Maitland/AMO Sustain Monitor – 30 October 2020

30th October 2020

The Financial Stability Board’s Taskforce on Climate-Related Financial Disclosures (TCFD) published its third annual status report this week, which provides valuable insight into the actions companies are taking to assess their exposure to the impacts of climate change.

 

The TCFD published recommendations in 2017 on a set of voluntary, consistent disclosure recommendations for use by companies in providing information on their climate-related financial risks. Since then, more than 1,500 organisations have expressed their support for the recommendations, an increase of over 85% since the 2019 status report.

 

Whilst the uptake is encouraging, the 2020 report shows that the quality of reporting still leaves much to be desired, with disclosure of the potential financial impact of climate change remaining low. Asset managers have come under particular scrutiny, as a lack of adequate data means clients are potentially missing out on vital information.

 

The UK asset management sector is split over how TCFD reporting should best be encouraged, as revealed by a recent Investment Association response to an FCA consultation. The response showed support for the current comply-or-explain approach proposed by the regulator, which will soon be in effect for all London-listed companies. However, others in the sector want to go further and have called for mandatory disclosures to help align regulatory requirements across the investment chain.

 

Whatever form such regulations end up taking, Bloomberg’s recently published New Energy Outlook hammers home the need for a transition in financing from the causes to the solutions of climate change as it estimates the world is currently on track for a temperature rise of 3.3 degrees this century. There is still a ‘2C’ route open, according to the report, but it would come with a $78-130 trillion price tag.

 

Maitland/AMO Sustain Team

 

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A round-up of this week’s sustainability news…

In Business

  • VIRTUAL POWER PLANT: UK homeowners operating solar and battery systems are now able to sign up to Tesla’s Energy Plan. The company has partnered with Octopus Energy to allow households without an electric vehicle to plug into Tesla’s “Virtual Power Plant”.
  • GREEN TOUR: Intrepid has become the first tour operator in the world to introduce emissions reduction targets verified by the Science-Based Targets Initiative in line with the Paris Agreement’s more ambitious 1.5C global warming goal. The announcement will see the company cut down the number of trips it offers that require long-haul air travel and offer more localised travel holiday options.
  • ON TRACK: Unilever has confirmed it is on track to meet its goal to halve the amount of virgin plastic it uses across its product portfolio by 2025.
  • SUSTAINABLE SHOPPING: Amazon has announced plans to rollout ‘Climate Pledge Friendly’ badges for items sold online, allowing shoppers to make more eco-friendly purchase decisions.
  • MICROSOFT PARTNERSHIP: Microsoft has announced a new partnership with Alaska Airlines, which will see the tech giant cut the environmental impact of its business travel. The new arrangement will see Microsoft purchase credits for jet fuel made from waste oil by SkyNRG, who will then supply the low emission fuel to the airline.
  • NEW TARGET: Engineering consultancy SNG has pledged to cut the carbon footprint of all the designs it provides to clients by 50% by the end of the decade.
  • MESSAGE IN A BOTTLE: Choose, an eco-friendly packaging firm, is tackling the plastic crisis and cutting down CO2 with the development of the world’s first biodegradable bottle made from paper.
  • TARGET HIT: Siemens Gamesa has hit its target to power its operations worldwide with 100% clean electricity five years early.
  • GILLETTE TO CUT PLASTIC: Gillette has upped its sustainability efforts and announced its 2030 goal to increase its reduction in greenhouse gas emissions from 26% to 50%.
  • PRIMARK PLEDGE: Primark has joined the UN’s Fashion Charter on Climate Action, pledging to cut its greenhouse gas emissions by 30% across its value chain over the next ten years, with a view to achieving net zero emissions by 2050.

In Politics

  • SEOUL SETS GOAL: South Korea President Moon Jae-In has announced an ambition for South Korea to become a carbon neutral country by 2050, supported by plans to invest $7.1bn in a “Green New Deal”.
  • PM PRESSURE: A series of letters from various groups representing millions of people have been sent to UK Prime Minister Boris Johnson, calling on the government to ramp up the Paris Agreement target and produce an ambitious decarbonisation plan ahead of COP26.
  • FOLLOW THROUGH REQUIRED: A coalition of green groups, including Plantlife and Friends of the Earth, have demanded that the UK government follow through on its previous pledge to ban burning on England’s peatlands.

In Investment

  • INVESTOR ACTION: Climate Action 100+ investors (including BNP Paribas Asset Management) have written an open letter to 47 major carbon intensive US companies calling on them to disclose how their corporate advocacy aligns with the climate goals of the Paris Agreement.
  • BWAM: Black Women in Asset Management has written an open letter to the asset management community urging the sector to promote more black women and build anti-racist investment portfolios capable of tackling systemic racism in the industry.
  • BARCLAYS CLOSES BOND: Barclays has closed its second green bond at £400m, noting that the 2020 Green Bond attracted strong interest and was five times oversubscribed.
  • LUXSE: The Luxembourg Stock Exchange marked the listing of the first social bond (€17bn) issued under the EU Support to mitigate Unemployment Risk in an Emergency programme.
  • INVESTMENT GROWTH: New figures from Big Society Capital has shown that social impact investing in the UK has increased at a huge rate from £830m in 2011 to £5.1bn last year.

In Research

  • MORE OFFSHORE WIND: RenewableUK’s latest version of its Offshore Wind Project Intelligence report has revealed that the combined pipeline of offshore wind projects worldwide has surged 47% since the start of the year – signalling continued rapid growth for the green energy sector as it battles global supply chain disruptions and economic turbulence wrought by the pandemic.
  • AIR POLLUTION PROBLEMS: A new study published in Cardiovascular Research has linked 15% of global Covid-19 deaths to long-term exposure to air pollution, with the highest proportion in east Asia.
  • MORE AIR POLLUTION PROBLEMS: Global Action Plan’s new study has revealed the problems with indoor air pollution risks, detailing that up to 440,000 manufacturing and logistics workers across the UK have health conditions that are worsened by air pollution, and are still being exposed to pollution in the workplace.
  • INCREASED ASSETS: New research from the UN’s Principles for Responsible Investment has predicted that the forest finance market is set to grow into a trillion-dollar market as corporate demand for carbon removal and offsetting will establish forests as a new asset class that has the potential to generate over $800bn each year for investors by 2050.