June 2023 Newsletter

Please see our selection of top ESG stories from June, and get in touch if you need further information or ESG guidance.

AIMA PRI briefing

Danesmead ESG are hosting an AIMA webinar (11th July at 3pm BST) providing practical insights and recommendations on PRI reporting. The session will provide an overview of the PRI and signatory benefits and requirements, then we’ll delve more deeply into the challenges presented by reporting including data gathering, analysis and review, the scoring methodology and latest changes, and the (im)practicalities of the portal and submission itself. We’ll also provide tips on improving scores and prioritising where to focus to maximise results.

AIMA members can register here, non-members please get in touch and we can register you directly.

ESG Ratings Regulation

The EU continues its drive to enhance the integrity and transparency of sustainable finance with the publication of its proposal for ESG Ratings Regulation (13th June). The proposal places enhanced requirements on ESG ratings providers with the aim of improving the integrity and transparency of the ESG ratings market. The new rules focus on preventing conflicts of interest, including preventing providers from offering consulting and other services, forcing them to publish their methodologies and underlying assumptions, and providing a complaint-handling mechanism to allow stakeholders to challenge specific ratings or the application of methodologies. Providers will also need to be authorised and supervised by the European Securities and Markets Authority (ESMA) and could be fined up to 10% of annual net turnover for breaching new rules. LINK

EU Sustainable Finance Package 2023

The European Commission has published its latest sustainable finance package of measures building on an earlier EU sustainable finance framework. The package includes a number of elements aimed at clarifying and improving the existing framework, whilst also enhancing usability, and transparency. The latest changes cover the EU’s environmental taxonomy, including activities and associated criteria for four environmental objectives under the Taxonomy Regulation, recommendations on transition finance tools and definitions, and a communication on the practical application of the sustainable finance framework and updates to SFDR. LINK

ISSB releases inaugural global sustainability disclosure standards

The International Sustainability Standards Board (ISSB) has published its landmark global sustainability disclosure standards: S1 General Requirements and S2 Climate-related Disclosures. As part of a global goal to improve trust and confidence in sustainable finance, the standards aim to provide a common language and comparable framework for disclosing climate-related issues. To ensure consistency and limit the additional reporting burden, under ISSB, companies will report sustainability-related information at the same time as their financial statements. Both S1 and S2 will also fully integrate the TCFD framework and recommendations. The standards will come into effect in January 2024. LINK

UN PRI publishes guidelines in preparation for 2023 reporting

In the run-up to the opening of the UN-PRI rget in toucheporting window (June to September), the PRI has published a series of guidelines to assist signatories and promote more detailed reporting on issues from human rights to climate change. In line with the PRI’s current focus on human rights in investment activity, they are promoting guidance on aligning investor’s human rights activities with the United Nations Guiding Principles on Business and Human Rights (UNGPs) and PRI reporting requirements. Additional guidance is available via the PRI website on identifying and managing human rights risks. Maintaining its focus on climate issues, the PRI has also published specific climate reporting guidance (including TCFD alignment) and additional guidelines to help signatories align their PRI reporting with any frameworks like the UN-convened Net Zero Asset Owner Alliance (NZAOA), and the Net Zero Asset Managers Initiative (NZAMI). LINK

Larry Fink stops using the term “ESG”

Larry Fink, CEO of the world’s largest asset manager BlackRock claims the term “ESG” has become “entirely weaponised ... by the far left and weaponised by the far right” and says he no longer uses it, preferring instead to talk about specific issues like decarbonisation and corporate governance. He added that BlackRock’s approach to ESG will not change. Commenting on the highly political US backlash to ESG which has cost the asset manager some $4bn in managed assets, Fink noted that he was “ashamed of being part of this conversation”. LINK

If you would like to discuss any of the topics mentioned here, please get in touch.