ISS Governance has warned that the 2025 AGM season will be challenging in its latest annual global outlook report, examining key themes expected to impact institutional investors and companies. “Many investors and their portfolio companies alike will face challenges this year, reflecting economic and political changes and uncertainties, and the impact they may have on key governance and stewardship issues such as corporate risk oversight, supply chain management, M&A activity, executive compensation, climate risks, human capital management, as well as board oversight and accountability,” said Georgina Marshall, Global Head of Research for ISS Governance. The report pointed to heightened shareholder activism in the US last year – a trend it expects to continue into 2025. In Asia, board independence and diversity are expected to remain a key area of focus, the report added. Executive remuneration will continue to be a priority for shareholders in the UK, whereas the trend of higher support for say on pay in the US is expected to remain prevalent. The anti-ESG movement in the US is likely to impact environmental and social shareholder resolutions filed in the US, ISS Governance noted. ISS Governance is a global provider of independent and objective shareholder meeting research and recommendations.
Sustainable Investor
News in Brief
Finnish mutual pension fund provider Varma has said that it plans to be CO2 free in real estate investments by 2030. The company said that over the past decade it has managed to halve the energy consumption-based CO2 emissions of its real estate portfolio. Varma’s residential real estate investments are now expected to meet its zero emissions target ahead of schedule, by 2025. Varma’s Residential Real Estate Investment Manager Sarianna Sipola said that this has been made possible because of greater investment in CO2-free district heating and electricity, as well as energy-efficiency renovations carried out at the properties. Varma has been purchasing wind-generated electricity and this year will make sure that the heating it buys is CO2-free as well. Varma said that it is the only pension company in Finland to have set emission targets for its operations in line with science-based targets. Varma’s AUM stood at €64 billion (US$70 billion) billion at the end of 2024.
The Taskforce on Nature-related Financial Disclosures (TNFD) has launched a global campaign to encourage more adopters of its framework in the lead up to COP30 in Brazil later this year. At COP16 last year, TNFD revealed that more than 500 companies and financial institutions have adopted the TNFD reporting recommendations. The companies represent over US$6.5 trillion in market capitalisation and the financial institutions representing US$17.7 trillion in AUM. The global adoption campaign will run through to COP30 in November, at which time the TNFD will formally announce all new adopters. “Business and finance leaders are increasingly recognising that the resilience of their business and investment returns depends on the resilience of nature,” said TNFD Co-chair David Craig. “By catalysing a shift in mindset, behaviour and public reporting, TNFD is helping organisations bring nature onto the balance sheet and into their risk and opportunity assessment. That same shift is bringing to light a wealth of investment opportunities that align with a nature-positive future – one in which both nature and business are working in harmony.” Last month, TNFD also launched its capacity-building platform to support market participants and training providers in building confidence and capabilities on nature-related issues.
Investment manager Octopus Investments and Treeconomy, a nature restoration-focused tech firm, have developed a due diligence tool that aims to enhance transparency and boost trust in nature-based carbon investments. The project’s objective is to pilot and integrate satellite-based analytics and data tools into investment decision-making processes for nature-based carbon projects, such as afforestation. The tool is the outcome of a nine-month grant-funded project awarded by the UK Space Agency as part of the Unlocking Space for Business programme. The due diligence tool leverages Treeconomy’s space-based digital measurement, reporting, and verification technology, combining high-resolution satellite imagery, remote sensing analytics, and more than 60 geospatial datasets to assess the viability and performance of nature-based carbon projects. By defining key investment metrics, refining methodologies, and integrating findings into Octopus’ standard evaluation framework, the product supports decision-making for natural capital investment. Following the product’s launch, Treeconomy is engaging with natural capital investors and project developers as early adopters to refine and enhance the tool’s capabilities. “It’s been a pleasure partnering with Octopus’ ambitious and innovative natural capital team to develop a solution to enable and accelerate data-driven decision-making for nature finance,” said Rob Godfrey, Treeconomy’s Co-founder. “In the hands of a growing number of natural capital investors and nature project developers, our new due diligence and screening tool will help private finance to find and act upon quality restoration opportunities, closing the UK’s £44 billion (US$57 billion) funding gap to achieve its climate and nature targets.”
A letter signed by 362 civil society organisations (CSOs) has called on the European Parliament and Council to reject amendments seeking to weaken crucial due diligence reporting rules under the Commission’s omnibus proposal. The omnibus, unveiled at the end of last month, looks to reduce the sustainability reporting burden for companies by modifying the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), and the EU’s taxonomy for sustainable activities. The letter argued that discussion of the CSDDD should be “strictly limited” to interpretative measures, such as guidance and delegated acts, with the text of the law itself not being subject to any revisions. On CSRD, the statement suggested that the Parliament and Council should lower the thresholds of in-scope companies and give mid-sized companies a proportionate standard, but that limitations on data requests should be reworked. This proposed standard looks set to emerge in the form of the European Financial Reporting Advisory Group’s Voluntary Sustainability Reporting Standard for non-listed Small and Medium-sized Enterprises, widely referred to as the VSME. “The publication by the European Commission of its omnibus proposal revising key corporate sustainability laws sends a clear political signal: President Ursula von der Leyen is deprioritising human rights, workers’ rights and environmental protections for the sake of dangerous deregulation,” the letter read. “The Council and Parliament must urgently show leadership by blocking this damaging proposal, as it is jeopardising the very objectives of these laws and undermines not only the EU’s commitment towards its green ambitions and protection of human rights but also its credibility as a reliable law maker.”
