EU Sustainable Finance Disclosure Regulation: An Update
Update - 3 March, 2021: To help investors comply with the new requirements of the SFDR, Sustainalytics launched the PAI Data Solution that maps our research to the 60 indicators defined by the regulator. This new dataset will enable investors to consider the PAIs in their investment decisions as well as supporting disclosure requirements. Visit our website to learn how we can help with you SFDR compliance journey.
Governance in Brief – Feb 11, 2021
Investors push for leadership and strategy shift at Exxon More than 135 investors, with USD 2.2 trillion in assets, have teamed up to push Exxon to make leadership changes and to increase its focus on clean energy transition. The investors, acting under the “Coalition United for a Responsible Exxon” banner, expressed concern over the company’s current strategy of basing its upstream investments on an assumption of future price and demand increases for oil and gas.
10 for 2021: Investing in the Circular Economy
This report aims to support investors interested in gauging environmental, social and governance (ESG) risks and opportunities in the global food value chain. We survey key subindustries – from agrochemicals, agriculture and aquaculture to packaged food, food retail and restaurants – in search of solutions that may support the principles of the circular economy (CE). These principles include minimizing waste and pollution, extending the use-phase of products and ecosystem regeneration. Some of the key insights found in the report are:
Governance in Brief – Feb 04, 2021
Apollo Global Management to overhaul corporate governance On January 25, US private equity firm Apollo Global Management announced far-reaching changes to its corporate governance. The firm will separate the Chairman and CEO roles held by co-founder Leon Black, who will stay on as Chairman while co-founder Marc Rowan takes over as CEO.
Lessons Learned from 926 Engagement Meetings in Emerging Markets
When Sustainalytics (GES) initiated the Emerging Markets (EM) Engagement program as a pilot project in 2009, the scale, scope and impact were undetermined factors. Based on the successful execution of the program methodology in the African and Middle Eastern regions during the pilot stage, the full program launched in 2010 to cover all major emerging markets. After the project close in July 2020, the program accounts for 926 meetings with companies in emerging markets.
A Political Pivot for Climate Change and the American Coal Industry
As the Biden administration moves into the White House this week, the world is waiting to see if a promising focus on climate change along with a Democratic Congress will present plausible opportunities to cut carbon emissions. While the outgoing administration backed initiatives supporting coal energy, it doesn’t appear to have slowed industry decline.
Governance in Brief – Jan 14, 2021
Starting this year, Apple will introduce an ESG modifier to its short-term incentive (STI) plan that may increase or decrease executives’ annual bonuses by up to 10%. The performance measures and the threshold, target, and maximum opportunity levels under the STI will remain unchanged.
Governance in Brief – Jan 07, 2021
Following confusion, NYSE delists three Chinese companies The New York Stock Exchange (“NYSE”) has announced the January 11 delisting of the American depositary receipts (“ADRs”) of three Chinese telecommunications companies. The concerned companies are China Mobile, China Telecom, and China Unicom Hong Kong, all controlled by the Chinese state and also listed on the Hong Kong Stock Exchange.
Is Natural Gas a Cleaner Energy Solution?
While Oil and Gas (O&G) operations are responsible for roughly 15 percent of global energy-related GHG emissions, some energy companies have pledged the role of natural gas (NG) as a transitional fuel. At the same time, NG energy use is increasing globally, and shale-gas extraction is booming at an unprecedented rate. One factor that is often overlooked is the methane emissions across the NG value chain.
Combining ESG Risk and Economic Moat
In this report, we look at the potential synergies between Sustainalytics’ ESG Risk Ratings and Morningstar’s Economic Moat Rating. As a part of our research, we constructed a back-testable investment strategy and portfolio by segmenting stocks with low ESG risk and a wide moat. While both metrics worked independently, they performed exceptionally well in combination.
Integrating Climate Risk into Corporate Governance
Since the introduction of the Taskforce on Climate-related Financial Disclosures (TCFD), there has been increased scrutiny of corporate climate governance and broader associated risks. Investors have increased their focus on climate risk, as governance mechanisms are likely to be impacted by transition and physical risk challenges[i].
How Climate Gentrification is Increasing Real Estate Costs and Socio-economic Disparities
Climate gentrification is an emerging concept describing how land with greater resiliency against intensifying physical impacts of climate change becomes more desirable and valuable. It catalyzes fast and visible socio-economic transformation in communities.
ESG Risk Ratings Methodology
The ESG Risk Ratings measure the degree to which a company’s economic value is at risk driven by ESG factors or, more technically speaking, the magnitude of a company’s unmanaged ESG risks. A company’s ESG Risk Rating is comprised of a quantitative score and a risk category.
Prioritizing Patient Care and Staff Safety in a Pandemic
Medical facilities, including hospitals and long-term care facilities, are under tremendous pressure to provide quality healthcare for patients while ensuring patient and staff safety amidst the COVID-19 pandemic. By using Sustainalytics’ ESG Risk Rating to understand better the risks faced by companies, and the current state of preparedness within the medical facility subindustry, investors can identify the most relevant points to address when engaging with companies and analyzing potential ESG impacts in their portfolios.
Sustainable Finance Disclosure Regulation: An Industry Game-changer
In recent months, the Sustainable Finance Disclosure Regulation (SFDR) has been sparking almost as much debate as the EU Taxonomy – both cornerstone regulations of the EU Sustainable Finance Action Plan. With the SFDR set to redefine ESG disclosures and make a significant impact on financial market participants in Europe, the short timeline and ambiguity on several vital details are creating confusion and concern in the industry. The risk of organizations not being able to comply in time is still present, despite the announced delay in timelines for the technical standards, as is the risk of high financial and operational costs for the industry.