Activist group Follow This has announced it will not be submitting any climate-focused resolutions at oil and gas firms this proxy season. “This strategic decision has been made because large investors, in the current pro-fossil political climate, are hesitant to support climate action, particularly in the US,” the group said. If it filed climate proposals this proxy season, and they secured less support than previous years, it could be “counterproductive”, Follow This argued. The organisation aims to mobilise more investors to increase pressure of the fossil fuel industry in other ways over the course of 2025. Follow This pointed to its previous successful resolutions, which contributed to the likes of Shell, BP and Equinor setting decarbonisation targets. Last year, Follow This and fellow shareholder Arjuna Capital faced legal action by oil and gas major ExxonMobil in response to a proposal calling for medium-term decarbonisation targets. “Increased pressure from large investors is the only way to make oil and gas companies move again towards a sustainable future,” Follow This said. “Fortunately, it is in investors’ own financial interest that the climate crisis does not escalate, as their assets will devalue in a world devastated by floods, extreme weather, and other climate disasters.”
Sustainable Investor
News in Brief
Europe’s largest power utilities plan to burn gas beyond 2035, with several developing new gas-fired power stations, according to research from civil society organisations who are urging investors to push for credible transition plans. Analysis from Reclaim Finance and Beyond Fossil Fuels found that none of the ten power companies studied are on track for net zero, nor have they published clear transition plans. Seven European utilities plan to build or are already building at least 37 new gas-fired plants, with financial support from major European banks and investors including Barclays, BBVA, Société Générale, ING, NatWest and PKO Bank Polski. Recent analysis from independent think tank Ember points out that by 2030, a significant portion of European fossil gas capacity could be under-utilised, while diverting financial resources away from long-term investments in renewable energy and efficiency measures. In all International Energy Agency scenarios, the peak demand for fossil gas, including for electricity production, is expected before 2030, especially in advanced economies where demand is already decreasing. This makes building new gas plants, whose lifespan ranges from 25 to 40 years, “incoherent”, said Reclaim Finance and Beyond Fossil Fuels. “Power companies in Europe are betting on gas as a generating fuel for the future, with no clear plans to transition away from fossil fuels,” said Pierre-Alain Sebrecht, Analyst at Reclaim Finance. “This ongoing dependence on gas is incompatible with tackling the climate crisis, aggravating the extreme weather conditions already being faced. The banks and investors supporting these power companies are complicit in the destruction of our climate and must end their support for fossil gas now.”
US state and local governments need to improve climate reporting to maintain access to the capital required to fund resilient infrastructure and vital services, according to new guidance. Investor network Ceres has released a framework aimed at helping governing entities to better manage and disclose climate risks to investors in the US$4 trillion municipal bond market. The report follows a spate of climate-related municipal bond defaults and credit downgrades, including those caused by the Los Angeles wildfires where S&P downgraded bonds due to concerns about future climate risks. Rising sea levels, hurricanes, floods, wildfires, and extreme heat increasingly threaten municipal revenues while creating significant adaptation costs, noted Ceres. The report cites forecasts that climate adaptation projects could double municipal debt issuance over the next decade, making transparent disclosure “even more critical” for municipalities seeking to fund resilience investments. The Ceres framework proposes a layered approach to municipal climate risk disclosure and resilience planning, recommending specific practices for financial statements, bond issuance documents, climate action reporting and climate resilience planning. It also references best practices from municipal authorities, including Miami-Dade County Water’s 2024 statement for water revenue bonds, which provided comprehensive disclosure of climate risks and adaptation efforts, with reference to its Sea Level Rise Strategy and other initiatives. “As extreme weather events threaten infrastructure, property values, and government revenues, climate disclosure is an opportunity for municipal, county, and state governments to be better prepared to meet these risks,” said Steven Rothstein, Managing Director of the Ceres Accelerator for Sustainable Capital Markets.
Following a compliance review of ESG disclosures by financial benchmarks, the European Securities and Markets Authority (ESMA) has called for changes to simplify reporting rules. The review identified inconsistent and divergent reporting practices across general ESG disclosures and specific disclosure requirements in the methodologies of climate benchmarks used to inform passive investment strategies. This was partly attributed to a lack of specific guidance on the definition and calculation of certain ESG factors, which ESMA said is hampering investors’ ability to compare benchmarks. In response, the report has provided added guidance on definitions and methodologies in a bid to clarify regulators’ expectations for benchmark administrators. In addition, ESMA has proposed reforms to streamline ESG disclosure requirements in an effort to reduce the compliance burden while ensuring high quality reporting. “Building on the findings, ESMA will continue liaising and cooperating with the national competent authorities and the European Commission on follow-up actions,” ESMA said. “These will include the need to use supervisory convergence tools to build a stronger supervisory culture across the EU and promote effective, sound and consistent supervision regarding ESG disclosure.”
