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Products & Investments
World Bank’s IFC to set record for environmental and social impact bond issuance in 2021

The International Finance Corporation, the World Bank’s private sector lending arm, is likely to set a new record for environmental and social impact bond issuance this year, according to IFC vice-president and treasurer John Gandolfo, ahead of the $2.3bn mark set in 2017. The IFC raised $2.2bn last year, including $1.9bn in social impact bonds. Much of the new issuance will go toward combating the impact of the Covid-19 pandemic.

Best source: Bloomberg (subscription required)
More than 250 European fund strategies adopted ESG factors last year

A total of 253 European-domiciled funds switched their strategies or investment profiles to include environmental, social responsibility and governance factors in 2020, according to Morningstar. With a further 505 new funds launched in Europe during the year, total ESG assets set a new record of €1.1trn by year-end. Index funds experienced significant growth, accounting for 22.5% of the total market by the end of 2020 after an 84% year-on-year increase in inflows in the fourth quarter.

Best source: Financial Times (subscription required)
Climate change is biggest issue for markets in coming years, say institutional investors

A survey of large institutional investors by MSCI has found that many see climate change as the biggest challenge for markets and managing risk. A third of institutions with assets exceeding $200bn say climate change is the biggest challenge regarding investments within the next three to five years, according to the survey of around 200 executives at pension funds, sovereign wealth funds, insurers and endowments.

Best source: Corporate Secretary
See also: MSCI
Macquarie raises €1.6bn for fund investing in renewable energy

Macquarie Infrastructure and Real Assets has exceeded its funding target by raising €1.6bn for investment in renewable energy projects by the Macquarie Green Investment Group Renewable Energy Fund 2. The fund, which will invest in wind and solar power projects in western Europe, the US, Canada, Mexico, Japan, Taiwan, Australia and New Zealand, received commitments from 32 investors including private and local government pension schemes, insurers and sovereign wealth funds.

Best source:
Ossiam launches biodiversity ETF targeting food industry

Natixis Investment Managers' Paris-based affiliate and smart beta specialist Ossiam has launched the Food for Biodiversity exchange-traded fund, which aims to tackle biodiversity destruction using an active quantitative strategy. It will use data from Iceberg Data Lab to assess the material impact of food companies, their suppliers and customers.

Best source: Citywire
Legal & General Investment Management launches ESG green bond ETF

Legal & General Investment Management has launched a green bond exchange-traded fund. The L&G ESG Green Bond UCITS ETF will track the JP Morgan ESG Green Bond Focus Index, which covers green bonds issued in hard currency, credit and local currency government bonds. The fund incorporates green bonds that have been reviewed independently by the Climate Bonds Initiative.

Best source: Investment Week
ESG inflows to China dominate emerging market investments

China accounted for 75% of investment by environment, social responsibility and governance-focused funds in emerging markets last year, according to fund data provider EPFR Global, and has attracted 83% so far this year. The volume of investment in China makes Asia the most popular region for ESG investors.

Best source: Business Times
M&G launches £5bn sustainable private asset investment strategy

UK asset manager M&G has created a new investment team with a £5bn allocation to invest in sustainable private assets around the world. The Catalyst team, which has received the allocation from M&G’s £136bn with-profits fund, has 25 dedicated staff in London, Singapore, New York and Mumbai. Pipeline investments include microfinance as well as financing for affordable housing and waste-to-energy facilities.

Best source: M&G
UK’s RM Funds launches impact credit fund targeting social and environmental infrastructure

Edinburgh-based alternative investment manager RM Funds is launching an impact credit fund investing in UK companies contributing to environmental, social impact and governance outcomes linked to the UN Sustainable Development Goals. The fund, which will focus on social and environmental infrastructure, will target an income return of 6% per year and is looking to raise £200m from investors.

Best source: Institutional Asset Manager
Legislation & Regulation
German investors upbeat about impact of SFDR disclosures

German institutional investors are confident that the Sustainable Finance Disclosure Regulation will improve transparency regarding the impact of corporate activities on the climate. Union Investment ESG analyst Bastian Grudde says the regulation and the EU taxonomy will improve visibility, although progress will depend on compliance with regulatory technical standards. Hannoversche Kassen board member Silke Stremlau says high-impact companies will have to improve their data and ensure it is comparable, and further disclosure requirements under the Non-Financial Reporting Directive and the IORP II pension fund legislation will also help broaden the scope of available sustainability data.

