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Sovereign Bonds, Train Derailments, Green Bonds, Water Funds, and 'Woke Banking'

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Here are 5 ESG insights you might have missed this week:

1. A Framework to Assess Sovereign Bond Issuers on Climate Change-

  • Assessing Sovereign Climate-related Opportunities and Risks (ASCOR) is a framework to assess sovereign bond issuers on climate change. The initiative is led by asset owners, asset managers and investor networks, including the Institutional Investors Group on Climate Change (IIGCC), Principles for Responsible Investment and Transition Pathway Initiative (TPI) among others.

  • Indicators are assessable using publicly available data, like government documents or reliable, publicly available databases. While data availability remains a limitation for some indicators, we aim to evolve the framework as disclosure and data availability improve, and through engagement with sovereign issuers. Country assessments will be undertaken using existing databases or through dedicated data collection and policy analysis based on information in public government documents.

  • The framework is composed of three pillars organised under nine themes, each of which includes ‘Yes’ or ‘No’ indicators and, where relevant, complementary quantitative metrics. These indicators were carefully selected based on materiality, availability and comparability.

  • Link to Source:

2. Green Bonds, Empty Promises-

  • Law professors Quinn Curtis, Mark Weidemaier and Mitu Gulati examined almost 1,000 green bond prospectuses over the past decade.

  • Utilizing a sample of nearly 1000 bonds over the entire history of the market and supplementing this data with interviews with over 50 market participants and policymakers, we find a concerning lack of enforce ability of green promises. Moreover, these promises have been getting weaker over time.

  • Green bonds often make vague commitments, exclude failures to live up to those commitments from default events, and disclaim an obligation to perform in other parts of the document. These shortcomings are known to market participants. Yet, demand for these instruments has been growing. We ask why green bond promises are so weak, while the same investors demand strong promises from the same issuers in other settings.

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3. After the Ohio Train Derailment: Evacuations, Toxic Chemicals and Water Worries-

  • When a train derailed in the village of East Palestine this month, it set off evacuation orders, a chemical scare and a federal investigation.

  • On Feb. 6, the authorities performed a controlled release of the toxic materials from five tankers, and the contents were diverted to a trench and burned off.

  • A class-action lawsuit filed in United States District Court for the Northern District of Ohio on Feb. 15 accuses Norfolk Southern of making the situation worse during the release when 1.1 million pounds of vinyl chloride was dumped in the area.

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4. Water Funds Dilute The Environmental Message-

  • There may be an investment case for holding them, but it’s not obvious they are saving the planet.

  • The investors who penned the open letter — including BNP Paribas Asset Management, Eden Tree Investment Management and Quilter Cheviot — said they were taking action by engaging companies to use water sustainably. They also said they saw reducing their exposure to water risk as a “core fiduciary duty” and that they were looking to benefit from the “opportunities associated with the transition to a water secure economy”.

  • Impax’s water strategy, divides water opportunities into four: utilities, distribution and infrastructure, treatment and efficiency. French-listed Veolia is an example of a water utility company, which brings some earnings stability. Sabesp, a Brazilian sanitation company that provides water and sewage services, is another holding. Other holdings are less obvious. Cintas, a uniform rental business, is a holding at Impax because it washes clothes efficiently, at scale, reducing water and energy usage — unlike home washing which can be energy inefficient.

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5. Arizona Drops Anti-ESG Rules While Florida Fights "Woke Banking"-

  • DeSantis called it a push against “these elites” attempting to “inject political ideology into investment decisions, corporate governance, and really just the every day economy,”

  • Arizona will no longer participate in investigations into banks and other financial institutions over ESG investing practices, according to a statement from the state’s new Attorney General, Kris Mayes. “it is not the place of government to tell corporations and their investors that they cannot invest in sustainable technologies and practices or improve their governance processes.”

  • Florida Gov. Ron DeSantis spoke at Florida SouthWestern State college’s Collier Campus in Naples. Signage at the event read “Government of Laws, Not Woke Politics.” The governor proposed new legislation to end ESG “woke” banking.

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One more thing: A podcast from Big Technology Podcast featuring David Friedberg on How Technology Solves Our Climate Crisis

Find the video here:

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There may be an investment case for holding them, but it’s not obvious they are saving the planet. The investors who penned the open letter — including BNP Paribas Asset Management, Eden Tree Investme

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