The London Pensions Fund Authority (LPFA), an £8 billion (US$10.23 billion) local government pension scheme, will invest £250 million in environmental solutions assets that will support members’ net zero ambitions. Local Pensions Partnership Investments (LPPI), which makes day-to-day investment decisions on the LPFA’s behalf, will invest the assets into LPPI’s newly launched Environmental Opportunities Fund (EOF). The LPFA’s climate change policy identifies climate risk as systemic, meaning it affects all investments. In 2021, the LPFA committed to being a net zero fund by 2050, using the Institutional Investors Group on Climate Change’s (IIGCC) Net Zero Investment Framework. Signatories are required to publish a target for investment in climate solutions, which refers to technologies and businesses that mitigate and adapt to climate change, such as renewable energy, energy efficiency or nature-based solutions, like reforestation. The LPFA said it has made “steady progress” on the six net zero goals originally published in 2022. Following the publication of the IIGCC’s Climate Solutions Guidance, the fund, working closely with LPPI as fiduciary and pool provider, has taken steps towards setting a climate solutions target which it will announce in due course. “The impact of climate change poses a financial risk to pension funds like ours, so we’re taking climate action to protect our members’ pensions,” said Jo Donnelly, CEO of the LPFA. “Our net zero commitment means engaging with our existing investment managers to reduce our portfolio carbon emissions while also investing in companies that help our society transition to a low carbon future.”
European asset managers remain the dominant players in a global responsible investment market increasingly defined by “authenticity, consistency and strategic clarity”, according to a worldwide benchmark study. The 2025 Responsible Investment Brand Index (RIBI), now in its seventh year, listed nine European firms in its top ten ranking, with only US-based Nuveen breaking the region’s stranglehold. Brussels-headquartered Degroof Petercam Asset Management achieved the highest overall score, followed by Candriam, owned by New York Life Investments, and Switzerland’s Pictet Asset Management. In this year’s iteration, RIBI evaluated 623 asset managers in total, assessing ‘commitment’ – based on five weighted-average criteria including level and quality of engagement and stewardship – and ‘brand’, derived from eight ‘soft’ factors, such as expression of purpose statements. The index reported that managers from Australia, Canada, Japan and the UK collectively performed, while the US lagged, with China also described as “in a weak position”, despite “considerable progress” since the previous analysis. Report authors Jean-François Hirschel and Markus Kramer said increasing scrutiny of a maturing responsible investment sector had contributed to a divergence between firms which have embedded principles into their “core identity” and those treating it as an overlay. “The former group demonstrates stronger cultural coherence, with purpose statements that connect to societal impact and value systems that reinforce these commitments,” they said. Hirschel and Kramer also warned that the increasingly common approach by global asset managers of marketing themselves differently in Europe and the US was causing confusion for employees and clients. “A consistent core identity around responsible investment can be communicated with appropriate nuance for different markets without compromising fundamental principles,” they suggested.
The IFRS Foundation and the Taskforce on Nature-related Financial Disclosures (TNFD) have committed to build upon the TNFD’s framework in the standards development work of the International Sustainability Standards Board (ISSB). The memorandum of understanding commits both parties to incorporate the TNFD’s disclosure recommendations in the development of the ISSB’s sustainability reporting standards. “Transparency and accountability are a key means of enabling more stable, resilient and efficient capital markets, and this collaboration will advance the ISSB’s ongoing work to reduce the complexity of the sustainability disclosure landscape, while building on established expertise and practice,” said Erkki Liikanen, Chair of the IFRS Foundation Trustees. The agreement builds on the ISSB’s role as a TNFD Knowledge Partner and acknowledges that the IFRS S1 general sustainability disclosure standard informed the TNFD’s finalised recommendations, which were published in September 2023. More recently, the TNFD has been supporting the ISSB’s Biodiversity, Ecosystems and Ecosystem Services (BEES) research project, launched last year. “Nature is essential to our economies and our future,” said Razan Al-Mubarak, TNFD Co-chair, President of the International Union for Conservation of Nature and former COP28 Champion. “Our collaboration with the ISSB is a major step toward making nature visible in businesses reporting and how capital is allocated. Climate-related standards have already moved markets, and we are pleased to continue to support ISSB efforts that bring the rest of nature into global reporting practice.”
