Professional associations

S&P Global: Renewable Energy Funding in 2023: A “Capital Transition” Unleashed

National governments and global financial institutions have placed capital allocation at the heart of their energy and industrial policies to accelerate and shape the energy transition. Governments are turning to capital markets because of the immense scale of investment expected to be needed in the coming decades.

It its estimated that current targets agreed to by the world’s major economies under the Paris Agreement would require at least tripling of global energy transition investment (including all decarbonization) to more than $5 trillion each year between 2023 and 2050, well beyond what government balance sheets can handle alone. Investment in renewable generating assets is a key part of the transition, with estimated annual investment of $1.4 trillion1 through 2050. 

The gas distribution industry, which owns and operates the systems that deliver energy to homes and businesses for heating and other uses, is a key player in the shift to a low-carbon economy.  

To avert the worst impacts and material financial risks of the changing climate, the industry, which delivers about 15% of the energy used in the U.S and accounts for around 14% of the nation’s carbon emissions, must decarbonize.  

Just as critically, this transition to reducing emissions and addressing financial risks will unleash strong financial opportunities for the utilities sector and its investors, while continuing to provide consumers and businesses with energy that is reliable and cost competitive. 

This investor guide is part of the work of the Ceres' Ambition 2030 initiative, which focuses on six key sectors, including utilities, with the aim of decarbonizing the highest emitting industries by driving greater corporate climate action. 

How active ownership makes a demonstrable contribution to investment and real world outcomes in Asia Pacific

It is awe-inspiring to witness scientists debate the advent of a new geological epoch, the Anthropocene – the age of humans. 

Global warming's rapid acceleration, reshaping our climate, indisputably heralds the Anthropocene. Human activity has also impacted our stock of natural resources, such as air, water, land and the amount of flora and fauna in our biodiversity systems – what we collectively call our natural capital assets. 

Preserving biodiversity holds inherent allure, but only recently have we ventured to quantify its economic value. The risk of widespread loss and degradation of our natural capital assets spurred the UK's finance ministry to commission the first global review on the economics of biodiversity in 2021, the so-called Dasgupta Review. The review's conclusion is sombre: between 1992 and 2014, produced capital per person doubled, and human capital per person increased by about 13% globally; but the stock of natural capital per person declined by nearly 40%.

The opportunity to redefine investment strategies to protect our most important and productive asset, nature, seems like prudent portfolio management.

As the Just Transition Mechanism (JTM) begins to kick in across Europe to assist Member States in transitioning away from environmentally destructive practices, we look at an example of EU climate assistance in practice. Spain is set to receive €869 million from the Just Transition Fund (JTF) to help build a carbon-neutral economy that is inclusive, resilient and protects livelihoods. 

Spain’s renewable energy transition is changing the country in multiple ways. As a country once heavily reliant on coal mining, particularly in Asturias, the switch to cleaner energy production raises questions about how Spain’s local economies will adapt to survive.

The current context of transitional economics has caused negative externalities that were perhaps unforeseen. 

The Oil and Gas industry faces mounting global pressure to implement robust environmental, social, and governance (ESG) programs across their operations. Sia Partners conducted a benchmarking exercise involving a sample of large and medium-sized organizations operating across the energy industry value chain in North America to assess the status and evolution of their public ESG reporting metrics. In addition, interviews were conducted with sustainability leaders from a subset of the benchmarking study group to gain insights into organizational priorities and activities.

Findings indicate that 69% of the benchmarking study group currently operate at an ESG Reporting Maturity Level of “Phase 1 – Emergent” or “Phase 2 – Developing”. While progress is underway, it is evident that many organizations would greatly benefit from further integration of Environmental Social Governance into their strategic and annual planning processes, as well as their operating models

Brummer & Partners: Sustainability Report 2022

Brummer & Partners latest sustainability report covers keys areas including: 

• Sustainability in the working group, engagement with the investment teams, investment restrictions and proxy voting and collaborative engagement
• 2022 in review, a summary of activities performed and consideration of the principal adverse impacts 
• Fossil fuels and responsible investment

RFI: Releases financed emissions report and open-access database

The RFI Foundation has released a report and database with estimates of financed emissions across 11 OIC markets in a continuation of our focus on improving financial institutions’ ability to address climate change. The urgent need for this type of resource is reinforced by the conclusions of the Global Stocktake that the world has until 2025 to reach peak global emissions.

To reach this peak within the next two years does not mean every country will individually reach that peak, but whatever level of emissions reduction is feasible for each country will have to be achieved far ahead of exact data showing our progress. There will be no daily counts to measure our progress against the goal. With the consequences of failing to meet the goal being so severe, however, the precautionary principle of doing the utmost to mitigate emissions becomes a common-sense guide.

As these efforts proceed, they should be guided by a conclusion of the Global Stocktake:“Achieving net zero CO2 and GHG emissions requires systems transformations across all sectors and contexts, including scaling up renewable energy while phasing out all unabated fossil fuels, ending deforestation, reducing non-CO2 emissions and implementing both supply- and demand-side measures.”

This is where the RFI Foundation’s database is so important, especially since it focuses on markets where emissions data are available only for a limited number of companies across a narrow range of high-emitting sectors. If these companies could reduce emissions unilaterally and without wider impact on the economy and society, then the focus on measuring emissions from these sectors and focusing on metrics and targets for those companies would be effective without further effort.

