Global investment manager Schroders plans to adopt the UK Financial Conduct Authority’s Sustainability Disclosure Requirements (SDR) labels for three further funds. This means that the firm will be adopting all four of the SDR labels. “We believe we are the first firm to publicly confirm the intended adoption of all four SDR labels across all the funds we have sought them for,” said Anna O’Donoghue, Global Head of Product Development and Governance at Schroders. “The labels will help to differentiate our sustainable product range focused on delivering active outperformance, making it easier for clients who are seeking sustainable outcomes to identify opportunities to invest.” Under SDR rules, UK-domiciled products wanting to use certain terms – including ‘impact’ and ‘sustainability’ – in their names must comply with the terms and conditions of one of four SDR labels. The Schroder Sustainable Future Multi-Asset Fund has become the firm’s first to adopt the ‘Sustainability Mixed Goals’ label, while the Schroder European Sustainable Equity Fund is the first to take the ‘Sustainability Improvers’ label. The latter will also change its name to the Schroder European Climate Transition Fund on 24 February. The Schroder Global Cities Real Estate fund will be the firm’s 12th to adopt the ‘Sustainability Focus’ label. The three new funds take the total planned labels across the Schroders Group to 16. Schroders announced plans to adopt SDR labels for 10 funds in December, while wealth management arm Cazenove Capital set out intentions for labels for three funds earlier this month. More than 1,200 funds in the UK were expected to be affected by the SDR’s rules.
Sustainable Investor
News in Brief
The Asia Investor Group on Climate Change (AIGCC), a network of institutional investors in the region, has appointed Minako Takaba as Senior Manager, Japan – Energy Transition. Based in Tokyo, Takaba will be responsible for developing and implementing AIGCC’s energy transition initiatives across all programmes in Japan, including investor practice, corporate engagement and stewardship. Tabaka has held leadership positions at a number of asset management companies, including as sustainable investment officer at Asset Management One and senior ESG investment manager at Nomura Asset Management. AIGCC CEO Rebecca Mikula-Wright said that Tabaka joins at a “pivotal moment” for Japan, as the country rolls out its green transformation (GX) strategy with a view to attracting private financing for its energy transition plans. “Drawing from her previous expertise as an asset manager, we’re now looking forward to having her invaluable insights to help our investor members and stakeholders, especially those in Japan, understand what the GX strategy means for them and how they can contribute to the conversation on energy transition,” said Mikula-Wright.
The fall in support for ESG-related shareholder resolutions may show increasing demand for high-quality proposals that are more likely to drive impact, according to the Principles for Responsible Investment (PRI). In a recently published analysis of trends and challenges in sustainability-related shareholder resolutions, the PRI found that majority-supported sustainability-related shareholder resolutions fell from 79 in 2022 to 29 in 2024, with average shareholder support for sustainability-related shareholder resolutions for environmental and social proposals sliding from 28.2% in 2022 to 15% in 2024 and from 33% to 25.4% for governance. “If anything, the fall in support for resolution shows that there’s an increasing scrutiny and demand for high quality and impactful resolutions,” René Van Merrienboer, Director of Sustainable Systems at the PRI, told ESG Investor. He added: “Companies and filers negotiate on the resolutions, which leads to resolutions being withdrawn if there’s a satisfactory outcome of that negotiation. This very often means that [those] that stay on the ballot are the more challenging resolutions,” In its report, the PRI stated that securing a commitment to an agreed course of action from the company through engagement before a vote on a shareholder resolution can be “just as successful as filing a resolution” in terms of investor stewardship. However, the research noted that due to the non-binding nature of resolutions, there is no guarantee of board action even after a successful vote. Van Merrienboer said: “Our message to investors is that your job doesn’t stop when you file the resolution and it’s put to a vote, but that there is a need for continued engagement on the resolution after filing to ensure that corporate boards implement it.”