Zurich-headquartered SUSI Partners has been appointed portfolio manager of the European Energy Efficiency Fund (EEEF), a public-private investment vehicle which finances public energy efficiency projects across the EU. Backed by the European Commission and private institutional investors, EEEF aims to contribute to climate targets while promoting the resilience of public infrastructure by financing public-sector projects in energy efficiency, renewable energy, and clean urban transport. The fund seeks to invest in economically viable projects with a defensive risk profile to secure attractive risk-adjusted returns, offering institutional investors the opportunity to commit additional capital into the fund. SUSI Partners has invested in mid-market energy transition infrastructure investments for 15 years. The firm launched its first credit vehicle in 2014 and has since deployed over €700 million (US$764 million) into energy efficiency and other energy transition-related projects through its credit strategy. EEEF’s current portfolio consists of 16 active investments across ten countries, accounting for over €170 million of invested capital. Classified under Article 9 of the EU Sustainable Finance Disclosure Regulation, EEEF has invested in projects spanning LED street lighting, efficient HVAC systems, electrified transportation, building retrofits, and distributed solar PV generation. “The EEF plays a vital role in helping European cities and communities transition to a low-carbon future,” said Giorgio Chiarion Casoni, Director for Investment in DG Internal Market, Industry, Entrepreneurship and SMEs at the European Commission. “We welcome the appointment of SUSI Partners as the portfolio manager of the fund and are confident that their specialised expertise and strong track record are perfectly suited to achieving the fund’s objectives for the benefit of all stakeholders.”
Coordinated action, including stronger supply chain due diligence measures, is required to eliminate modern slavery by 2030, according to a report by the Global Commission on Modern Slavery and Human Trafficking. The 2030 target is part of the UN Sustainable Development Goals (SDGs), but there are currently an estimated 50 million people trapped in slavery, generating profits of at least US$2336 billion annually. The report, due to be presented at a convening event at UN Headquarters in New York, calls on governments to mandate human rights due diligence in supply chains in line with UN Guiding Principles on Business and Human Rights, requiring firms to identify, prevent, and address risks of forced labour. Existing legislation, such as the UK’s Modern Slavery Act, has been criticised for weak enforcement mechanisms, which have led institutional investors to approach firms directly to seek their compliance with its reporting requirements. Other recommendations include strengthening domestic legislation and enforcement, integration of anti-slavery measures into responses to humanitarian crises, tougher monitoring and accountability among UN member states, and the establishment of a unified legal definition of modern slavery. The report also includes a new prevention framework for modern slavery and human trafficking, inspired by the Prevention of Genocide Framework created in 2014 by Adama Dieng, a former UN Under-secretary General. “Modern slavery and human trafficking remain the greatest human rights issue of our time yet, in recent years, it has dropped down the international agenda. While the world faces many challenges, this is a moral stain on humanity that we can – and must – address with far greater urgency and global collective action,” said Baroness Theresa May of Maidenhead, Chair of the Global Commission, which aims to exert high-level political leverage to restore momentum towards achieving UN SDG 8.7.
The world’s largest oil and gas majors are moving further away from alignment with the goals of the Paris Agreement, according to Carbon Tracker research. The think tank has assessed the sector’s climate progress in the wake of the re-election of US President Donald Trump and heightened geopolitical tensions, noting a “widening gulf” as firms “pivot away from green energy” and double down on fossil fuels. All assessed companies are planning to increase oil and gas production in the coming years, with their business strategies now incompatible with a 1.7°C temperature pathway. Some are even misaligned with a 2.4°C rise in temperatures above pre-industrial levels, the report said. “Most producers are ignoring peak demand and remain far from a Paris-aligned path,” said Carbon Tracker Analyst Rich Collett-White. “Investors – whether they have a climate mandate or not – should think twice about backing risky new production for short-term gain.” European oil and gas majors like BP, Eni and Shell have seen their scores decline since Carbon Tracker’s assessment last year, due to their longer-term production targets for fossil fuels. BP fell from its previous top spot with a ‘D’ grade – down to an ‘F’ this year – following its decision to abandon its target to wind-down fossil fuel production. Separately, changes proposed in the European Commission’s (EC) sustainable finance omnibus would exempt European oil and gas majors from reporting under the EU Taxonomy. In its Delegated Act proposal, the EC has proposed that companies with less than 10% taxonomy-relevant activities should no longer be required to report. A briefing by the World Wide Fund for Nature (WWF) suggests this would mean oil and gas companies are exempt, creating a “major data gap” for investors looking to assess the green performance or transition claims of these companies.