But we know that is not the case, and this limits substantially the room for action by financial institutions to focus their climate change strategies in this way. Financing renewable energy, or electric vehicles and public transport, and financing transition plans of high-emitting and hard-to-abate sectors is necessary. But this won’t be enough on its own because they produce for a reason, to meet demand, which drives their decision-making.

If these high-emitting sectors were faced with a serious transition risk, the impact for financial institutions would not be limited to just the financing provided to this sector. All the other companies whose demand induces the production of high-emitting goods and services, whether that is electricity, vehicles or the sources of waste that result, would face a corresponding shock depending on how reliant they are on the output of high-emitting sectors.

RFI’s database tries to illustrate the value chain sources of risk transmission that would impact financial institutions in case of a transition risk materializing. It also helps to fill a data gap where current bottom-up emissions data use different methodologies and are of varying consistency. This doesn’t detract from good efforts like the Net Zero Data Public Utility and key standard setters to improve the consistency of the data, it complements them.

As these bottom-up data are aggregated — and especially as the scale of aggregation increases — the margin of error multiplies. It becomes more important to look not just at multiple perspectives covering regulatory requirements for emissions data but also other sources of information. This is to triangulate not only what needs to be disclosed, but what can inform strategy to bring more of a financial institution’s assets to bear on the issue of highest urgency, which is peaking emissions as fast as possible.

>> Explore the capabilities of the RFI Insights Financed Emissions Database for navigating the dynamic climate landscape. Visit www.rfi-insights.org to discover its valuable insights and foster meaningful change.

The world is decarbonizing. Plans to cut carbon emissions to meet commitments to the Paris Agreement on climate change and those made at COP26 are producing a flurry of corporate, national, and international initiatives aimed at eliminating net greenhouse gas emissions by mid-century. The EU projects that it will reach net zero by 2050 and aims to cut its emissions by half over the next decade.

This powerful trend places a particularly stringent set of demands on the chemical industry because it accounts for a large share of global emissions. It is an energy-intensive industry that relies on hydrocarbons for raw materials. And about 50% of its total emissions are Scope Three, i.e., the results of all activities of the organization or its assets along the value chain. Reducing these emissions will require huge investment. To further aggravate matters, as the International Energy Agency (IEA) points out, the technologies for achieving 75% of the required emissions cuts by 2050 are not commercially available today.

But these challenges also present the chemical industry with a particularly powerful set of opportunities to position itself as a key partner in the sustainability-driven transformations of its customers’ industries. Because they are essential participants in the manufacturing value chain, chemical companies that prepare early to comply with more rigorous environmental, social, and governance (ESG) standards will build an advantage. And their response to address ESG pain points will spur important innovation.

China’s new rules for a nationwide power spot market are likely to promote renewable power consumption, as they allow discovery of electricity prices in real time, says Fitch Ratings. This will also help to balance power supply and demand during peak hours.

The new rules establish fundamental principles governing China's electricity spot market on a national level. Each region may then localise the implementation based on its market dynamics. Fitch expect local authorities to roll out the new rules gradually to minimise the impact on power-generation companies (gencos) and users. 

Fitch Ratings: UK Delayed Ban on Petrol Car Sale Has Limited Impact on Automakers

Fitch expects that existing UK targets for manufacturers to reduce fleet CO2 emissions of new car sales by 2030 will remain largely unchanged notwithstanding the extended timeframe for the ban.

Fitch expects that the delay will not affect the investment plans of major automotive original equipment manufacturers (OEMs), but will allow smaller companies more time to ensure their fleets are substantially zero-emission. Fitch believes that battery electric vehicles (BEVs) are currently less profitable for OEMs than traditional diesel and petrol vehicles.

BEV represented about 16% of total new car sales in 8M23 in the UK, according to the Society of Motor Manufacturers and Traders. Much of these sales are driven by emission-based tax incentives for business fleets.

• Indonesia will launch an innovative cap-tax-and-trade system in 2025 that will expand on its recently implemented ETS
• Existing ETS only covers coal-fired plants connected to the national grid, with "captive plants" in industry a concern
• Lack of regulation on the use of coal in industry is a key decarbonisation risk for Indonesia, in our view

Clients of HSBC Global Research can access the full report via the HSBC Global Research website or by contacting Wai-Shin Chan

Uncertainties remain: The first phase of Indonesia's emission trading system (ETS) started in 1H23. Ninety-nine coal-fired plants with at least 100MW of generation capacity, all of which are directly connected to the power grids owned by the state utility Perusahaan Listrik Negara (PLN), are included in the first phase of the ETS. It is equivalent to 81.4% of the country's national power generation capacity.

A carbon exchange that facilitates emissions allowance trading finally launched on 26 September. However, details like the "banking" of allowances and how many carbon credits can be used to fulfil the compliance obligations are still unknown to the public.

Key findings

• The growing stakeholder awareness of biodiversity and nature loss as business risks places pressure on companies to report on and mitigate such threats. The launch of the TNFD framework could further elevate these expectations.
• Our analysis shows that current corporate disclosure practices vary. While 82% of firms in our study referred to biodiversity- and nature-related terms in their FY2022 annual reports, only 8% mentioned biodiversity regulations and frameworks.
• Among companies we considered to have high exposure to biodiversity risk, we did not find a strong correlation between relevant risk-management practices and average reference to biodiversity/nature risks in annual reports.

