July 2023 Newsletter

Hello, we hope you’re enjoying the summer (such that it is here in London!). Here’s our pick of the top ESG stories for July.

UKSIF Alternative Investment Week 2023

This took place on 19TH June at the Barbican Centre, London. Discussions covered a range of topics, from the complexity of ESG in the alternatives space to “woke capitalism” and current trends in ESG around the world, biodiversity, the role of quant, and the future of impact measurements. ESG regulation, data, real estate and social issues also featured. For a longer summary, please get in touch.

IFRS to take over responsibility for TCFD

Starting next year, the IFRS Foundation’s International Sustainability Standards Board (ISSB) will take over responsibility for monitoring companies’ progress on climate-related disclosures from the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD). With the release of the ISSB Standards in June 2023, the FSB notes "the culmination of the work of the TCFD", passing on responsibility for its oversight to the global standards provider (IFRS) in the latest step towards consolidating and standardising ESG and sustainability reporting. LINK

Investor groups and asset managers call on EU to uphold mandatory sustainability reporting rules  

Investor groups (including the PRI, Eurosif, EFAMA, IIGCC, and UNEP FI) as well as more than 90 asset managers (including Fidelity International, Robeco and Storebrand) have issued a joint statement to request the European Commission do not ease proposals for mandatory sustainability reporting from corporates. The group fears the most recent proposal for the European Sustainability Reporting Standards (ESRS) would reduce the requirements on corporates under the forthcoming Corporate Sustainable Reporting Directive (CSRD) and thus prevent investors from accessing the “consistent, comparable and reliable” data they need to make decisions. This in turn, they claim, would limit their ability to fulfil their own requirements under Sustainable Finance Disclosure Regulation (SFDR). Amongst their key concerns is the proposed change around materiality assessments which would allow companies to determine and undertake reporting only on the sustainability factors they consider material. The group is also urging the Commission to maintain disclosure requirements on Scopes 1, 2 and 3 emissions, mandatory transition plans, reporting that aligns with SFDR and other key elements of the original proposal. LINK

UK consultation on ISSB

Following the recent release of the ISSB sustainability standards, the UK’s Financial Reporting Council (FRC) has published a call for evidence to inform the standards’ endorsement in the UK. The call seeks input from corporates, investors, and shareholders on whether application of these standards will result in disclosures that are “understandable, relevant, reliable and comparable for investors” in the UK context. It also calls for evidence on the technical feasibility of disclosures and asks whether they can be prepared alongside financial reporting, and whether the expected benefits are likely to be proportionate to the costs. The call for evidence closes on 11 October 2023. Responses will inform the UK Sustainability Disclosure Technical Advisory Committee’s (TAC) recommendations to government on the standards’ suitability and any adjustments required to apply them effectively in the UK context. LINK

FCA delays SDR Policy Statement to Q4

The FCA has further delayed the publication of its long-awaited Policy Statement which will provide the final rules on the proposed Sustainability Disclosure Requirements (SDR) and investment labels. Publication was initially delayed to Q3 in March 2023 and is now expected in Q4 2023. The FCA explained the delay in an update to its Regulatory Initiatives Grid. It noted that the forthcoming policy changes – aimed at preventing greenwashing and providing clarity around sustainable investments - will “help the UK’s asset management sector thrive by setting standards that improve the sustainability information consumers have access to”. LINK

UK government approves new oil and gas licenses

As high temperatures continue to contribute to wildfires and health issues across Europe, the UK government, backed by Conservative Prime Minister Rishi Sunak, has committed to more than 100 new oil and gas licenses for projects in the North Sea, claiming the move is “entirely consistent” with the country’s net zero strategy. The government has also confirmed funding for a large new carbon capture and storage scheme in Scotland, which it claims will provide jobs and facilitate the energy transition, while critics note it employs an expensive, untested technology and call it a “distraction” from the licences whilst also being inconsistent with national policy and failing to improve energy security or lower bills as promised. LINK