There is a great deal of inconsistency when it comes to Climate-related Financial Disclosures (CFDs) from large private companies and those listed on the Alternative Investment Market (AIM) exchange, according to a review undertaken by the Financial Reporting Council (FRC). While almost all companies provided disclosures, information was often missing and many of them were unstructured without specific cross-references, said the FRC. CFD requirements were introduced for accounting periods beginning on or after 6 April 2022. They require companies to report on climate-related risks and opportunities if they have more than 500 employees and meet certain conditions, such as trading on AIM or with a turnover exceeding £500 million. This is the first time that the FRC has carried out a review of CFD reporting. The FRC expects reporting practices to improve over time, with the review used to support the development of disclosures going forwards. “As many AIM and large private companies continue to consider the impact of climate on their strategy, operations and people, the importance of robust frameworks that support preparers to assess risks and opportunities will continue to grow,” said Sarah Rapson, Executive Director of Supervision.
Sustainable Investor
News in Brief
UK-based pensions provider Scottish Widows is partnering with asset manager Robeco to scale their responsible investing strategies. The focus of the partnership will be on designing customised equities indices to prioritise responsible investing principles and contribute to the UN Sustainable Development Goals (SDGs). These will be targeting both developed and emerging markets. “By pooling our collective expertise and leveraging Robeco’s depth of research and centre of excellence, we can innovate at pace and deliver a unique set of indices for UK workplace pension savers with responsible investing fitted as standard,” said Eva Cairns, Scottish Widows’ Head of Responsible Investment. Robeco was selected by Scottish Widows due to its sustainability research capabilities and close alignment with the asset owner’s responsible investing priorities. The two firms will also co-publish analysis on priority themes, such as the energy transition, nature and deforestation. “We are delighted to be embarking on a strategic partnership with Scottish Widows, with a focus on bespoke Robeco-SW indices that leverage a number of our proprietary sustainable investment frameworks and innovations,” said Joop Huif, Head of Robeco Indices. “We look forward to working closely with Scottish Widows – a valued strategic partner – to expand the scope of our collaboration in 2025 and beyond.”
Carbon credit verification body Verra has published guidance on how Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) labels for eligible carbon credits can be requested. Last October, the United Nations International Civil Aviation Organization approved Verra’s Verified Carbon Standard (VCS) Program, making it eligible for airlines to use carbon credits verified by Verra during CORSIA’s first phase. The guidance document provided an updated overview of eligibility for the pilot and first phases of CORSIA, and information on how project proponents can request CORSIA labels for VCUs that their projects generate. It also offers details on new CORSIA labels on the Verra Registry, which indicates what VCUs are eligible for CORSIA’s pilot and first phases. CORSIA aims to stabilise carbon emissions at 2019 levels, which can be done by offsetting surplus or excess emissions through carbon credits. As of 1 January, 129 states responsible for more than 75% of international aviation activity participate in CORSIA’s voluntarily first phase. Participation becomes mandatory in its second phase, which will run from 2027-2035. Earlier this month, MSCI forecast that the global carbon credit market would grow at least fivefold by 2030, with the market currently worth US$1.4 billion.
A UK local government pension scheme (LGPS) pool has been appointed to provide oversight and stewardship services for more than £11 billion (US$13.5 billion) in passive funds managed by financial services provider Legal & General (L&G). This new mandate sees LGPS Central’s total AUM surpass £43 billion, with £23 billion of this across passive funds. This includes both internally- and externally-managed equity and fixed income strategies. Prior to LGPS’s Central formation in 2016, L&G’s passive investment services were managed by six of the pool’s partner funds, alongside Warwickshire Pension Fund. Under the new agreement, effective from this month, LGPS Central will oversee these funds on behalf of all eight partner funds, conducting semi-annual review meetings with L&G. “The agreement represents a significant advancement in our assets under stewardship, supporting partner funds in building on the historic joint procurement,” said Richard Law-Deeks, CEO at LGPS Central. “This collaboration sets a benchmark for stewardship and cost-effective management. It amplifies our impact and ensures a unified approach to governance across all partner funds.”
Data and technology solutions provider ISS STOXX has expanded its collaboration with global asset manager BlackRock to incorporate sustainability principles within a series of custom index solutions. As part of the arrangement, a number of existing equity indices will now screen out companies based on “controversial activities and carbon emissions”. Axel Lomholt, General Manager at index solutions business STOXX, said: “The STOXX Equity Factor Screened indices offer investors a unique methodology to target long-term potential outperformance and diversified exposure while controlling for systematic risk and integrating sustainability principles.” Multifactor indices track the performance of various factors that have historically produced higher returns than the market. They are often used to mitigate long periods of portfolio underperformance. BlackRock and STOXX first teamed up to deliver such solutions in 2022. Their collaboration now covers ten exchange-traded-funds (ETFs) with total assets under management of US$6.4 billion. “Our expanding collaboration with BlackRock allows us to combine our indexing and portfolio construction capabilities with industry-leading factor analytics and design, to capture potential for long-term enhanced returns,” said Lomholt.
