EU financial services watchdog the European Securities and Markets Authority (ESMA) has published its work plan for 2025, which includes its sustainable finance-related priorities. ESMA intends to build on its work on greenwashing risks achieved during 2022-24 by further clarifying supervisory expectations, developing tools that enable supervisors to best address related risks, and enhancing the effectiveness and quality of ESG disclosures. “ESMA will collaborate with participating NCAs [national competent authorities] to support the development of supervisory tools and methodologies to detect and address potential greenwashing practices by supervised financial market participants,” the report read. ESMA will also monitor the implementation of guidelines such as the fund names rules. In addition, the watchdog outlined plans to develop technical standards and additional guidance on several aspects relating to the Green Bonds Regulation, MiFID II, Corporate Sustainability Reporting Directive, and Benchmarks Regulation. “ESMA will, alongside the other ESAs [European Supervisory Authorities], publish their annual report on the extent of voluntary disclosures of principal adverse impact in the Sustainable Finance Disclosure Regulation (SFDR) [and] may provide guidance and Q&As for sustainability disclosures under the SFDR,” it said, noting that the European Commission’s assessment and review of the regulation may generate requests for advice from ESMA. To support the EU’s broader transition efforts, ESMA intends to monitor initiatives related to transition finance and will issue guidance on capacity-building to promote an effective and consistent framework.
Sustainable Investor
News in Brief
Avantis Investors, a US$54 billion investment offering from US$261 billion global asset manager American Century Investments, has expanded its ETF services into the European market as part of a plan to grow both investment capabilities and client base. Avantis’ investment approach aims to offer the benefits associated with indexing – such as transparency, broad diversification and low fees – while seeking to promote investment in companies with more attractive valuations and profitability characteristics. “We have been asked for a long time now when we will have offerings available outside the US,” said Eduardo Repetto, CIO at Avantis. “Many investors have found value in our approach to building portfolios, and we are happy to bring our low-cost, well-diversified strategies to the European marketplace.” Launched in September 2019, Avantis now has 28 strategies and serves more than 3,500 institutional and advisory clients. Avantis’ growth has driven American Century to be the fourth largest active ETF issuer, and one of the fastest growing ETF issuers globally in the last decade. “Avantis Investors offers core building blocks for an investor’s allocation,” said Richard Adams, Head of EMEA at American Century. “More and more, the clients and prospects we speak with are interested in Avantis, so we’re thrilled to have these available for [them] to access.”
Eighteen asset owners and managers have co-signed a letter warning against investing in global meat producer JBS, following reports linking the company to 18,000 hectares of deforestation and illegal occupation of Indigenous lands in Brazil. The letter urged the US Securities and Exchange Commission (SEC) to protect investors against the lack of transparency around JBS’ climate-related risks – specifically across Scope 3 emissions – with the company’s supply chain reportedly making up approximately 97% of its overall carbon emissions. In parallel, 20 NGOs published a briefing for shareholders evidencing the risks associated with changes to JBS’s renewed application to list on the New York Stock Exchange, in which the company is said to have dodged its ‘Net zero by 2040’ target – replacing it by ‘Climate reduction goals by 2040’. JBS has also been delisted by the Science-Based Targets initiative (SBTi) for failing to submit an adequate climate plan. In addition, NGO Global Witness revealed that Barclays had earned US$1.7 billion from financing JBS, highlighting the financial sector’s exposure to supply-chain harms. “JBS has a long history of misleading investors by exaggerating its environmental track record and minimising environmental risks,” said Annie Sanders, Director of Shareholder Advocacy at Boston-based family office Green Century. “We urge the SEC to reject JBS’ registration until it aligns its rhetoric with its true environmental impacts.” JBS could soon face new regulatory requirements, including the publication of a 1.5°C-aligned transition plan by 2027 and comprehensive ESG reporting by fiscal year 2025 under European sustainability directives – posing further complications and risks to investors. The briefing also warned minority shareholders that their voting rights might be diluted at the point of listing, effectively disenfranchising them and severely limiting their ability to influence company decisions on ESG impacts and other matters.