Key findings

• The reporting templates for EU Taxonomy are complex and financial market participants may require guidance on interpretation and usage to ensure that data is disclosed in the correct format.
• This has been especially true for Non-Financial Reporting Directive (NFRD), where EU Taxonomy regulations mandate the use of reported data and timelines for disclosures related to NFRD.
• MSCI’s EU Taxonomy Reported Data User Guide emphasizes the importance of granular data disclosures and offers insights into the use cases for reported and estimated EU Taxonomy data.

A key driver of ESG flows continues to be regulation and this is responding to the increased frequency and materiality of ESG-related events, attempting to shape the direction of travel and how these issues are managed.

In this article:

• Corporate disclosure is high on the regulatory list 
• Fund disclosure is a close second 
• Taxonomies prove a popular tool 
• Transition on the horizon 

Greenbank: Food and energy security on a warming planet (Live webinar)
 

Green Shoots webinar
Thursday 12 October 2023    
12.30pm — 1.15pm

Both 2022 and 2023 have brought food and energy security sharply into focus. The global energy crisis and more extreme weather have highlighted the vulnerability of the legacy energy and food systems that we have depended on. These challenges are likely to become more onerous as the planet continues to warm and the global population grows. Can technological solutions in the form of vertical farming and clean energy sufficiently address these challenges and provide security as climate change impacts become increasingly severe?

Joe Crehan, Investment Manager at Greenbank, will be hosting a live lunchtime webinar. He will be joined by two experts in this field: Morag Watson, Scottish Renewables' Director of Policy and David Farquhar, CEO at Intelligent Growth Solutions (IGS).

Investors are increasingly influenced by ESG ratings and companies’ approaches to managing ESG risk. While an annual general meeting (AGM) is an ideal opportunity to communicate company plans around managing these risks, ESG reporting goes beyond an AGM or proxy season. Investors want investing to align with values, but are also looking at risk exposure and management. 

This ebook outlines how incorporating ESG into the agenda of your AGMs, as well as into your overall reporting strategy, can improve effectiveness, increase director and investor confidence, and provide measurable value. 

Download the ebook to find out: 

• The ESG issues that matter the most to investors and how to prepare to take action.
• How to better meet investor expectations on ESG by improving transparency and accountability.
• Strategic approaches to addressing ESG concerns and improving the dialogue with investors. 

Practically everyone has heard the phrase “save a tree.” Its call to action is more poignant and timelier than ever as whole forests are disappearing at alarming rates, often because of business activity. Equity investors must gain a greater understanding of how companies are impacted by and addressing deforestation—and how different approaches might affect long-term return potential.

The challenge for investors is to examine how well companies in different industries are managing potential deforestation risks and the opportunities it poses for their businesses.

AllianceBernstein’s (AB) Concentrated Global Growth team conducted a comprehensive deforestation analysis of more than 100 companies within the investable universe for the equity portfolio. Guided by a list of strategic questions (Display), they aimed to identify risks, and survey and analyze the extent of each company’s forestation policies, if any.

Sustainable investors tend to look for businesses that embody two virtues. The first is a commitment to consider stakeholders, society and the environment in a way that is aligned with long-term, rather than merely short-term, profitability. The second is a sustainable competitive advantage that enables the business to survive multiple cycles and compound its earnings growth over the long term. Most sustainable investors would argue that it is very difficult to find the second without the first.

Sustainable businesses have specific markers relating to these two virtues. Some are relatively easy to quantify, such as a high return on invested capital. Others, such as a strong corporate culture, are less tangible. Neuberger Berman believe that analyzing and assessing these less tangible characteristics requires qualitative judgment and close relationships built on long-term shareholder engagement.

In Neuberger Berman's view, that raises questions about the rising popularity of rules-based, passive sustainable investing products, which mirrors past waves of enthusiasm for market-capitalization, style and factor indices and indexed products. In this paper, we argue that the complex, long-term nature of sustainable investing makes it inherently an active management discipline.

Sin stocks are an interesting area to explore if you want to understand why people follow ESG investments. In theory, if ESG investors shun sin stocks (gambling, defense, alcohol, tobacco) the risk premium on these stocks should increase offering investors higher returns in the long run. In practice, though, it is unclear if there is any risk premium to sin stocks. Now, thanks to a series of lab experiments we get a better understanding of why people invest in sin stocks and who invests in these stocks.

After a downturn in 2022, the global green economy has returned to form in 2023. Green equities struggled in 2022 due to a combination of factors, including high inflation, rising interest rates and geopolitical tensions. However, by the end of Q2 2023, market capitalisation of green companies had recovered to its 2021 average of over 9%.

Despite financial volatility, the green economy has continued to expand steadily. Green revenues for listed companies are on track to exceed US$5 trillion by 2025, with market capitalisation of the green economy approaching 10% of the equity market.

The green economy is maturing and diversifying; green companies are becoming larger and more investable. The average market capitalisation of pure plays (companies with 100% green revenues) reached over US$7 billion by June 2023 – a more than a six-fold increase since 2016.

There has been strong government support to accelerate clean energy development, such as the US Inflation Reduction Act and the EU Net-Zero Industry Act. However, attempts to decouple global supply chains and secure key raw materials may introduce structural inefficiencies that threaten to slow the growth of the global green economy.

