Global professional services firm Alvarez & Marsal (A&M) has appointed Will Rhode as Managing Director for its new ESG practice in EMEA. The launch of the practice forms part of A&M’s strategy to deliver sustainability-linked transformation and demonstrate how such metrics can lead to financial returns, underscoring the firm’s commitment to driving sustainability up the corporate agenda. The practice will work closely with A&M’s core offerings and senior sector specialists, aiming to enhance and integrate ESG into its core EMEA services, including transaction diligence and advisory, performance improvement and transformation, chief financial officer advisory, and industrial decarbonisation and solutions. “ESG has long been a focus for corporates across the world, [but] the challenge is to deliver operational change that creates financial as well as societal value,” said Antonio Alvarez III, Managing Director and Leader of A&M’s European practice. Rhode brings over 15 years’ experience as a consultant covering ESG advisory, strategy, business and portfolio review, due diligence, and value-creation support. Prior to joining A&M, he was a partner in EY’s Financial Services Strategy and Transactions team. At EY, he was also global private equity ESG leader, responsible for supporting clients on ESG due diligence, transformation and programmes. “By leveraging A&M’s multidisciplinary capabilities, we are uniquely positioned to support clients in their sustainability-linked transformations,” said Rhode. “We have already worked on some exciting projects, from carbon-baselining to supply-chain reviews, and have ambitious plans to continue to grow our team and expand our practice.”
Sustainable Investor
News in Brief
Impact investor WHEB Asset Management has confirmed plans to adopt the ‘sustainability impact’ label as set out in the UK Sustainability Disclosure Requirements (SDR). The label will be attached to the FP WHEB Sustainability Fund, with an updated prospectus for the vehicle to be published in line with SDR requirements. The fund’s name will be changed to ‘FP WHEB Sustainability Impact Fund’. “Impact investing is all we do and all we have ever done,” said George Latham, Managing Partner at WHEB Asset Management. “The average investor on the street doesn’t care what hoops have to be jumped through or what the regulation is called, but they do care that when they invest in a sustainability-labelled fund it does what they expect it to do, by investing in stocks that are aligned with their environmental and social values.” The label approval process was challenging, Latham acknowledged – adding that it is nonetheless a welcome step towards cementing trust with end investors and reducing greenwashing risk. “It was always going to be a challenge to find a balance between being sufficiently detailed and robust, yet accessible, understandable and engaging to retail investors – but we think the end result is worthwhile,” he added. “We’ve seen frustration across the industry with the challenges of complying with the new disclosures required for a sustainability label to be used, but it’s what you would expect so early in any new framework regulation.” The fact that the process is so tough proves that it is working, Latham claimed.
The People’s Bank of China (PBOC), the National Financial Regulatory Administration (NFRA), and six other government departments have issued new guidelines to support the development of green finance in the country. Specifically, the guidelines call on financial institutions to support eligible green and low-carbon companies along China’s Yangtze River Economic Belt in raising capital. The belt is China’s biggest economy zone, covering 11 provinces and municipalities along the Yangtze River – reaching Shanghai in the east to Sichuan and Yunnan in the west. It covers 21% of China’s surface area and represents 44% of its GDP. Per the new guidelines, eligible green and low-carbon firms will be encouraged to raise capital via green bonds and equity fundraising – including through IPOs, refinancing, and M&A activity. The proceeds would be deployed to improve waste treatment, green tech and pollution control. Financial institutions and businesses along the belt will also be encouraged to issue green bonds in line with domestic and international standards to facilitate global participation in China’s low-carbon transformation. In addition, the guidelines promote the use of China’s National Green Development Fund to boost pollution reduction, ecological restoration, and the development of green transport networks and clean energy. “Carbon emissions data quality and carbon footprint management mechanisms will be improved by nurturing high-level third-party tabulators,” the guidelines noted. The document comes two weeks after China’s State Council announced plans to extend the PBOC’s programme to provide low-cost loans to financial institutions until end-2027, aiming to support companies in cutting their carbon emissions. China has pledged to reach peak emissions by 2030, with goals to achieve net-zero emissions by 2060. In July, during the third plenum of the Communist Party’s Central Committee, top Chinese policymakers had also committed to promoting green finance across the country.