Best source: Investments & Pensions Europe (registration required)
Analysts warn that SFDR classifications could hinder fund comparability

The implementation of the Sustainable Finance Disclosure Regulation requirements on March 10 could lead some asset managers, particularly exchange-traded fund providers, to mislabel their funds and potentially result in greenwashing, analysts warn. They note that asset managers must classify their funds as regular funds under Article 6 of the regulation, light green funds with sustainable characteristics under Article 8, or dark green funds that actively seek to promote climate goals under Article 9, depending on their impact on the environment and emissions, but warn that funds within each category could have very different ESG characteristics, confusing investors. Some groups may label their funds under articles 6 or 8 to avoid complications when they must provide hard data to justify their categorisation decisions from January 1, 2022. Adrian Whelan, global head of regulatory intelligence for investor services at Brown Brothers Harriman, says the result could be multiple sub-sets of Article 9 funds without the ability to compare them adequately under the SFDR classification system.

Best source: ETF Stream
Luxembourg ministers support legislation to criminalise ecocide

Luxembourg foreign minister Jean Asselborn and environment minister Carole Dieschbourg have backed a proposal for the grand duchy to criminalise ecocide, following the example of neighbours Belgium and France. The ministers say a clear definition of the term would have to be agreed, along with a thorough review of how other EU members are tackling the issue.

Best source: Delano
German cabinet approves complete glysophate ban for 2024

The German cabinet has approved legislation that will impose a complete ban of glysophate-based products from 2024, with farmers required start phasing out their use over the next four years. Farmers have criticised the measure, saying it puts livelihoods at risk, and arguing that a ban would be less effective in fostering biodiversity than co-operation between farmers and conservationists. The legislation, which must be approved by the two chambers of parliament, also provides for a ban in certain areas on the use of herbicides and insecticides that could harm bees, and measures to curb light pollution.

Best source: Reuters
Sustainable Finance Trends
BlackRock calls on oil companies to reveal carbon emissions

BlackRock has called on oil companies and other major producers of greenhouse gases to publish their carbon emissions and establish targets to reduce them. All companies whose shares are held by BlackRock in its portfolios will be required to disclose their scope 1 and 2 direct emissions, and the asset manager says fossil fuel extractors should also publish scope 3 emissions data covering the combustion of their products.

Best source: The Guardian
BNP Paribas halts new lending for farming on cleared Amazon land

BNP Paribas is to stop financing customers that produce or buy beef or soybeans from Amazon forest land that has been cleared or converted to farming since 2008, and will encourage customers not to produce or buy beef or soybeans from the Cerrado savannah in Brazil cleared after January 1, 2020. The French group will also end lending to producers, meat conditioners and traders that do not demonstrate strategies to achieve zero deforestation in production and supply chains by 2025.

Best source: Reuters
ESG funds have higher exposure to low-tax companies: study

The growth in environment, social responsibility and governance-focused fund investment is channelling money toward companies that pay less tax and provide fewer jobs than businesses with lower sustainability ratings, according to research by brokerage StoneX’s global macro strategist Vincent Delaurd. He says ESG funds often have larger exposures to monopolistic technology groups, pharmaceutical companies and financial institutions that tend to pay a lower overall tax rate and employ fewer people relative to their size and earnings. ESG exchange-traded fund assets increased from $59bn at the end of 2019 to $174bn last year, according to TrackInsight.

Best source: Financial Times (subscription required)
Social Responsibility
Fund industry urged to consider LGBT+ issues in investment process

A survey of global investors led by asset manager LGBT Capital and associated industry group LGBT Great has found that most investment professionals do not take account of LGBT+ issues in their investment processes, due to a lack of data and metrics. The organisations have called on the industry to increase their focus on the issues as a driver of inclusion and social sustainability.

Best source: Investment Week
UK fund association criticised for lack of ethnic diversity

The UK's Investment Association is facing criticism for not having any ethnic board members, while telling listed companies that its proxy adviser Institutional Voting Information Service will issue amber-top warnings to FTSE 350 companies that do not have plans to include at least one ethnic minority member among their directors. The organisation says it plans to appoint at least one ethnic minority board member by 2024.