• Our flagship report provides the 4th annual update on the global green economy
• Building on the unique and highly granular FTSE Russell Green Revenues data, this report provides detailed analysis on the global green economy with a broad listed equities universe and for the first time discusses new geopolitics related to the green economy
• This report highlights how to use our Green Revenues data to identify and analyse investment opportunities in the green economy and measure portfolio exposure to climate and environmental solutions

This latest report from Vanguard Group covers key areas which include: 

• Vanguard Group's 4 principles, including oversights of strategy and risk and shareholder rights
• Case studies and insights, these cover the topics of the 1,802 engagements conducted in 2022, examples include Board diversity at Vodaphone Group plc
• Proxy voting history, divided by geography 
• Company engagements, with 1,304 companies engaged with in 2022

Swedbank Robur: Corporate Governance & Engagement Report 2022

Swedbank Robur's latest report covers various key areas included: 

• Engagement to make a difference 
• Voting, including participating in more than 850 general meetings in Sweden and abroad
• Governance engagements 
• Collaborations, such as, Valuing Water finance initiative and talks with SSAB for Climate Action 100+

Janus Henderson Investors: 2022 Impact Report 

Janus Henderson's latest report covers key topics including: 

• 2022 highlights - these include, being carbon neutral for 15 years and 77% of employment engagement score
• Governance, commitments to ethics 
• People, employee engagement score ad gender pay gap
• Community, including pride parade, walk to fight suicide, charity auction
• Environment, carbon neutrality
• Responsible Investing, covering evolving ESG proposition

OFI's Engagement Report covers key areas including:

• Engagements broken down by ESG pillar, including engagement examples such as Nestle and Engie
• Engagement during the investment process and with market participants, these included Dufry and participation in ClimateAction 100+
• Voting rights exercised in 2022, statistics include a 68.4% approval rate as the percentage of all resolutions submitted. 

RMI: A Path through Carbon Markets Turmoil

For voluntary carbon markets, the best way ahead is to strengthen the integrity of data and processes. Here’s how.

This summer’s headlines — from record-breaking heat waves in Phoenix and Baghdad, to hot tub-esque ocean temperatures off the Florida coast, and devastating wildfires across Maui and Canada — are an urgent call for aggressive climate action that can rapidly reduce 420 gigatons of greenhouse gas emissions or remove 10–13 gigatons of emissions that have already been released by 2050.

As a complementary tool to direct decarbonization, the voluntary carbon market (VCM) — a market mechanism that enables private parties to buy, sell, and invest in carbon credits tied to avoided, reduced, or removed greenhouse gas (GHG) emissions — has the potential to align incentives, unlock critical project financing, and build the institutions required for climate stabilization.

Recently, the VCM has emerged as the go-to mechanism for companies looking to meet their 2030 net-zero targets, for countries searching for a financially viable pathway to climate-aligned growth, and for early-stage climate technology companies seeking a path to commercialization. In 2022, the VCM conducted roughly $2 billion in trades. In 2023, VCM-related headlines focused on the market’s struggles to develop and deliver accurate and reliable carbon credits.

S&P Global Ratings: Decarbonizing Chemicals Part Two: The Credit Risks And Mitigants

Drivers of decarbonization-related credit risks may gain greater influence in future, especially beyond 2030. Sector risks should be manageable until then, based on current information, policies, and regulations

Key Takeaways:

• There is no quick fix to decarbonize the chemical sector. The sector’s numerous (over 70,000) and heterogenous products, and dependence on carbon-based fuels and feedstock, create risks relating to decarbonization technology, costs, and regulations.
• S&P assume that companies will benefit from the future technological evolution and development of decarbonization options, thereby mitigating some credit risks. Decarbonization could create new markets and applications for some chemicals.
• While S&P see potential risks for chemical companies, in their view the sector's credit risks are currently manageable under existing regulatory policies. 
• S&P believe decarbonization-related credit risks won’t hurt company credit standings at least until 2030. After that, risks could mount especially at lower rated companies with limited flexibility to absorb decarbonization costs and capital outlays, and lower ability to avail of mitigants.

S&P Global Ratings: Decarbonizing Chemicals Part One: Sectorwide Challenges Will Intensify Beyond 2030

Medium-term decarbonization targets are unlikely to materially affect chemical companies' cost structures but could imply more significant disruptions to the sector post-2030.

Key Takeaways:

• The interim decarbonization targets (typically by 2030-2035) of the chemical companies we rate are technically feasible without materially disrupting the sector’s cost structures, and with limited financial impacts.
• Decarbonization over that time frame could largely rely on energy efficiency gains and the electrification of certain processes. It will also hinge on external factors such as the availability of sufficient renewable energy. Inconsistent regulation across regions, in globalized chemical markets, could create uncertainties and diverging effects.
• Longer term decarbonization targets, on a roadmap toward carbon neutrality by 2050 for instance, could see greater shifts in product chains. These could for example involve hydrogen-based manufacturing or greater carbon-capture capacities. Such shifts could prove more disruptive to the industry's cost structures, while early movers are likely to be better prepared to absorb transition-related impacts.

S&P Global Ratings: Global Sustainable Bonds 2023 Issuance To Exceed $900 Billion

Green, social, sustainable, and sustainability-linked bond issuance has risen this year, despite challenges posed by high global interest rates, while traditional bond issuance is stagnating. 