The global universe of sustainable open-end and exchange-traded funds (ETFs) attracted an estimated US$16 billion of net new money in the final quarter of last year, according to Morningstar Sustainalytics. This is up from US$9.2 billion in the quarter before, the report said. “Global sustainable funds ended 2024 on a high note, achieving their strongest quarterly inflows of the year,” said Hortense Bioy, Head of Sustainable Investing Research at Morningstar Sustainalytics. “This fresh flow of capital, however, shouldn’t hide another reality.” Over the full year of 2024, global ESG funds recorded their lowest inflows since 2018, while the rest of the market enjoyed a boom, the report said. This was partly driven by the US, where redemptions from sustainable funds in Q4 slid to US$4.3 billion compared to the US$2 billion in outflows in Q3. “2025 might be a reset yet, with anti-greenwashing rules reshaping the ESG fund market, companies reaffirming or rolling back their sustainability initiatives, and governments reviewing their priorities amid a changing geopolitical and economic landscape,” said Bioy. “These are new developments that sustainability-focused investors will have to navigate.”
Asset manager Fidelity International has issued a new report calling for the introduction of a stewardship code in China to encourage more investors to exercise their voting rights. The report was published in collaboration with Beijing-based proxy advisory firm ZD Proxy Shareholder Services. Over the past seven years, investors have become more active and minority shareholders are now “a force to be reckoned with”, it said. However, recently the participation of minority shareholders in meetings has slowed, which may be due to lower foreign participation, said the report. “We may have hit a ceiling for the bottom-up, investor-driven improvements in stewardship practices, and the next phase of development may require clearer top-down direction from regulators,” said Tina Chang, Associate Director for Sustainable Investing at Fidelity International. Chang said there has already been “plenty of discussion” in the local market about the introduction of a formalised stewardship code for China, but added that timely “nudges” from regulators could encourage more investors to exercise their voting rights. “We expect momentum for stewardship to build following the issuance of the guidance,” Fidelity said in the report. “Aided by an increasingly enthusiastic institutional investor base, stewardship may finally make its mark as a catalyst for long-term value creation in China.”
NatureAlpha, a nature and biodiversity analytics company, has selected Laura Segafredo as its Chief Growth Officer. She will be responsible for new business, index solutions and strategic initiatives, drawing on two decades of experience in the sustainable finance industry developed through previous roles and dedicated study for her PhD. “We consider 2025 a pivotal year for the nature-finance nexus,” said Nick Hough-Robbins, NatureAlpha CEO. “We’re witnessing increasing urgency and demand for meaningful and reliable nature data, from asset managers seeking to make the best possible investment choices for clients and for the planet. [Laura] brings to the table a wealth of knowledge, expertise and genuine alignment to our overarching objective of moving capital at scale towards nature-positive outcomes.” Segafredo has joined the firm after eight years at BlackRock, where she was the Global Head of Sustainable Product and Portfolio Research, leading strategic initiatives to deliver on the asset manager’s global sustainability commitments, including the disclosure of climate metrics for exchange-traded funds and index mutual funds. “NatureAlpha’s ambitious pursuit and provision of market leading nature risk data within the finance space is laudable, particularly at such an early stage of its development,” said Segafredo. “There is growing momentum behind nature investing and the decoupling of nature from broader sustainable investment discussions, which is exciting to observe. This year is set to be a transformative one for nature investing both in the advancement of data and the consequential development of investment products and solutions.”
Financial intelligence provider Moody’s Ratings has forecast sustainable bonds to see the fifth consecutive year of issuance around US$1 trillion in 2025. Moody’s says that this growth rate will be limited by political headwinds in some countries. The prediction comprises US$620 billion of green bonds, US$150 billion of social bonds, US$175 billion of sustainability bonds, US$20 billion of transition bonds and US$35 billion of sustainability-linked bonds (SLBs). “The ramp-up in clean energy investment in many countries will spur sustainable issuance in 2025, especially green and sustainability bonds,” the report read. “While we expect climate mitigation projects will remain the focus, investment drivers will evolve, leading to more issuance related to data centres, nuclear energy and emerging green technologies.” While increasing just 2%, the growth in green bonds will break the previous record of US$617 for issuances set in 2021. SLBs are expected to see the most growth, with issuances increasing 14% from 2024, but this falls far short of the US$80 billion annual average achieved between 2021-23. Meanwhile, social bond issuance is expected to slip by 9%. According to Moody’s, Europe will lead sustainable bond issuance but may remain flat “given the maturity of the market”, and much lower than the 2021 record of US$594 billion. The report noted that Asia-Pacific will “remain an important driver” of sustainable bond volumes, while issuances in North America will “remain muted amid a retrenchment of climate policies under a new US administration”. Moody’s also highlighted that volumes of issuances in emerging markets – particularly in Latin America and the Caribbean – are likely to rise ahead of COP30 in Brazil in November.
