The Kool-Aid Religion

Crossville TN

Description

EU securities market regulator publishes results of ESG ratings consultation The European Securities and Market Authority on June 27 published the results of its consultation on the ESG ratings space, writing that users of ESG data and ratings cited poor coverage of specific sectors, insufficient granularity of data and a lack of transparency on the methodologies of ESG rating providers. The regulator also said that the ESG ratings space is split between a few very large non-EU providers and many significantly smaller EU entities. Although respondents were spread throughout about half the 27 EU member states, many of them were concentrated in just three countries, ESMA said. U.K. regulator launches consultation on actuaries’ consideration of climate change risks The U.K.’s Financial Reporting Council, which oversees auditors, accountants and actuaries, published a consultation on June 15 on proposed changes to actuarial standards that would require actuaries to consider climate change risks in their work. The proposed requirements would ensure actuaries include climate as well as environmental, social and governance risks in calculating future material risk, the regulator said. While actuaries have built experience in more established risks, they need to take non-traditional risks such as climate change into greater consideration, the FRC said. The consultation closes on Sept. 7. ASIA-PACIFIC Japan’s financial regulator says ESG data providers need to ensure data quality Japan’s financial regulator, the Financial Services Agency, or FSA, said ESG data providers need to ensure they are giving their clients quality data by setting clear procedures and analyzing key information in detail. In a report setting out a code of conduct for the ESG industry published in June, it said data providers must make sure they have qualified staff to provide clients with the quality of data they require. It also said data providers must establish policies to enable them to make decisions independently and address potential conflicts of interest. The committee that wrote the report said it expects the FSA to treat its recommendations as a “code of conduct” for ESG data providers in Japan. China sets green finance guidelines for banks and insurers The China Banking and Insurance Regulatory Commission published a set of green finance guidelines on June 2 requiring the banking and insurance sectors to play an active role in the transition to a low-carbon economy. The guidelines stipulate that the boards of financial institutions will be responsible for developing green finance strategies, while senior management will oversee setting objectives, the commission said. Banking and insurance groups will have to adjust and improve their credit and investment policies and support carbon emissions reduction. They will have to gradually reduce the carbon intensity of their asset portfolios, with the aim of making them carbon neutral, the commission wrote. Financial institutions will have to strengthen their ESG management throughout their lending process, according to the commission. They will also be required to strengthen disclosures as well as establish a green finance assessment and evaluation system, the commission said. Singapore publishes green bond framework for sovereign bond issuances The Monetary Authority of Singapore and the Singapore Ministry of Finance published on June 9 a framework establishing guidelines for sovereign green bond issuances. The framework is aligned with international principles such as the International Capital Market Association’s Green Bond Principles 2021 and the ASEAN Capital Markets Forum ASEAN Green Bond Standards 2018. Singapore is aiming to issue up to S$35 billion in green bonds by 2030. In addition, the Singapore government has committed to annual reporting on the environmental, and where possible, the social benefits of the green bond issuances. Australian regulator releases greenwashing guidelines for investment funds The Australian Securities & Investment Commission, Australia’s corporate, markets and financial services regulator, released guidance on June 14 on how managed and superannuation funds can avoid greenwashing. It defines greenwashing as “misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical.” It said it had reviewed a sample of superannuation and investment funds and had identified room for improvement. Fund managers need to use clear labels, provide definitions of sustainability terms used and explain how they factor sustainability considerations into their investment strategy, the commission said. UNITED STATES AND CANADA U.S. Supreme Court curbs Environmental Protection Agency’s ability to regulate carbon emissions The U.S. Supreme Court ruled on June 30 to constrain the U.S. Environmental Protection Agency's authority to regulate greenhouse gas emissions from existing power plants. The court found that the Clean Power Plan, which was presented in 2015 but never came into effect, adopted an approach to reducing power plant emissions that exceeded the agency's authority. Congress would need to give that authority expressly to the agency under a legal standard known as the "major questions doctrine," the majority held in an opinion written by Chief Justice John Roberts. In a joint dissent, the court's liberal justices argued that the decision will strip the EPA of power given by Congress to respond to "the most pressing environmental challenge of our time." Likely suicide.