Key Takeaways:

• Despite stagnating global bond issuance, we anticipate that GSSSB issuance should be in line with our forecast of $900 billion to $1 trillion, or 14% to 16% of total issuance, in 2023.
• S&P anticipate issuance of sustainability-linked bonds will decline in 2023 as questions regarding the credibility of targets persist, while green bonds will continue to dominate the GSSSB market, building on a record level of issuance in the first half of the year.
• Europe will remain the leading region for GSSSBs, while North American issuance may be hampered by lower supply and demand for the remainder of the year. Emerging markets may see increased issuance in the coming year

S&P Global Ratings: Lost Water: Challenges And Opportunities

Non-revenue water or "lost water" deters investment in water infrastructure, representing a global sustainability challenge.

Key Takeaways:

• Non-revenue water (NRW), or lost water, deters investment in water infrastructure assets. Analyzing NRW can provide valuable information about the infrastructure's performance, financial vulnerability, and governance in the sector.
• Reducing NRW can have many benefits, including increasing universal access to safe water, mitigating water stress, reducing the impacts of freshwater withdrawals on ecosystems, and mitigating global greenhouse gas emissions.
• Investment decisions made today could significantly affect future NRW rates, yet in many cases--particularly emerging markets--access to private-sector funding is limited and regulatory incentives are insufficient.
• High NRW rates may pose operating risks for water utilities. In severe cases, this could contribute to downgrades, but these have been rare among the utilities we rate.  

• Taskforce on Nature-related Financial Disclosures (TNFD) publishes final disclosure recommendations and guidance
• TNFD likely to transform availability of nature-related information, with material implications for corporate value
• We explain what's next for TNFD and priorities for investors, including how they can help accelerate adoption

Clients of HSBC Global Research can access the full report via the HSBC Global Research website or by contacting Wai-Shin Chan

• In case you missed it...this note is a compendium of the HSBC ESG team's most popular research so far this year
• The ESG of EV batteries, our guide to ESG Integration, and our ESG Sentiment Surveys were the most read
• Analysis of regulations, major energy transition themes and ESG integration into equities also proved popular

Clients of HSBC Global Research can access the full report via the HSBC Global Research website or by contacting Wai-Shin Chan

HSBC: Asia Real Estate - ESG Integrated 3.0: Focus on upstream emissions  

• Rising regulatory, legislative, and investor demand shows the need for better Scope 3 emission disclosures by corporates
• Hong Kong and ASEAN lead in disclosure rates, while mainland China and India lag; Swire Property is a case study
• Actions by corporates are key to decarbonisation; the green transition presents opportunities and risks for industry leaders

Clients of HSBC Global Research can access the full report via the HSBC Global Research website or by contacting Wai-Shin Chan

Who's ahead? Across our coverage, ASEAN and Hong Kong had the highest Scope 3 disclosure rates in FY22. Mainland China and India had the least. The major sources of carbon emissions in the property value chain are third-party contractors, tenants, business travel, and waste. About 25% of our covered companies have set voluntary targets for carbon reduction, led by Hong Kong and ASEAN.

Opportunities from the push towards greener companies include: (1) rising demand for property technology (PropTech) offerings; (2) increasing demand for green products and buildings; and (3) cost savings from higher energy efficiency. Risks include: (1) regulatory and legislative changes like mandatory climate disclosures in Hong Kong and Singapore, as well as expanding cap and trade in mainland China; and (2) higher R&D and associated costs, given already elevated interest rates. Challenges include data quality due to inconsistent reporting frameworks and quantifying returns and paybacks for green investments. However, the long-term returns from sustainable investments and the benefits tied to the real estate ecosystem should increase shareholder value.

A rebound in growth stocks helped sustainable funds beat traditional funds in the first half of 2023, as assets under management rose and ESG investors increased their use of restriction screening.

In the first half of 2023, sustainable funds saw a median return of 6.9%, beating traditional funds’ 3.8% and reversing their underperformance in 2022, according to a new “Sustainable Reality” report from the Morgan Stanley Institute for Sustainable Investing. Investor demand also remained strong as sustainable funds’ assets under management (AUM) reached record levels.

“Our mid-year update shows the resilience of ESG funds with a return to outperformance after a challenging 2022,” says Morgan Stanley's Chief Sustainability Officer and CEO of the Institute for Sustainable Investing Jessica Alsford. “Investors are increasingly turning to sustainable funds with sustainable AUM now at ~8% of total AUM globally.”

Understanding 2023 Fund Performance

Last year, a rapid rise in interest rates contributed to declines in both equities and bonds. Value stocks (those trading cheaply) and high-quality, short-duration fixed income benefited, which contributed to the relative underperformance of sustainable funds in 2022, since sustainable funds tend to skew away from these categories. This year, a rebound in growth stocks (which prioritize long-term potential) has especially helped sustainable funds’ relative outperformance.

By asset class, sustainable equity funds posted the strongest gains, showing a 10.9% median return and outperforming traditional equity funds’ 8%. Fixed-income outperformance was more muted, with sustainable funds at a 3.8% median return vs. traditional funds’ 2.2% (see Figure 1).

The global aviation industry is aiming for decarbonization. And while it will be a long and expensive journey, the transition could bring billions of dollars in investment opportunity. 

The challenge: How to curb and offset the industry’s carbon dioxide (CO2) emissions, which were estimated at 1 billion metric tons in 20191–roughly equivalent to those of Japan—and expected to double or even triple by 2050 amid increased demand for international air travel, according to the UN agency that regulates international aviation.  

