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House of HR — ESG QuickTake (9fin) — UPDATE (12/12/2022):

House of HR reports no concrete emissions targets, whereas competitors have SBTi-verified near-term targets and net zero commitments. It is currently under investigation due to a fatal accident of a temporary worker on customer premises. Limited information is provided on House of HR’s approach to health and safety. In 2021, the company reportedly dealt with zero large data security incidents and 2,000 low-risk incidents.

If you are not a client, you can request a copy of the House of HR ESG QuickTake here.

PRI in Person 2022: Data, Disconnect and Divestment (15/12/2022):

Three key themes underpinned the PRI in Person Barcelona conference two weeks ago; effective use of ESG data, the disconnect between investors and companies, and divestment. Sometimes the moments of real insight arose between panels, in the networking hall. One PRI representative said “everyone in this room knows we’re heading for 2-3°C”. He argued that warming is now unavoidable and that we need to focus on physical risk more than anything else. Despite this, participants at the event were generally optimistic about the future of ESG investment.

News & Stories Followed by 9fin's ESG team

HSBC to stop funding new oil and gas fields as part of policy overhaul (14/12/2022):

HSBC will stop funding new oil and gas fields and is now expecting more information from energy clients over their plans to cut carbon emissions. "HSBC's announcement sets a new minimum level of ambition for all banks committed to net-zero," said Jeanne Martin, Share Action. HSBC said it would continue financing energy companies at the corporate level to help them overhaul their businesses and drive development of cleaner energy sources, and would assess their strategic plans annually.

BlackRock Is Becoming the Republican Bogeyman for ESG (14/12/2022):

Florida, under the direction of Governor Ron DeSantis, is pulling $2bn from BlackRock and encouraging managers who run the state’s pension funds to withdraw their holdings (worth around $13b). His reason: BlackRock’s ties to ESG. DeSantis’ main complaint is that ESG investing “sacrifices returns at the altar of the select few, unelected corporate elites and their radical woke agendas.” He also singled out Larry Fink, saying BlackRock’s chief executive officer is “on a campaign to change the world” by championing ESG. But while Fink has spent the past few years singing the praises of ESG, he’s been regularly accused of allowing BlackRock to profit from investing in unsustainable industries.

Industry welcomes potential regulation of ESG ratings providers (12/12/2022):

As part of Jeremy Hunt’s announcement of 30 reforms to financial services regulation, the government will consult on bringing ESG ratings providers under the Financial Conduct Authority’s reach. In a statement, the government said HM Treasury will join the ESG data and ratings code of conduct working group. “These services are increasingly a component of investment decisions, and the government wants to ensure improved transparency and good market conduct.”

Vanguard self-report of greenwashing led to smaller fine, experts say (14/12/2022):

Vanguard’s Australian unit self-reported its own regulatory breach that led to three greenwashing infringement notices issued by the securities watchdog last week. The pre-emptive move by the US asset manager likely led to a much smaller fine, experts say. The greenwashing involved three funds under the Vanguard International Shares Select Exclusions Index Funds, which were structured to exclude companies that were involved in significant tobacco sales but tracked an index that did not actually have that specific exclusion.

Fewer companies gain top score for environmental disclosures in 2022, report shows (13/12/2022)

Just 12 companies out of more than 18,700 worldwide achieved a “triple A” score for their environmental disclosures in 2022, according to the latest report from Carbon Disclosure Project (CDP). This was even fewer than the 14 companies identified the previous year. Many companies are finding it challenging to meet the requests for more information as regulators and investors demand improvements in environmental reporting and disclosure standards. Over 29,500 companies with a combined market value of more than $24.5t were graded an “F” after failing to provide any data to CDP.

EU struggles to counter Joe Biden’s big green push (12/12/2022):

Following a massive US package of green subsidies through Joe Biden’s Inflation Reduction Act (IRA), Ursula von der Leyen has said that the EU would match Washington’s support and relax its rules on how much help member states can offer. However, in reality, it will be extremely challenging for Brussels to offer help on the scale that the Biden administration has done. The IRA package involves a mix of subsidies and tax credits. But offering credits to the entirety of the EU is not possible; responsibility for tax policy lies with member states. In terms of subsidies, the EU is constrained by state aid rules; member states cannot offer companies support that puts their competitors elsewhere in the bloc at a disadvantage.

Biodiversity offsets: Carbon credits’ contentious cousins (7/12/2022):

One of the top issues up for debate at COP15 was “biodiversity offsets”. The credits are controversial due to the trade-offs they require. For example, to build an airport, you may need to destroy wetlands inhabited by flamingos. You may choose to “offset” this by nurturing a similar environment nearby. You would be able to plough up wetlands if you build a habitat for a species that is more endangered. In their report, the UNDP and IIED explicitly stressed that biocredits should not be used “to offset damage elsewhere”. Instead, according to the report, the instruments could flourish as a new financial asset class in its own right, to expand “private and public finance for conservation in ways that benefit marginalised people”.

Product hints, tips, and updates

ESG dropdown button: You can now easily find 9fin’s ESG QuickTakes using the ESG dropdown option on the 9fin homepage. You can also track sustainable bonds and sustainable loans.