Improved transparency from financial institutions has revealed increased alignment between their global shipping portfolio with decarbonisation trajectories set by the International Maritime Organization (IMO). The Poseidon Principles – a global framework for responsible ship finance which aims to help incentivise the shipping industry to decarbonise in line with the IMO’s climate goals – represent nearly 80% of global shipping finance. Its fifth annual disclosure report, which has assessed the climate alignment of 35 major financial institutions across 13 countries, noted that an average of 93.3% of signatories’ portfolio activity was reported. All signatories reported ship emissions data from at least 70% of their portfolio, with 28 achieving a reporting rate of 90% or above. Eight signatories achieved 100%. Average climate alignment scores also showed “noticeable progression” from last year, the report said, with portfolios’ alignment to the IMO’s ‘minimum’ and ‘striving’ trajectories improving. “The principles have redefined what is possible in transparent climate reporting for the shipping industry,” said Michael Parker, Poseidon Principles Chair and Chairman of Global Shipping & Logistics at Citi. “This milestone shows how far we have come in five years but also serves as a reminder that we are now five years closer to critical decarbonisation targets for 2030, 2040, and 2050. We must accelerate efforts, addressing key areas of misalignment and ensuring collective ambition turns into transformative action.” In 2023, the Poseidon Principles adopted well-to-wake emissions reporting, encompassing full lifecycle emissions of fuels and setting a new benchmark for climate reporting in line with climate science. “Alignment with 2050 net zero goals remains a challenge, in particular for certain vessel types that are facing operational complexities,” said Paul Taylor, Vice Chair of the Poseidon Principles and Global Head of Maritime Industries at Societe Generale. “The principles will continue to evolve, setting new benchmarks for transparency and commitment to a sustainable future.”

More than US$7.3 billion of asset owners’ money has been recently invested by asset managers in new bonds issued by companies developing fossil fuel projects, according to analysis by French NGO Reclaim Finance. The report, which analysed the investments of 25 European and US asset managers, found that the firms were continuing to support fossil fuel developers through their investments and voting behaviour. Asset managers are “disregarding” the long-term sustainability-focused interests of their asset owner clients, Reclaim Finance said, urging asset owners to increase engagement and to stop entrusting new mandates to managers overwhelmingly supporting fossil fuel expansion. The assessed asset managers – including Amundi, Allianz Global Investors and UBS Asset Management – are failing to align their practices with climate science, the report said, pointing to investments in bonds issued by fossil fuel developers between 1 January 2023 and 30 June 2024. “Asset managers are entrusted with asset owners’ money, but they fail to follow through on managing climate risks,” said Agathe Masson, Sustainable Investment Campaigner at Reclaim Finance. “Asset owners should look at how their money is being invested and challenge asset managers’ overall practices. Allocating new assets to fossil fuel developers will exacerbate climate change and increase climate risks for generations to come, which is in total contradiction with pension funds and other asset owners’ long-term horizon.” 

Climate-related losses are outweighing revenues generated from underwriting fossil fuel business at many of the world’s leading insurance firms, according to the latest annual scorecard from campaign group Insure Our Future. The report’s analysis of 28 top global property and casualty insurers found that their estimated share of climate-attributed losses (US$10.6 billion) came close to equalling the US$11.3 billion in direct premiums underwritten for oil, gas and coal clients in 2023. For more than half the companies – including Allianz, AXA, and Zurich – losses exceeded these premiums, which make up less than 2% of total premiums. The figures raise “serious questions” about why insurers are not using their influence on the fossil fuel sector to protect the other 98% of their business against climate risks, the group said. The report also found that climate change accounted for more than a third (US$600 billion) of global insured weather losses over the last two decades, with climate-attributed losses rising from 31% to 38% of total insured weather losses over the last decade on average. On an individual basis, Generali replaced Allianz at the top of the scorecard of fossil fuel restriction policies, after becoming the first and only insurer to mostly rule out oil and gas expansion across the value chain, including new methane LNG terminals. However, Insure Our Future said industry progress had stalled on effective climate action, with firms leaving communities worldwide exposed to “mounting risks without protection”. The group called on policymakers to mandate “robust scenario analysis to account for the full complexity” of climate-related events, and to require insurers to develop, implement and disclose 1.5°C-aligned transition plans. 

Non-profit group Global Canopy’s new ‘Floresta 250 – Cattle’ report has found that 80% of large companies and financial institutions involved in Brazilian cattle supply chains are ignoring links to deforestation. The report identifies and assesses the 175 companies and 75 financial institutions with the most influence over Brazilian cattle supply chains, through their links to leather and beef, including three of the world’s largest meatpacking companies – JBS, Marfrig and Minerva. Of the assessed companies, 83% are yet to publish deforestation commitments for at least one of the cattle commodities relevant to them, as is the case for 80% of financial institutions. More than nine in 10 (91%) companies had not publicly disclosed any of their leather volumes as being deforestation and/or conversion free, while 88% had not done so for beef. Meanwhile, just three of the 175 companies have a publicly available commitment for the most critical human rights issues in commodity supply chains. “Deforestation is likely to be in the public eye for COP30 in 2025,” said Global Canopy. “By then, as an absolute minimum, [we] call for companies to publish a comprehensive deforestation commitment covering all high-risk commodities to which they are exposed and the most critical human rights issues. Financial institutions should conduct a risk assessment of their portfolios and categorise clients/holdings by level of risk.” Earlier this year, a separate Global Canopy report stressed the key role of regulation in addressing human rights risks linked to deforestation. NGO Mighty Earth’s ‘Soy & Cattle Deforestation Tracker’ last week found that over the past two years, ten soy traders and meatpackers alone were responsible for more than 300,000 hectares of deforestation and land degradation, equivalent to twice the size of London. The research found JBS to be the worst offender.

Integrating employee perspectives as an input into corporate decision-making is a core part of effective human capital management, according to new research by the International Corporate Governance Network (ICGN). It determined that investors believe listening to workers can help company boards and management identify risks and opportunities, which enhances workforce performance and productivity, and builds trust with stakeholders. As such, consulting workers is an important aspect of responsible business conduct, anchored in international standards and conventions, the ICGN said. The report also explored corporate governance mechanisms that can help management and boards hear workers’ perspectives. ICGN proposed questions investors can ask to gain a better understanding of how companies approach this issue. Workers’ voice can either be individual or collective and may be shared through both formal and informal mechanisms, the report added. “Empowering worker voice not only aligns with fundamental principles of respect, dignity, and fairness in the workplace, but is a strategic advantage that drives sustainable growth, protects rights, and strengthens workforce engagement,” said Karin Halliday, Co-chair of ICGN’s Human Capital Committee. “Investors have a critical role in championing this dialogue.”