ESG and Sustainability News


Sustainability Highlights Monthly Briefing
November 2021

Legislation & Regulation
ECB sets out conditions for climate risk stress tests
The European Central Bank has announced its measures to stress-test climate risks in banks’ trading and loan activities between March and July next year. Institutions must forecast how their business will evolve over the next 30 years and what order of losses they expect from the transition to a sustainable economy. They must also model a sharp increase in the price of carbon emissions over a three-year period. Regulators are looking to scrutinise the impact on banks’ business of both disruption stemming from climate change measures and the direct impact of changes to the weather and other consequences of global warming.
Best source: Handelsblatt (subscription required, in German)
See also: European Central Bank

EU asset managers say they can’t meet January 1 deadline for SFDR disclosures
The European Fund and Asset Management Association says managers of $22trn in assets will not have sufficient time to meet the prescriptions of the Sustainable Finance Disclosure Regulation by the deadline of January 1, especially since the detailed regulatory technical standards have not yet been finalised. Dominik Hatiar, who advises EFAMA on SFDR issues, says the safest approach at this point is to say no investment product fulfils the criteria for classification as sustainable. The standards were scheduled to be decided by late September or early October, but publication has been delayed due to their complexity; they will not apply to asset managers until July 1 next year.
Best source: Bloomberg (subscription required)

Sustainable Finance Trends
Regulators must do more to prevent greenwashing: IMF
Regulators must do more to protect investors from greenwashing if sustainable investing is to make a significant contribution to reducing carbon emissions, argues the International Monetary Fund in its Global Financial Stability Report. Assets in sustainable investment funds have reached $3.6trn but progress toward net zero by 2050 will require new inflows of $20trn. The authors say effective regulatory oversight and verification mechanisms are necessary to make sure investors know how their money is being spent.
Best source: Financial Times (subscription required)
See also: International Monetary Fund

Investments & Products
European Commission receives record €135bn in bids for first €12bn green bond
The European Commission has received bids totalling more than €135bn for its debut green bond, a €12bn 15-year issue led by BofA Securities, Crédit Agricole, Deutsche Bank, Nomura and TD Securities. The Commission is aiming to raise €800bn on the capital markets for the Next Generation EU recovery fund by 2026, of which at least €250bn will be in the form of green bonds. The current issue is part of €80bn in bonds planned for this year. In September the UK Treasury attracted orders exceeding £100bn for its first green issue, a £10bn bond maturing in 2033.
Best source: Börsen-Zeitung (subscription required, in German)
See also: Frankfurter Allgemeine Zeitung (subscription required, in German)
See also: Financial Times (subscription required)

European private market ESG assets to reach up to €1.2trn by 2025: PwC
Assets committed to European private market sustainable investment will reach between €775.7bn and €1.2trn by 2025, up from €252.9bn at the end of last year, according to a survey by PwC Luxembourg of 200 general partners and 200 limited partners representing €46trn in total assets under management. PwC predicts that ESG assets will account for between 27.2% and 42.4% of the private market industry’s assets, compared with 14.8% last year, and the authors expect the ESG share of real estate and infrastructure to be between 33.7% and 40.6%.
Best source: Unquote (subscription required)
See also: PwC Luxembourg

VitalBriefing Sustainability Insights
Defining sustainability – what does it all mean?
In an interview with VitalBriefing, Sophie Öberg, deputy director at Inspiring More Sustainability Luxembourg, looks at the characteristics of a circular business model and examines the distinctions between sustainability, sustainable finance, sustainable investment, ESG, corporate social responsibility and circularity.
Best source: VitalBriefing

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This free briefing is a selection of key stories from VitalBriefing’s Monthly Sustainable Finance News & Insights Briefing, prepared by our top financial journalists and identifying the critical trends and major European and global developments in Legislation & Regulation, Sustainable Finance Trends and Investments & Products.