Gustavo Bernal Torres
Divesting from Russia, IPCC's Report, SBTi, and ways to help Ukraine
Here are 5 ESG insights you might have missed this week:
1. IPCC's Climate Change 2022: Impacts, Adaptation and Vulnerability-
The Working Group II contribution to the Sixth Assessment Report.
The 18 Chapters and 7 Cross-Chapter Papers of the Working Group II Report assess the impacts of climate change on nature and humanity, and their capacities and limits for adaptation.
The Technical Summary (TS) provides an extended summary of key findings and serves as a link between the comprehensive assessment of the Working Group II Report and the concise Summary for Policymakers.
Link to Source: https://www.ipcc.ch/report/ar6/wg2/
2. Shell, BP and ExxonMobil Have Done Business in Russia for Decades – Here’s Why They’re Leaving Now-
Russia’s invasion of Ukraine has completely changed Western energy companies’ cost-benefit analysis of doing business in Russia.
In response to Russia’s invasion of Ukraine, British energy giant BP announced on Feb. 27, 2022, that it will sell its nearly 20% ownership in Russian state-owned energy giant Rosneft. BP’s rival Shell is also pulling out of all of its operations in Russia, as are U.S. energy giant ExxonMobil and Norway’s state-controlled company, Equinor.
These breakups will not be cheap. BP’s stake in Rosneft is worth US$14 billion. In various projects, Shell has about $3 billion in assets in Russia. ExxonMobil has over 1,000 employees and more than $4 billion in assets there. Pulling out will inflict significant financial hits on all of these companies.
Link to Source: https://theconversation.com/shell-bp-and-exxonmobil-have-done-business-in-russia-for-decades-heres-why-theyre-leaving-now-178269
3. Investors Rush to Dump Russian Assets After Years of Ignoring ESG Red Flags-
Russia is the new tobacco. Or forced labor. Or apartheid South Africa.
Russia’s invasion of Ukraine has triggered a sudden withdrawal by global investors from Russian oil companies, banks, airlines and government debt. The abrupt reckoning belies the inconvenient truth that for years Russia’s ‘country risks’ have been clear to analysts of ESG, or environmental, social and governance factors.
Doing business with autocratic regimes can be considered a ‘negative externality,’ Evgueni Ivantsov of European Risk Management Council writes in the Financial Times. Negative externalities are usually associated with environmental issues, such as air and water pollution. “But in this case we are dealing with another form of externality: where a company profits at the expense of negative geopolitical consequences for society.”
Link to Source (Free registration required): https://impactalpha.com/investors-rush-to-dump-russian-assets-after-years-of-ignoring-esg-red-flags/
4. Financial Sector Science-Based Targets Guidance-
SBTi's new framework helps financial institutions set science-based targets and align their lending and investment activities with the Paris Agreement.
Financial institutions (FIs) differ from other economic sectors: they provide finance and other services to the companies that are responsible for reducing GHG emissions, rather than exercise direct control over GHG emission reductions. The central enabling role of finance is recognized in the Paris Agreement’s Article 2.1(c)on “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”
The framework includes target setting methods, criteria, a target setting tool, and this guidance document.
Link to Source: https://sciencebasedtargets.org/resources/files/Financial-Sector-Science-Based-Targets-Guidance.pdf
5. ESG and Alpha: Sales or Substance?-
This article sets aside the question of the social and environmental impact of ESG investing to examine claims that ESG funds deliver alpha.
The opportunity to generate alpha with lower beta and planetary impact has proven to be an extremely effective way to market funds.
Below we discuss the rationales provided by ESG investment practitioners and assess each theory’s logical validity.
Link to Source: https://www.institutionalinvestor.com/article/b1wxqznltqnyzj/ESG-and-Alpha-Sales-or-Substance
One more thing: A list of trustworthy organizations and ways foreigners can help the people of Ukraine. We’re just linking one of many lists but please do your own research beforehand.
Find the list here: https://standwithukraine.live/how-to-help/
Do share your comments or the content you think our community should not miss!