The guidelines call on financial institutions to support eligible green and low-carbon companies along the Yangtze River Economic Belt in raising capital.https://t.co/7Mp12B2eZy
— Regulation Asia (@RegulationAsia) September 2, 2024
Monetary policymakers must manage trade-offs arising from the increasing influence of extreme weather events on output and inflation to deliver price stability, according to the Network for Greening the Financial System (NGFS). The advice came in a new report, which aims to provide central banks with a systematic understanding of the implications of physical hazards of climate change for the macroeconomy – including for the conduct of monetary policy. Around three quarters of central banks surveyed by the NGFS said their economies had experienced damages from acute climate events over the last decade. Annual global damages from weather-related hazards have more than doubled in real terms in the past 20 years, reaching US$275 billion in 2022. The NGFS report analysed the economic channels through which the acute physical impacts of climate change can propagate to the economy, setting out an analytical framework to help central banks understand the implications for key macroeconomic variables relevant to monetary policy considerations. “Central banks have typically treated the macroeconomic impacts of extreme weather events as transitory supply shocks, looking through their impact on output and inflation when setting monetary policy,” said James Talbot, Chair of the NGFS Workstream on Monetary Policy. “However, with these events expected to become more frequent and severe around the world, more persistent macroeconomic effects are likely to follow via both domestic and international spillover channels, making them harder for central banks to look through.” The publication is the first in a series of similar documents from the NGFS expected in the coming weeks to support central banks in assessing and understanding the macroeconomic effects of climate change and the transition to net zero.
Around 85% of investment industry employers are largely in favour of introducing standards and education on the responsible use of AI in the sector, according to the CFA Institute. “Increasing accessibility to large language models is rapidly adding to the pace of the AI-led revolution of the investment industry,” said Margaret Franklin, President and CEO of the CFA Institute, in a survey it published this week. “Many leading organisations have expertise with these tools, but industry-wide we see an unsettled picture.” Eighty-two percent of respondents also said that the lack of standards had hindered fast adoption of the technology. Data privacy and security were ranked as the biggest roadblocks to faster AI employment by 16%, while 13% said the lack of knowledge and tools was the most significant hurdle. The majority (70%) of employers said they have a preferred or essential need for workforce training and upskilling on regulatory compliance and AI risk-related skills. Almost half (47%) said their organisation was not well-prepared for potential AI-related regulatory changes. In addition, 68% of employers reported that their workforce was curious about AI, 60% said they were “anxious”, and 48% found resistance to using the technology. “Employers tell us they need best practices, guardrails, and standardised policies to help their teams move safely into the new AI-plus-human-intelligence (HI) era,” said Franklin. “Further, the absence of standards and concerns around data privacy may be slowing down AI adoption.” The survey was conducted across February, covering 200 investment industry representatives from firms managing between US$5 billion to US$100 billion in assets.
Asset manager Robeco has introduced a new family of climate indices to cater to a broad base of investors at different stages in their climate investing journey. The family includes the Developed Low-carbon Climate Leaders Tilt Equities Index, Developed Paris-aligned Climate Leaders Tilt Equities Index, and Developed Climate Leaders Equities Index. The first one offers a low tracking error alternative to a passive market-cap weight index, which will suit investors focused on mitigating climate risk while obtaining an equity premium. The second aims to support investors who want to meet the minimum requirements for EU Paris-aligned benchmarks and have more exposure to climate solutions providers. Meanwhile, the final index targets those considered as “leaders” in the transition to a low-carbon economy. Robeco noted that investors were increasingly seeking climate indices that go beyond reducing backward-looking carbon emissions. As such, the asset manager has incorporated forward-looking, multi-dimensional climate metrics and will further utilise its Climate Traffic Light tool to assess alignment with the goals of Paris Agreement. The metrics will be integrated into the indices to varying degrees, depending on the specific climate objectives and risk profiles of each index. “We decided years ago to not only focus on carbon emissions data when looking at climate investing,” said Lucian Peppelenbos, Climate Strategist at Robeco. “We invested in resources to also evaluate other climate characteristics of companies, such as their alignment with the Paris Agreement, whether [they] provide solutions to lower the world’s future emissions and their level of climate transition risk. We have developed these metrics in-house and integrated them into our investment solutions.”