The Institute of Faculty Actuaries (IFoA) and University of Exeter have launched a climate risk tool that aims to address the discrepancy between climate projections and policy outcomes. The tool looks to provide a comprehensive overview of current and projected risks up to 2050 across climate, nature, society and the economy. This should help investors and other entities build their “situational awareness” of the risks associated with exceeding planetary boundaries, the two bodies said. “If implemented, this risk-led methodology would provide a clear tool for policymakers to avoid the catastrophic impacts that could be experienced if we do not change course, thereby supporting future prosperity,” said Sandy Trust, an IFoA council member. The IFoA and University of Exeter have warned that the world is on a temperature pathway of at least 2°C by the mid-century. Their research has predicted a possible 25% loss of global GDP by 2050, rising to 50% between 2070 and 2090. “Our dashboard communicates how the risk of planetary insolvency has been escalating over time,” said Professor Tim Lenton from the University of Exeter’s Global Systems Institute. “We want this to be an easily accessible, regularly updated resource that decision-makers can turn to. It can help us all see the urgency of the situation and inspire action to get humanity on a more sustainable path.”
Fund managers are continuing to struggle with providing comprehensive and transparency impact disclosures to investors, according to a study by BlueMark. The independent impact verification and intelligence provider for the impact and sustainable investing market found that 97% of the 37 assessed funds do not regularly check the quality of their impact data. The funds’ reporting practices achieved an average score of 54%, with BlueMark highlighting gaps in disclosures, the quality of data and lack of verification, raising concerns about “impact washing” risk. In comparison, the funds averaged a score of 63% on governance. The study also found that large and small funds were more likely to outperform mid-market asset managers in impact governance and reporting, while the industry as a whole struggled with underdeveloped reporting practices and meaningful stakeholder engagement. “As demand for transparency grows, standardisation and accountability are needed to ensure impact investing delivers on its promises,” said Paige Nicol, BlueMark’s Senior Director. “With credible reporting, the industry can keep high levels of trust investors placed in it, that is critical to scaling impact investing.”
The Sustainable Finance Observatory (SFO) has reiterated calls for the EU to do more to support nature-positive activities within its taxonomy framework, following research that suggests few nature funds are reporting against it. “The taxonomy in its current state is critically limited as a tool to support nature-positive activities,” said the SFO. The EU’s taxonomy entered into force in 2022, although there are currently plans to simplify it. According to the SFO, regulatory inconsistencies mean that biodiversity is currently only weakly integrated into the taxonomy framework. It was initially envisaged that the EU’s taxonomy would cover five macro sectors of economic activities that qualify as substantially contributing to the biodiversity environment objective. However, the SFO stated that only “environmental protection and restoration activities” are covered in the current legislation. “It is difficult to reconcile this political direction of travel with the conclusion of this paper that further development of the taxonomy regulation is necessary to achieve the policy objective of helping to reorient finance towards biodiversity protection and restoration,” the paper read. There has been a significant increase in nature-focused funds in recent years, according to the SFO.
Institutional investor Phoenix Group and Energy Systems Catapult, a net zero energy innovation specialist, have called on the UK to alter its local energy project financing approach to achieve its net zero transition and encourage green investment. In a jointly published report, the companies concluded that place-based financing (the key to reaching net zero at a local level) is hamstrung by fragmented planning, higher borrowing costs in certain regions, and the need to strengthen investor confidence. The report stated that place-based models could potentially halve costs and generate significant socio-economic benefits. It pointed to estimates from Innovate UK, part of the country’s innovation agency, that savings of up to £137 billion (US$177 billion) in investment costs could be achieved, as well as wider savings of £431 billion from factors such as energy savings and wider societal benefits such as better air quality. The report sets out a four-stage framework to confront these challenges. This includes prioritising projects based on Local Area Energy Plans (LAEPs), and developing engagement and strategic partnerships between local authorities, businesses, and financial institutions to secure long-term support. “Local authorities are on the frontline of the UK’s Net Zero transition but delivering change requires the right investment [and] too many projects are stuck on paper because funding mechanisms do not match local needs,” said Tom Elliott, Senior Energy Transition Advisor – Place at Energy Systems Catapult. “The message is clear: the UK’s net zero ambitions will not be met through fragmented, project-by-project funding. Without institutional investors contributing to place-based financing, critical decarbonisation projects risk being left behind – along with the communities that stand to benefit from them.”
Local authorities play a crucial role in achieving Net Zero, but many face challenges in securing the investment required to turn plans into reality.
A report from @EnergySysCat and @PhoenixGroupUK outlines a roadmap to unlock regional funding and fast-track decarbonisation. pic.twitter.com/rc6POTlRUe
— Energy Systems Catapult (@EnergySysCat) March 6, 2025
John Willis has joined the World Business Council for Sustainable Development as Senior Director, Corporate Performance and Accountability, according to a LinkedIn post that he published. Willis joins from independent think tank Tracker Group, where he was most recently Director of Research for Planet Tracker, which is focused on nature-based research. Tracker Group also has a climate-based research arm called Carbon Tracker. The Tracker Group recently announced a more streamlined management structure to better exploit synergies between its two research streams. The World Business Council for Sustainable Development is a CEO-led organisation of over 225 international companies. News of Willis’ departure comes a day after a former Tracker Group employee, Maeve O’Connor, announced that she was joining workplace pension scheme Nest as Responsible Investment Manager for Climate and Nature. O’Connor was previously Oil, Gas and Mining Analyst at Carbon Tracker. “After three cracking years researching climate investment risk at Carbon Tracker, I’m excited to start putting theory into practice,” she said.
