With the World Economic Forum gathering for its first in-person annual meeting in two years at Davos over the coming days, you can be sure that the assembled global leaders will have environmental, social and governance (ESG) concerns high on the radar.
And where better for them to gain insights and inspiration than our weekly collection of news, opinion, videos and podcasts. If you can’t attend in person, then registering for one of our Designation or Certificate programs is the next best thing.
We can’t spot everything, so if you read and or watch a news item that would benefit others in the Competent Boards family, please send it along to mathew.loup@staging.competentboards.com.
1. Tesla misses the cut. The electric-vehicle manufacturer Tesla was removed from the S&P 500 ESG Index this week. Although Tesla is in the EV business, S&P said the company’s low ESG score was caused by alleged racism and poor working conditions in its factories, as well as “lack of a low-carbon strategy” and questionable “codes of business conduct”. It’s fair to say Tesla’s CEO did not take the news too well, tweeting: “ESG is a scam. It has been weaponized by phony social justice warriors.” That followed earlier statements, such as: “I am increasingly convinced that corporate ESG is the Devil Incarnate.” Despite Tesla’s exclusion, oil and gas giant Exxon Mobil remains in the S&P 500 ESG Index.
2. The name’s bond, green bond. The European Union is planning tough new rules to clean up the European green bonds market. The Economic and Monetary Affairs Committee aims to cut back on greenwashing and improve transparency and supervision. The proposals also aim to weed out the “brown” companies (high polluters). However, despite opposition, plans to shelve nuclear and gas power from the regulation have been put on hold.
3. China’s green leap forward. China will take a major step towards better ESG governance for its companies on June 1 with the release of its first set of ESG disclosure standards. Developed by the China Enterprise Reform and Development Society (CERDS) alongside a host of other companies, the standards are based around relevant Chinese laws and regulations and set in Chinese operating conditions. The Guidance for Enterprise ESG Disclosure addresses different company sizes as well as setting out requirements and applications.
4. Biodiversity niche. Several of the UK’s biggest asset management firms are launching new funds in a different area of green finance. Biodiversity funds were only a US$4 billion market in 2019, but experts believe that could be up to US$93 billion by 2030. Plant-based protein companies, ecology funds and carbon offset projects are just some of the niche areas being targeted. The stakes are high: according to the World Economic Forum, half of global GDP (US$44 trillion) is reliant on the natural world, but with one million animal and plant species at risk of extinction, aiding biodiversity is gaining greater prominence.
5. Hedging their bets. Investors are starting to change their strategies due to the geopolitical upheaval in 2022. A new survey by CoreData Research showed that the majority of institutional investors now fear a prolonged period of low employment and high inflation is coming. A fifth even think it could lead to a global recession worse than the one in 2008. Investors are also rethinking their approach to ESG. The survey found that 50% are changing their ESG strategies to exclude Russian investments. Defence-related companies have become more palatable, with 17% saying they will now include those in ESG portfolios.
Mathew Loup is Competent Boards’ Director, Marketing & Communications. Connect with him on LinkedIn.
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