Specialist advisory firm Chronos Sustainability has appointed David Russell as European Sustainable Investment Specialist to help create and deliver work programmes for corporate sustainability and responsible investment clients. Russell joins a global team of more than 30 responsible investment, corporate sustainability and policy specialists at Chronos, bringing more than two-and-a-half decades of industry experience. He spent 22 years at the Universities Superannuation Scheme – the largest UK pension fund by AUM – including 17 years as head of responsible investment. Russell is currently chair of the Transition Pathway Initiative, as well as a board member at the UK Sustainable Investment and Finance Association. He was formerly a board member at the Principles for Responsible Investment, and a founding steering committee member of the Institutional Investors Group on Climate Change. “New regulations, shifting consumer demands and a deteriorating environment are rapidly changing the sustainable finance and corporate sustainability scene, particularly in Europe,” said Nicky Amos, Managing Director at Chronos. “We’re delighted to add David’s knowledge, leadership and expertise to our offer to help investors and companies navigate this shifting landscape. He joins a growing team at an exciting time for the business.”
Global investment manager GMO has launched the GMO Horizons Investment Fund to support investors looking to address global emissions risk, while harnessing opportunities to mitigate climate change through sustainable investment solutions. The fund aims to reduce total portfolio emissions by utilising GMO’s proprietary research into emissions risks across company value chains. The firm’s Indirect Emissions Model works to address shortcomings in reported Scope 3 data, allowing the portfolio to target 50% less total emissions than the MSCI ACWI ex Fossil Fuels Index. In addition, the fund will be targeting green revenues of at least three times higher than the benchmark – 27% for the portfolio, versus 9% for the benchmark. The fund will have high exposure to companies where revenue is derived from selling green products and services. “We believe Horizons’ dual objective of reducing total portfolio emissions and increasing exposure to climate opportunities is a unique and comprehensive investment solution in the sustainability space,” said George Sakoulis, Head of Investment Teams and Lead Portfolio Manager on the GMO Horizons Strategy. “The fund represents a low-cost systematic alternative to passive equity investment, avoiding the industry concentration risks and unintended factor exposures found in other offerings in the market.”
The Sustainable Markets Initiative and infrastructure consulting firm AECOM have launched an AI tool designed to protect nature during infrastructure project developments. The Nature Risk Tool analyses pieces of land globally, providing detailed insights into habitats and biomes to help planners and policymakers create sustainable infrastructure that safeguards the environment. Over the past 50 years, wildlife populations have decreased by an average of 60%, the founders said, with infrastructure development being a significant factor. Using datasets from the Taskforce for Nature-related Financial Disclosures, the tool will aim to combat habitat loss, biodiversity decline, pollution, and increased greenhouse gas emissions. It will be employed at the project initiation stage to support site selection and feasibility studies, enhance decision-making and efficiency, and minimise impacts on nature and biodiversity. Separately, nature-focused non-profit Restor launched a transparency tool to map nature restoration-focused projects and communities, and facilitate funding allocation. Supported by Manulife Investment Management, the governments of Costa Rica and Ethiopia, and cloud-based software company Salesforce, Restor Enterprise will aim to build trust and transparency in the “nature movement”, showing how and where investments are being made – and contributing to closing an estimated US$700 billion annual nature financing gap outlined by the Global Biodiversity Framework. Restor currently supports more than 200,000 projects of local communities, farmers, and Indigenous populations working to promote nature by connecting them to funders, markets, and to one another. “This tool gives organisations and governments the power to not only showcase their commitment to nature, but also to prove their impact in a way that’s verifiable,” said Brigitte Hoyer Gosselink, Director of AI and Sustainability at Google, which provides philanthropic support to Restor. “By enabling the transparent flow of funds to those directly stewarding our planet, we’re not just restoring ecosystems, we’re restoring trust.”
The International Emissions Trading Association (IETA) has published recommendations ahead of further negotiations of carbon markets rules under Articles 6.2 and 6.4 of the Paris Agreement. It suggested parties should consider impact on investment certainty when negotiating further guidance on Article 6 rulebook authorisation matters, noting that badly designed rules would increase risks for project developers and investors, resulting in lower investment flows into mitigation activities. The IETA also recommended that authorisations be provided as early as possible and streamlined by adopting standard procedures, forms and templates. In addition, it said any new guidance under Article 6.2 or 6.4 should not negatively impact existing cooperative approaches and authorisations. “In case no agreement on the guidance for these topics can be reached, we urge countries engaging in Article 6 to address these issues in national legislation and the rules of specific cooperative approaches,” the IETA wrote. “Authorisation is the basis for the international compliance carbon market under the Paris Agreement – it is necessary for an emission reduction or removal to become an Internationally Transferred Mitigation Outcome (ITMO) that can be used towards NDCs [nationally determined contributions] or Other International Mitigation Purposes (OIMP).” This guidance follows the collapse of Article 6 negotiations at COP28 in Dubai last year, which meant that no finalised guidance was adopted at the time. Several points of contention across Article 6.2 and 6.4 are to be discussed at COP29 next month, including process of authorisation, transparency and timing.
