Maitland/AMO Sustain Monitor – 7 January 2022
Following swiftly on the heels of COP26 the beginning of 2022 is the year to put ambition into action. January has kicked off in the UK with the requirement for listed issuers to disclose climate-related risks and opportunities, in alignment with the recommendations of the Taskforce of Climate-related Financial Disclosure (TCFD), within their annual reports – or explain why it is missing.
In only a few months’ time, from 6 April, TCFD reporting will also be mandated for more than 1,300 of the largest UK-registered companies and financial institutions pending parliamentary approval. These include many of the UK’s largest traded companies, banks and insurers, as well as private companies with more than 500 employees and £500m in turnover.
Whilst ESG for the majority of its existence has remained a mere voluntary pursuit, the introduction of regulation in the UK, as well as in the EU through SFDR and EU Taxonomy, shows the continued direction of travel regarding standardisation and formalisation. With the International Sustainability Standards Board also due to make progress this year, expect companies and investors to begin coalescing around a more defined and restricted set of ESG standards and regulations.
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Top stories this week
INCREASE IN EVS: New AutoMotive, a green motoring consultancy, has predicted a twice fold increase in the number of EVs sold in 2022, potentially taking a 15% share of the total new car market by 2023. The firm estimates that around 300,000 new EVs will be sold in the UK this year.
SKY HIGH GOALS: Denmark’s Prime Minister Mette Frederiksen announced in her New Year’s address a pledge to make all internal flights ‘completely green’ by 2030. She added that the government would work to ensure that all Danes would have the opportunity to fly on green domestic routes by 2025.
PURE HIGH-FLYING GREENWASHING: Climate finance campaign group Reclaim Finance has called a proposed green bond from the Hong Kong Airport Authority “pure high-flying greenwashing”. Reclaim Finance has urged investors to avoid the transaction due to its climate risk as well as the biodiversity risk which will particularly affect the Chinese white dolphin population in the area.
Push to renewables..
RENEWABLE INVESTMENT PUSH: SEB’s latest sustainable finance report has predicted a 25% increase in global investment in renewables this year. The rise comes as governments and financial institutions ramp up investment in clean energy in response to the global energy supply crisis.
RENEWABLE COAL’S THE GOAL: The port of Newcastle, the world’s largest coal port, has announced it will now be powered entirely by renewable energy as part of a plan to decarbonise the business by 2040.
ESG regulations and standards..
RISKY BUSINESS: The EU Taxonomy on greenwashing offers cause for hope but also concern, as critics suggest that Brussel’s latest anti-greenwashing tool could add more greenwashing than it removes if investors treat it as a kitemark rather than something requiring extra scrutiny.
ESG IS KEY: Chris Cummings, CEO of the Investment Association, has said the development of consistent standards on ESG investing will be key in helping the UK investment industry maintain its global pre-eminence, noting that 2021 was a year of monumental change for the investment industry.
Must do better..
NO NET-ZERO PLAN: Research from YouGov on behalf of Veolia has found that less than a third of UK businesses have a strategy for reaching net zero, with 42% of companies feeling “overwhelmed” by the steps needed to achieve the goal.
LACKING POLICY LOSSES: The lack of policy action to tackle climate changes has been lamented by impact-focused fund managers, as a fall in the value of clean energy holdings has contributed to strategy losses in 2021.
TOO HIGH PAY: According to a report published by the High Pay Centre think-tank, the gap between chief executives’ pay and UK average earnings narrowed in 2020 amidst the pandemic’s cancellation of bonuses, whilst median pay for CEOs of FTSE 100 companies was 86 times that of the median annual wage for a full-time worker.