To meet net-zero targets aligned with the Paris Agreement, the airline industry needs to reduce its carbon footprint to around 885 million metric tons by 2030, 13% below a 2019 baseline, and to about 200 million metric tons by 2050—an 80% reduction, according to International Energy Agency estimates.

“Sustainable aviation fuel, which can offer over 80% reduction in CO2 emissions over conventional jet fuel, presents the best solution for decarbonizing in the near to medium term,” says Ravi Shanker, Morgan Stanley's Freight Transportation and Airlines Analyst.  

Supply and scale will be a big part of the success story for sustainable aviation fuel (SAF), with investment implications for global refiners, airlines, chemicals and aerospace companies.  

This SRI Report explains La Banque Postale's approach as a responsible investor and conviction: to draw on all the levers it has to encourage a – fair and organised – transition, to contribute to the general interest and deliver financial, environmental and social performance to our customers. 

Editorial

"2022 was a year of powerful commitments for LBP AM and its subsidiary Tocqueville Finance. As part of its participation in the Net Zero Asset Management Initiative, the group set out a decarbonisation trajectory for its portfolios with an ambitious objective: 80% of total assets would be aligned with a decarbonisation target compatible with the objectives of the Paris Agreement from 2030. This ambition is underpinned in particular by an across-the-board and transparent policy for managing fossil fuel allocations, applied to oil and gas since 2022 through distinct measures. 

Concurrently, it has stepped up its commitment to the conservation of biodiversity, with the deployment of a policy and a dedicated fund... 

Executive summary

• A growing body of research demonstrates the financial materiality of physical, transition and adaptation risks to companies, issuers and their investors.
• Investment to reduce or mitigate greenhouse gas (GHG) emissions will lower the costs of physical risks arising from climate change, but trillions of dollars must also be spent to adapt the global economy to the new climate regime.
• Though many experts believe markets are widely underestimating climate-related risks, studies show that lower-emitting companies and those with transition plans have delivered financial outperformance

The 2022 RBC Global Asset Management Responsible Investment Survey was answered by over 700 participants from around the world, including the U.S., Canada, Europe and Asia. Respondents came from all corners of the investment business.

Nearly 45% of the respondents represent organizations with $1 billion or more in assets with the highest number, or 21%, coming from organizations with $1 to $10 billion in assets. However, smaller firms with assets of less than $100 million were nearly equally represented, with 19% of respondents working at these firms.

Key Highlights from the survey include:

• Climate change has broken away from the pack of ESG themes of greatest concern: 51% of investors cited it as their top #1 or #2 ESG concern - more than double the next highest concern, renewable energy (21%). Rounding out the list of the top five #1 or #2 concerns are water, human rights and anti-corruption.
• Aligning investment portfolios with the goal of achieving net-zero emissions by 2050 is important for a majority (54%) of global investors.

Impax Asset Management: The transition will not be televised – Part 3

In Part 1 of this series, Impax focused on changes in the ‘upstream’ portion of the clean electricity value chain, exploring the potential for technologies like wind and solar to accelerate their existing growth rates. Part 2 unpicked the emerging ‘midstream’ in clean power that’s using storage and hydrogen technologies to make renewables more flexible and reliable.

Here, Part 3 looks at how energy users in the ’downstream’ segment (industrial, commercial and residential customers) are changing the way they buy and use energy. This looks at how falling technology costs and accelerating government policies are creating new opportunities for companies at the cutting edge of shifts in US energy demand.

Executive summary

• A potential re-ordering of the relationship between energy producers and consumers presents numerous opportunities for equipment suppliers, infrastructure providers and new market entrants.
• Technological advances are enabling consumers to take charge of their energy use. Early adopters are demonstrating the bottom-line benefits of wrestling control away from incumbent energy producers.
• With this push from consumers, the US energy system could shift rapidly towards higher rates of efficiency, electrification and independence from fossil fuels. But the potential won’t be realized without substantial hardware and software upgrades to US power networks.
• Consumers can be an important catalyst for innovation – if regulators let them. Regional and state agencies should resist their pressure to restrict the higher levels that distributed generation enables.

TPI’s Carbon Performance assessment is based on the Sectoral Decarbonisation Approach (SDA). [1] The SDA translates greenhouse gas emissions targets made at the international level (e.g., under the Paris Agreement to the UN Framework Convention on Climate Change) into appropriate benchmarks, against which the performance of individual companies can be compared.

The SDA is built on the principle of recognising that different sectors of the economy (e.g., oil and gas production, electricity generation, and automobile manufacturing) face different challenges arising from the low-carbon transition, including where emissions are concentrated in the value chain, and how costly it is to reduce emissions.

Therefore, the SDA takes a sector-by-sector approach, comparing companies within each sector against each other and against sector-specific benchmarks, which establish the performance of an average company that is aligned with international emissions targets. 

TPI currently uses three sectoral benchmarks for the assessment of companies in most sectors, including steel:

1. A 1.5 Degrees scenario, which is consistent with the overall aim of the Paris Agreement to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels”.
2. A Below 2 Degrees scenario, which is also consistent with the overall aim of the Paris Agreement to limit warming, albeit at the middle of the range of ambition.
3. A National Pledges scenario which is insufficient to put the world on a path to limit warming to 2°C, even if it will constitute a departure from a business as-usual trend. 