Carbon finance specialist company Respira has joined forces with impact-focused organisation Palladium to launch two new funds aiming to accelerate climate action and improve the quality and monitoring of nature-based carbon projects. The Respira Carbon 2 fund looks to raise funds from corporates investing in the carbon projects, while the Respira Vivair fund targets financial investors seeking cash returns from the sale of carbon credits. Credits from the projects will be purchased by corporates to help facilitate their net zero transition by compensating for unavoidable emissions. The collaboration will raise funds to invest in global projects focused on nature-based solutions such as forest conservation, blue carbon, reforestation and sustainable land use – as well as provide capital to create and scale nature-based carbon removal and reduction projects. Palladium will serve as the funds’ impact, ESG and risk advisor. This will involve evaluating ESG factors to ensure that the projects the funds invest in meet high standards of sustainability and continue to deliver the promised benefits over time. “At a time when the quality and integrity of carbon credits are under intense scrutiny, our collaboration with Palladium ensures that corporations can invest with confidence in projects that deliver tangible, verifiable environmental benefits,” said Ana Haurie, CEO of Respira.
US asset manager BlackRock will partner with ALTÉRRA, a United Arab Emirates-backed (UAE) investment vehicle, to develop a new blended-finance emerging-markets (EM) strategy focused on climate infrastructure opportunities. The initiative will also involve other investors in BlackRock’s Climate Finance Partnership (CFP), the firm’s flagship public-private blended finance vehicle investing in climate infrastructure across EMs. BlackRock will also consult with the Global Energy Alliance for People and Planet, the Shell Foundation, and the Group of Seven Partnership for Global Infrastructure and Investment on the strategy. Launched at COP28 with a US$30 billion commitment from the UAE, ALTÉRRA has already committed US$350 million to BlackRock’s EM climate infrastructure platform, with US$100 million co-invested alongside CFP and US$250 million committed as anchor catalytic capital to the forthcoming strategy. According to BlackRock, the CFP has invested a majority of its capital into a diversified portfolio of wind, utility solar, and distributed solar assets across Africa, Latin America and Southeast Asia. “The CFP platform has proven to be an important public-private partnership that is driving climate impact and economic development in these regions,” said Andrea Hauser, Member of the Management Committee, KfW, a German state-owned investment and development bank, and CFP partner organisation. “I am encouraged to see steps being taken to scale CFP’s climate impact and mobilize significantly more institutional capital into EMs.”
Global leaders have approved a political declaration at the UN General Assembly’s second High-Level Meeting on Antimicrobial Resistance (AMR), committing to targets and actions to reduce the associated 4.95 million annual human deaths by 10% by 2030. The declaration called for sustainable financing and US$100 million in catalytic funding, to help achieve a target of at least 60% of countries funding national action plans – including through the AMR Multi-Partner Trust Fund. Acknowledging that AMR is a “complex problem”, the statement recognised the need for a multisectoral response combining human, agricultural, animal, and environmental sector-specific interventions. On human health, it set a target that at least 70% of antibiotics globally should belong to the World Health Organization Access group antibiotics, adding that all countries should have access to basic water, sanitation, hygiene and waste management services. On agriculture and animal health, it committed to meaningfully reducing the quantity of antimicrobials used in agri-food systems by 2030. On the environment, it underscored the need to prevent and address the antimicrobials discharge and pollution, while calling for increased research. Earlier this month, investors representing US$13 trillion in combined assets set out seven asks, led by the Investor Action on AMR (IAAMR) initiative – co-founded by the US$75 trillion-backed FAIRR investor network. Emma Berntman, Senior Engagement Specialist at FAIRR, said: “A timebound commitment to reduce the quantity of antimicrobials used globally in agri-food systems by 2030 is welcome. However, the dilution of the ‘30% reduction’ target touted ahead of the final declaration to a ‘meaningful reduction’ is a missed opportunity – with an estimated 73% of antimicrobials used on livestock rather than people worldwide.” While investor signatories to the September statement may view the declaration as a “positive step forward”, there is a long way to go before all their asks are met. As such, they will “remain mindful of the sustained effort and increased ambition required to protect public health and portfolios from the accelerating AMR crisis,” Berntman added.