A fund for supporting climate finance in emerging markets, launched by the European Investment Bank (EIB) and Allianz Global Investors (AllianzGI) in 2021, has closed at €450 million (US$466.7 million) following a final €20 million top-up from the German government. The Emerging Markets Climate Action Fund (EMCAF) is now one of the world’s largest blended finance equity funds. It is expected to mobilise up to €7.5 billion of climate finance in emerging and developing markets. Last year, EMCAF provided US$100 million for four transactions supporting renewable energy, sustainable mobility and green infrastructure across Africa, Asia and Latin America. “EMCAF has proven, that equity investments in climate mitigation and adaptation projects represent a suitable impact investing theme,” commented Stephanie Lindemann-Kohrs, Director Global Equity and Funds at Kreditanstalt für Wiederaufbau, the development bank through which the German funds are channelled. Renewable energy and energy efficiency represent a majority of EMCAF’s investments to date. Other areas of support by EMCAF include sustainable transport, forestry, water supply and wastewater. “EMCAF shows the power of public and private partnerships to bridge the global climate finance gap,” said EIB Vice-President Ambroise Fayolle. AllianzGI Chief Executive Officer Tobias Pross added: “As we close this fund dedicated to climate mitigation and adaptation in emerging markets, we are investing not just in sustainable solutions but in the future of our planet.” EMCAF recently published its second impact report covering the year 2023, which shows that the fund contributed to a reduction of 800,000 metric tonnes of greenhouse gas emissions.
The Taskforce on Nature-related Financial Disclosures (TNFD) has released four new sets of finalised sector guidance, as well as draft guidance for three further sectors. The second tranche of sector guidance covers the apparel, textiles and footwear, beverages, construction materials, and engineering, construction and real estate industries. The draft guidance for these sectors was released in June 2024 and saw “extensive” feedback and consultation with market participants, according to the TNFD. This brings the total number of sectors with final guidance from the TNFD to 13. The taskforce has also released draft guidance for consultation for three further sectors: fishing, marine transportation and cruise lines, and water utilities and services. The consultation will run until 4 April, with the TNFD intending to issue final guidance the three sectors in June. The TNFD is also currently consulting on draft guidance for nature transition planning for companies and financial institutions, which closes on 1 February. More than 500 organisations in more than 50 countries representing over US$17 trillion in AUM have committed to reporting their nature-related issues aligned with the TNFD recommendations. The TNFD has also obtained multi-year grant funding from philanthropic organisation The Rockefeller Foundation. The grant is part of the foundation’s wider effort to mobilise private sector resources for climate mitigation, adaptation and resilience, and to mainstream nature-based solutions. The Rockefeller Foundation will also join TNFD’s Stewardship Council. “This grant will help us maintain the momentum of our second phase of work, as we continue to encourage voluntary market adoption, build out our market capacity-building interventions and develop our roadmap for enhancing access to high-quality nature-related data,” said David Craig, Co-chair of the TNFD. Earlier this month, TNFD welcomed the Bank of China as the first Chinese financial institution to join the initiative and has convened new consultation groups in China and Hong Kong.
A new labelling system launched at Davos aims to serve as a globally applicable tool for evaluating the sustainability and resilience performance of infrastructure projects. The FAST-Infra Label, the result of collaboration between the Global Infrastructure Basel Foundation (GIB) and Bloomberg, will also contribute to efforts to unlock much-needed finance for sustainable infrastructure projects, helping to close an estimated US$15 trillion investment gap projected by 2040. “There is clear investor appetite to deploy more capital in sustainable infrastructure as governments around the world work to reach their net zero goals and build resilience in their existing real assets.” said Louis Downing, GIB’s CEO. By serving as a global framework that is interoperable across regions, the FAST-Infra Label will ensure consistency and data availability, GIB and Bloomberg have said. This data will be available via the FAST-Infra Application Portal, built and operated by Bloomberg, which will serve as a central repository for all project-related data. “This is a milestone for the sustainable infrastructure asset class,” said James Hook, Head of Data at Bloomberg. “Building consistency through a commonly accepted, consistent framework based on sophisticated, high-quality data sets, the FAST-Infra Label is a much-needed solution for infrastructure investors and managers.” The FAST-Infra Label is a private sector initiative founded in 2020 and led by major financial institutions and global organisations, including HSBC, the International Finance Corporation and Meridiam.