Key areas of the latest report include: 

• Stewardship updates and committee 
• Engagements, themes and process 
• Public policy engagements 
• Collaborative engagements, including CDP, WDI, Climate Action 100+ and Share Action

Highlights:

• Global green bond issuance hit a record US$314 billion in the first half, with the finance sector dominating the market, while governments and agencies also played a larger role.
• Analysis on the use of proceeds from impact bonds indicates that the most common category of project for such funds was renewable energy , with around 400 issuances representing more than US$157 billion of investments.
• The issuance of sustainability-linked bonds amounted to US$35 billion in 1H 2023, falling 28% year on year. European corporates accounted for 65% of issuances globally. Among all sectors, the industrial sector issued the largest amount of such bonds in the first half.
• The Asia-Pacific region had a record half-year with US$140 billion of impact bonds issued. Japan and Hong Kong drove regional growth, though China remains the top issuing country globally.
• North America saw a 20% year-on-year drop in first-half issuance, with US$42 billion of impact bonds: growth in green bond issuance was offset by falls in social and sustainability-linked bonds.

Comgest: Annual Responsible Investment Report 2022 

This report covers key areas of their responsible investment strategy and progress in 2022, this includes: 

• Responsible Investment approach and 2022 highlights 
• Governance and resources 
• Intergrate 
• Engagements 
• Transparency on key ESG metrics

Sycomore AM: Sustainability and Shareholder Engagement Report 

This report is Sycomore AM's response to meeting the requirements of Article 29 of France's Energy and Climate Law. It follows the recommendations of the Autorite des Marches Financiers on reporting and meets SFDR requirements on the disclosure of principal adverse impact indicators. 

Key areas of this report include:

• Responsible investment approach, covering main areas of progress in 2022
• The sustainability of Sycomore's investments, environmental, social and governance analysis
• Shareholder engagement, implementation of the voting policy 
• Governance to support sustainability 

Breckinridge Capital Advisors: In Evaluating Risks from Weather Extremes, Insurers and Bond Investors Share Strategies and Goals

• Insured catastrophic storm losses in 2022 totalled $132 billion, with average insured losses reaching an all-time high of $86 billion.

• Strategies employed by property and casualty insurance companies and bond investors to assess and protect against financial losses due to extreme weather events share important commonalities.

• Materiality is an essential consideration for both insurers and investors when assessing risks within the context of business sustainability.

Sabanci Holdings' 2022 Sustainability Report is available to read and download here.

See here for further Corporate Governance and Sustainability reports and information.

A Best Practice Guide for Plastics – Executive Compensation: A report card for plastic-related companies can be downloaded here. Click here to download the Engagement Sheet.

Tesco: Annual report 2023 & Sustainability reports

Tesco has published its Annual report for 2023. The report contains information on Climate and TFCD reporting; standalone reports on the following are available

• Climate change
• Healthy, sustainable diets
• Food waste, Packaging
• Diversity and inclusion
• Sustainability data book 2022/23.

See here for Tesco's approach to sustainability reporting.

WHEB Asset Management

WHEB is a pioneer in sustainable and impact investing.  Our mission is ‘to advance sustainability and create prosperity through positive impact investments’.  We do this through a single, long-only, global equity strategy, investing in companies that provide solutions to sustainability challenges.  With a track record of over 15 years, we are one of the early innovators in listed equity impact investing.

Sustainability and impact investing define our whole business as well as the investment philosophy. As a Certified B Corporation, WHEB is part of a global movement of stakeholder businesses, which consider the impact of business decisions on our employees, clients, suppliers, the community, and the environment, as well as our shareholders. Our mission is supported by a strong culture and core values that guide our behaviour. 

For more information about WHEB Asset Management see www.whebgroup.com

Marketing Associate role

WHEB is seeking a marketing professional to join the team, based in London.  At the forefront of the rapidly growing market for Impact Investing, WHEB is constantly innovating in our communications with both existing and potential investors.  We produce a wide range of thought-leadership content, and this role will be closely involved in helping to deepen the connection our investors have with the real-world impact of their investments.

Working with our Marketing Manager, your role will be expected to cover a wide range of activities, including:

 ·        Production of new and regular marketing collateral and content;

·        Administration of client mass-comms and newsletters, often working in Mailchimp;

·        Supporting the organisation and management of client events;

·        Managing website updates and keeping content/documentation up to date;

·        Managing social media accounts;

·        Powerpoint presentation updates and new slide design;

·        Search engine optimisation and digital marketing approach; and

·        Salesforce & Mailchimp management, including managing client lists.

 The Successful Applicant

 The successful applicant will have, as a minimum:

 ·        Data processing and manipulation skills and experience, including list management;

·        Graphic design skills, including high proficiency in Powerpoint.  Will be expected to work with Indesign and Adobe tools;

·        Demonstrable focus on accuracy and attention to detail; and

·        A passion for sustainable investment and positive impact.

Prior experience in financial services is not a requirement.

 The successful applicant will also be able to demonstrate our values, in particular:

 ·        Teamwork - work in a small, close-knit team, where debate and reasoned discussion are expected and rewarded;

·        Leadership - demonstrate a driving and responsible attitude, working with a high degree of autonomy and ownership;

·        Continuous Improvement – having a passion for progress and sharing learning;

·        Passionate about Impact - a demonstrable understanding of – and passion for – sustainability;

and,

·        Integrity – honest in approach and treat all stakeholders fairly.