The presidency of the upcoming COP29 in Azerbaijan has shared a letter to encourage parties to submit early Biennial Transparency Reports (BTR), ahead of the November summit. The letter stressed the importance of the Enhanced Transparency Framework (ETF), making it clear that transparency forms a cornerstone of mutual trust and accountability in ensuring that collective actions to combat climate change are robust, comprehensive, and measurable. Under the ETF, parties to the Paris Agreement are required to submit a BTR every two years, with the first one due by 31 December this year. The submissions should include information on national inventory reports; progress towards nationally determined contributions (NDCs); policies and measures; climate change impacts and adaptation; levels of financial; technology development and transfer; capacity-building support and needs; and areas of improvement. In addition, the letter highlighted the Baku Global Climate Transparency Forum, due to be formally launched on 3 September during the COP29 presidency’s high-level dialogue in Baku – where the COP29 high-level pairs for transparency will also be formally introduced. “We have to be steadfast in our determination to fulfil past promises, deliver on our mandates, and build on the process so that it can address the urgency and scale of the crisis,” the letter read. “As a presidency we are committed to delivering COP29 in a transparent, impartial, inclusive and party-driven manner. We now need everyone to take ownership of the process and engage in good faith to act swiftly.” The document also flagged the two pillars of the COP29 vision: “enhance ambition, enable action”.
Octopus Investments and tech startup Treeconomy have been awarded funding by the UK Space Agency to undertake earth observation, with a view to supporting the asset manager’s natural capital investments. The partners secured a grant under the agency’s ‘Unlocking Space for Business’ scheme, which fosters innovation by combining satellite data and services with other data sources and technology to drive benefits for businesses in both financial services and transport and logistics. Octopus’s natural capital strategy aims to generate high-integrity carbon removal credits through investment in conservation, nature restoration, and sustainable land management. The firm has partnered with Treeconomy as part of its commitment to using technology to achieve efficiency and impact through natural capital investments. The project aims to pilot and embed the use of satellite-based analytics and data tools to guide investment decisions related to nature-based carbon projects, such as afforestation. Investment underwriting principles will be used to develop, refine and integrate a satellite data product within Octopus’ standard due diligence, evaluation, and reporting workflows. Treeconomy will provide Octopus with digital measurement, reporting, and verification services for carbon and nature projects, which will help the firm to monitor, measure, and verify high-integrity carbon credit projects in a transparent and cost-effective manner. “We strongly believe that satellite-based insight, pioneered in the UK, can bring vital speed, trust, traceability, and transparency that has historically been missing from carbon markets,” said Alex Godfrey, Investment Director at Octopus Investments.
A social impact vehicle launched by Big Issue Invest in 2022 has made investments to support more than 65,000 people experiencing systemic inequity, according to its annual report. The Growth Impact Fund was co-launched with social entrepreneurs foundation UnLtd, responding to the Adebowale Commission, which identified a lack of inclusivity and equity in the investment market. More than 65,000 people have benefitted from £2 million (US$2.64 million) of investments in 11 social purpose organisations across the UK – including racialised minorities, students, people in prison, long-term unemployed neurodivergent job seekers, and LGBTQIA+ young people. The fund leverages a grant support system to encourage early-stage entrepreneurs to become ‘investment ready’, Big Issue Invest said. Investees include Living in Fitness – a health and fitness service for older adults that tackles social isolation, frailty and disability, and the need for flexible work opportunities through online and live classes. As of March 2024, the fund had received a total of 900 applications totalling £250 million of requested funding, with the majority demanding equity. “The fund is committed to breaking the systemic barriers that founders from underserved communities face, and … 100% of our investments have met these criteria,” said Sarah Faber, Investment Director at Big Issue Invest. Investors in the Growth Impact Fund include Bank of America, Big Society Capital, Macquarie, Greater Manchester Combined Authority, University of Edinburgh, Joseph Rowntree Foundation, and Charities Trust.
The Science Based Targets initiative (SBTi) has launched the Buildings Sector Science-Based Target-Setting Criteria – a decarbonisation framework for companies and financial institutions in the buildings value chain to set 1.5°C-aligned emissions reduction targets. The criteria focuses on four key actions: stopping fossil fuel installations, with a public commitment to halt the installation of fossil fuel-based heating, cooking, power generation and hot water equipment by 2030; reducing in-use operational emissions – which are associated with a building’s energy use; cutting upfront embodied emissions – which emanate from raw materials, manufacturing, transportation and construction; and retrofitting inefficient buildings. According to SBTi, retrofitting needs to more than double by 2030 to align with the International Energy Agency’s Net Zero by 2050 Scenario. “The [building] sector now has the tools to build towards net zero – companies and financial institutions must take immediate action,” said Alberto Carrillo Pineda, Chief Technical Officer of the SBTi. “Decarbonising both old and new buildings is paramount to tackling climate change. We call on these businesses to lead the net-zero transformation.” The framework was developed in consultation with an independent expert advisory group made up of companies, financial institutions, non-profit and multilateral organisations. The process included a two-month public consultation and a four-month pilot test.