Multiple arms of the French Crédit Agricole group, including Crédit Agricole Assurances and Crédit Agricole CIB, have strengthened their commitment to the energy transition with the launch of its Transition Infrastructure Debt Fund (CATI). Managed by B Corp certified asset manager RGREEN INVEST, the fund will back European companies that develop infrastructure projects for a less carbon-intensive economy. CATI has a €300 million (US$310.6 million) investment capacity. “With the launch of this new fund, and as part of Crédit Agricole Group’s societal project, Crédit Agricole Assurances reinforces its commitment to supporting the low-carbon transition. Given the increasingly challenging environmental context, calling for strong commitments from all economic actors, we are convinced of this new financial platform’s usefulness,” said Nicolas Denis, CEO of Crédit Agricole Assurances. CATI has been categorised as an Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation, with RGREEN INVEST prioritising projects that are eligible in line with the EU taxonomy across themes such as wind power, solar energy, battery power storage and electric vehicle charging stations. “We are delighted to form this partnership, which represents a major milestone in our mission to support energy transition companies,” said Nicolas Rochon, Founder and CEO of RGREEN INVEST.
The US Federal Reserve Board has announced that it is withdrawing from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). In a statement, the US central bank said that, while it has appreciated the engagement with the NGFS and its members, “the work of the NGFS has increasingly broadened in scope, covering a wider range of issues that are outside of the board’s statutory mandate”. In a separate statement, the NGFS said it regrets but respects the Fed’s decision to leave its “coalition of the willing”. It noted that the Fed was not a member of the NGFS steering committee, nor leading any workstream. “As extreme climate events and natural disasters are among the few visible and painful certainties of our times, our community of central banks and supervisors stands as strong and determined as ever,” said the NGFS. The NGFS was launched in 2017, as part of the inaugural One Planet Summit held in Paris. As of December 2024, 144 central banks and financial regulators are members of the NGFS, spread across 90 countries. The Federal Reserve joined the NGFS as a permanent member in 2020. News of the exit comes as Donald Trump assumes the US Presidency, with looming uncertainty about the extent to which he will – or can – roll back climate policies in the country.
Sustainability solutions provider ESG Reporting Intelligence has introduced an asset management platform for supporting ESG disclosures, strategy, and compliance with regulation. The ESG Asset Management tool aims to address challenges posed to organisations from ESG obligations, including rising regulatory scrutiny and increasing stakeholder demand for transparency. The tool covers a number of industries including construction, energy, manufacturing, and real estate, allowing the integration of ESG components into asset management strategies. The platform offers reporting for track direct emissions, indirect emissions from consumption and supply chain emissions (Scope 1, 2 and 3 of international climate disclosure standards). It also provides real-time energy monitoring, offering insights into energy usage to reduce energy consumption and carbon footprints, as well as tracking for ESG targets to align with performance benchmarks. “By integrating real-time insights and actionable tools, we’re giving organizations the power to make informed, sustainable decisions that deliver value for stakeholders and the environment alike,” said James Cronan, Managing Director at ESG Reporting Intelligence. “Businesses need tools that provide actionable insights, not just compliance checkboxes. Our platform goes beyond reporting; it enables proactive management of ESG challenges and opportunities.”
The Taskforce on Inequality and Social-related Financial Disclosures (TISFD) has announced the 25 members of its cross-sector steering committee, including US pension fund CalPERS and French multinational insurance firm AXA. The committee will oversee the development of a global framework for social-focused financial disclosures, as well as guidance on supporting metrics and implementation strategies. “To gain greater insight, we support the work of TISFD toward measuring and reporting on inequality and other socially related, financially material metrics,” said CalPERS CEO Marcie Frost. “We believe that a standardised methodology to better account for these risks will lead to more sustainable returns over the long-term.” Other committee members include ING, Nippon Life Insurance and Generation Investment Management. “We believe the work of the TISFD will help investors understand the risks presented by inequality and other social factors, and create a simplified, shared approach to analysing the impact of their investments on society and people,” said David Blood, Senior Partner at Generation Investment Management. Launched last year, the TISFD aims to serve as a global initiative supporting companies and investors in the identification, assessment and disclosure of inequality and other social-related risks, opportunities and impacts.
Investors’ appetite for US-domiciled sustainable funds has waned ahead of President Donald Trump moving into the White House for his second term. Morningstar’s latest annual ‘US Sustainable Funds Landscape’ report noted that US sustainable funds suffered net outflows every quarter of 2024 collectively amounting to US$19.6 billion – an increase from US$13.3 billion in outflows in 2023. Conventional funds received US$740 billion of net new money. Morningstar pointed to high interest rates which penalised some areas of the sustainable investment market, such as clean energy stocks, while climate funds experienced their first year of outflows, with redemptions hitting US$2 billion. “2024 was a turbulent year for ESG funds, with the increased politicisation of ESG issues, continuously high interest rates, greenwashing concerns, and a general preference for conventional strategies in a bull market,” said Hortense Bioy, Head of Sustainable Investing Research at Morningstar Sustainalytics. Despite these outflows, assets in sustainable funds rose to US$344 billion last year, which represents 6.3% annual growth. “The outlook for US sustainable funds in 2025 is very uncertain,” said Bioy. “Recent weeks have seen companies backtrack on ESG commitments and net zero alliances review their purpose. Under the new Trump administration, we may see litigation pressures exacerbate ‘greenhushing’, where companies downplay their sustainability efforts. All these developments bring new challenges to investors interested in sustainability-focused investments.”