 Equal opportunities and flexible working

WHEB is an equal opportunities employer and strongly encourages candidates from diverse backgrounds to apply. The role would be suitable for candidates looking for a full or part-time position. Based at our office in central London, the position will offer considerable opportunity for flexible working, including both office and home-based work. For more information on WHEB’s policies and culture please see https://www.whebgroup.com/about-us/working-at-wheb

Process

Applicants should send their CVs, along with a covering letter to This email address is being protected from spambots. You need JavaScript enabled to view it.. The deadline for applications is Friday 13^th October 2023.  Due to the high volume of expected applications, we regret that it may not be possible to respond to unsuccessful applicants.

WHEB Asset Management

WHEB is a pioneer in sustainable and impact investing.  Our mission is ‘to advance sustainability and create prosperity through positive impact investments’.  We do this through a single, long-only, global equity strategy, investing in companies that provide solutions to sustainability challenges.  With a track record of over 15 years, we are one of the early innovators in listed equity impact investing.

 Sustainability and impact investing define our whole business as well as the investment philosophy. As a Certified B Corporation, WHEB is part of a global movement of stakeholder businesses, which consider the impact of business decisions on our employees, clients, suppliers, the community, and the environment, as well as our shareholders. Our mission is supported by a strong culture and core values that guide our behaviour. 

 For more information about WHEB Asset Management see www.whebgroup.com

 UK Client Relationship Manager role

WHEB is seeking a UK client relationship manager to join the team, based in London.  WHEB works with a wide range of investors from across the spectrum including large institutional investors, wealth managers and intermediaries, as well as direct investors.  We treat our clients as our partners, and this role will be at the forefront of creating strong relationships with both potential and existing clients.

 This is a broad and dynamic role, with responsibilities including but not limited to:

 ·                  Primary point of contact for WHEB’s UK client relationships (institutional, intermediary and retail);

·                  Identifying new potential client relationships – structuring and managing sales pipeline;

·                  Review RFPs and questionnaires before submission;

·                  Consultant relationships;

·                  Hosting regular webinars and client events;

·                  Regular travel around the UK to visit clients;

·                  Arranging client/consultant meetings with the Investment Team;

·                  Managing platform relationships and partnerships.

 The Successful Applicant

 The successful applicant will have, as a minimum:

 ·        Significant investment industry experience;

·        Enthusiasm to travel regularly around the UK to meet clients and build networks;

·        A passion for sustainable investment and positive impact;

·        Knowledge of Salesforce CRM would be beneficial;

·        A good proficiency in Powerpoint;

·        Excellent people skills with a demonstrated focus on meeting the needs of clients; and

·        Accuracy and attention to detail.

 The successful applicant will also be able to demonstrate our values, in particular:

 ·        Teamwork - work in a small, close-knit team, where debate and reasoned discussion are expected and rewarded;

·        Leadership - demonstrate a driving and responsible attitude, working with a high degree of autonomy and ownership;

·        Continuous Improvement – having a passion for progress and sharing learning;

·        Passionate about Impact - a demonstrable understanding of – and passion for – sustainability;

and,

·        Integrity – honest in approach and treat all stakeholders fairly.

 Equal opportunities and flexible working

WHEB is an equal opportunities employer and strongly encourages candidates from diverse backgrounds to apply. Based at our office in central London, the position will offer considerable opportunity for flexible working, including both office and home-based work, and we will consider part time working. For more information on WHEB’s policies and culture please see https://www.whebgroup.com/about-us/working-at-wheb/

Process

Applicants should send their CVs, along with a covering letter to This email address is being protected from spambots. You need JavaScript enabled to view it.. The deadline for applications is Friday 13^th October 2023.  We regret that it may not be possible to contact unsuccessful applicants.

JobPost: JP Morgan & Co - Business Manager - ESG Paris / Net Zero Reporting- Sr Associate (New York | CloseDate: Unknown)

JobPost: JP Morgan & Co - ESG Business Manager - Wealth Management Solutions - VP (New York | Close Date: Unknown)

JobPost: Moody's - Associate Lead Analyst – Sustainable Finance (São Paulo | CloseDate: Unknown)

JobPost: S&P Global: ESG Client Engagement Specialist (New York or Toronto | CloseDate: Unknown)

JobPost: Interfaith Center on Corporate Responsibility: Program Associate: Climate Change & Environmental Justice (New York | CloseDate: 15 Oct)

JobPost: Director, Impact Measurement & Management (IMM) Engagement: Global Impact Investing Network (New York/hybrid | Posted 2 Sept)

JobPost: ISS ESG: ESG Product Manager - Regulatory Solutions (Berlin/Stockholm/Munich/London | 6 Sept)

Contract role (6-12 months, full time or part time)

JobPost: Pyrford International (within Columbia Threadneedle): ESG Operations & Reporting Manager (London | CloseDate: Unknown)

JobPost: JPMorgan Chase & Co.: Business Manager - ESG Paris / Net Zero Reporting - VP & Senior Associate (New York / Wilmington | Posted 21 Aug)

Senior Associate role

Vice President role

JobPost: Sustainalytics: Associate, Debt Capital Markets & Sustainable Finance (Toronto | CloseDate: Unknown)

JobPost: S&P Global: ESG Client Engagement Specialist (New York or Toronto | Posted 23 August)