Best source: The Times (subscription required)
Google faces scrutiny over dismissal of artificial intelligence ethics team members

Staff at Google have complained about the company’s actions after it dismissed scientist Margaret Mitchell, the second member of the company's artificial intelligence ethics team to be ousted after AI ethics researcher Timnit Gebru. Google claims Mitchell transferred electronic files outside the company in breach of its rules, but critics say she and Gebru may have been fired because they called for greater diversity and inclusion in the company’s research teams. They also demanded that Google not censor research studies that are critical of its products, including a paper by Gebru arguing that AI language algorithms could marginalise certain communities.

Best source: Reuters
Norges Bank Investment Management backs EU sustainable corporate governance proposals

Norges Bank Investment Management has backed proposals by the European Commission to introduce sustainable corporate governance measures, but questions whether it is practical to impose fixed levels of relevant ESG experience for companies' board members to help improve governance. The asset manager says voluntary due diligence standards have not met expectations and that greater EU harmonisation would help, including on cross-border voting and streamlining filing processes for shareholders.

Best source: Investments & Pensions Europe (registration required)
Political issues hampering Norway wealth fund’s ESG decision-making: Global SWF

Diego Lopez, managing director of sovereign wealth and public pension fund data platform Global SWF, says political processes are hampering the environment, social responsibility and governance ambitions of Norway's $1.3bn Government Pension Fund Global. He argues that the Norges Bank Investment Management decision-making process for exposure to asset classes is far more drawn-out than at smaller asset managers because of political considerations.

Best source: Bloomberg (subscription required)
BlackRock provides private company ESG data to clients

BlackRock has added access to environmental, social impact and governance data on private companies to clients using its eFront technology. The data and analytics are provided by RepRisk, with risk metrics and incident data, along with benchmarks for assessment of private companies.

Best source: Institutional Asset Manager
Green Economy
France launches repairability index for electronic devices

France has begun requiring producers of some electronic devices to assign a repairability score, informing consumers how easy their products are to fix. Criteria include the ability to disassemble the product, availability of spare parts, and the accessibility of technical documentation. The index will be enforced with fines from next year, and some companies have already released products with repairability scores.

Best source: Grist
Kobe Steel unveils technology to reduce blast furnace emissions by 20%

Japanese steel manufacturer Kobe Steel has launched a new technological process that reduces carbon dioxide emissions from blast furnaces by up to 20% when used in combination with direct reduction iron, which is a common substitute for scrap in electric arc furnaces. The technology, which the company claims can be applied to other sectors at low cost, was trialled for a month at Kobe's main Kakogawa Works site last October, and products could be made available to customers within a year.

Best source: Nasdaq
Plastic in face masks can be reused as construction material for highways: Australian researchers

The plastic in disposable face masks can be recycled as a construction material for roadbuilding, according to Australian researchers, who say three million masks can be used to build one kilometre of two-lane road when mixed with recycled concrete. The research team from RMIT University determined that a mix of 1% masks and 99% recycled concrete meets the required civil engineering standards for use.

Best source: Treehugger
Jaguar says car output will become fully electric by 2025

Jaguar Land Rover has announced that its Jaguar brand will become all-electric by 2025, as new carbon emission rules that disadvantage diesel- and petrol-engined vehicles take shape in the EU and UK. The company will spend £2.5bn a year to develop new technology for its cars, and says electric versions of all Land Rover and Jaguar vehicles will be available by 2030, the date by which the UK government plans to ban the sale of all wholly petrol and diesel cars.

Best source: BBC News
Green Deal
European Commission unveils climate change adaptation strategy

The European Commission has unveiled a new strategy for climate change adaptation designed to protect against economic losses of up to €12bn a year and loss of life caused by extreme weather events. The strategy calls for improved adaptation planning, risk management and facilitating resilience on a global scale. The remit of Climate-ADAPT, the EU's main platform for adaptation knowledge, will also be expanded.

Best source: European Commission
EU agency to create environmental ranking system for flights

The EU's Aviation Safety Agency is to create an environmental ranking system for flights in the EU, emulating the detailed carbon emission data displayed to consumers purchasing high-speed rail tickets. Aimed at countering greenwashing by airlines exaggerating their environmental credentials, the agency will take into account different types of aircraft and criteria including use of biofuels, waste generated and carbon offsets. However, it may take several years before the system is launched.

Best source: Engadget