Secondary Analysis

ESG Secondary Digest — RCS & RDS, Wepa, Takko (9fin) (23/08/2023)

Find ESG secondary market coverage on RSC & RDS, Wepa, and Takko in this week’s Secondary Digest. RCS and RDS perform poorly compared to peers in terms of emissions reduction targets and waste management. Wepa’s GHG emissions targets are robust and in line with peers. Takko’s supply chain has been linked with child labour in the past.

9fin Featured Content

Cloud 9fin — ESG specialist Rupert Davies talks setbacks and opportunities (9fin) (24/08/2023)

ESG investing has come under greater scrutiny for its ability to effect change in recent months, following controversy around the Sustainable Finance Disclosure Regulation in Europe and rising political pushback against the movement in the US. In this week’s episode, our host Jennifer Munnings sat down with Rupert Davies, a sustainable finance specialist, to discuss frankly the state of ESG.

HY Company News

Twitter accused of helping Saudi Arabia commit human rights abuses (4/09/2023)

X, formerly known as Twitter, is involved in a lawsuit alleging that the company has helped Saudi Arabia commit grave human rights abuses against its users. The lawsuit alleges that X disclosed confidential user data at the request of Saudi authorities at a much higher rate than it has for US, UK, or Canada. 

Judge allows age-discrimination lawsuit against Elon Musk’s X to proceed (30/08/2023)

A US district judge has allowed a lawsuit against X to move forward. The company allegedly laid off older employees disproportionately following Elon Musk's acquisition in 2022. The lawsuit alleges that the mass layoffs had a greater impact on older employees, for example, the suit claims that X laid off 60% of employees who were 50 or older and around three quarters of those who were over 60. 

UAW files unfair labor practice complaints against GM and Setllantis (1/09/2023)

The National Labor Relations Board (NLRB) has received complaints from the United Auto Workers union accusing General Motors and Stellantis of failing to negotiate in good faith or in a timely manner. GM and Stellantis have rejected the claims and argued that they cannot meet all the union's demands and remain competitive with non-unionised automakers like Tesla. 

News stories

SFDR downgrades have not harmed investment flows, EU regulator says (1/09/2023)

According to the European Securities & Markets Authority (ESMA) the wave of downgrades under the EU's Sustainable Finance Disclosure Regulation (SFDR) did not negatively impact fund flows. ESMA found that investors were focused more on investing in ESG funds than on the specific SFDR disclosure regime. It also found that between February 2022 and June 2023, during the wave of fund downgrades, funds reclassified from SFDR Article 9 to Article 8 received more inflows than funds that remained Article 9. 

How a downturn in ESG-linked loans prompted a rethink (1/09/2023)

Sustainability-linked loan issuance has declined by almost 70% to $108bn in 2023 compared to a 2021 peak at over $500bn. The drop in issuance is a result of a decline in borrowing in 2023. Less than €50bn of revolving credit facilities were due in in 2023, which borrowers typically convert or refinance into ESG-linked credit lines. Another challenge SLLs face is proving that they are having a positive impact.

Investors translate PAI data into pre-trade warnings, portfolio tools (1/09/2023)

Investment firms like Danske Bank and T Rowe Price, are turning PAI (Principal Adverse Impact) reports into tools for their portfolio managers. Danske Bank implemented a pre-trade warning for portfolio managers in February for investment decisions with major PAI impacts. Danske Bank’s head of responsible investment frameworks and governance said that the warning serves as a last resort for portfolio managers to consider the PAI. At T Rowe Price, portfolio managers are given access to the full PAI profile of their products and are able to see how changes to the portfolio could impact PAIs. 

EU regulator calls for increased scrutiny of biodiversity funds (31/08/2023)

The European Securities & Markets Authority (ESMA) has said that the anticipated surge in biodiversity funds, amid growing public understanding and acceptance of biodiversity risks, calls for increased levels of market monitoring. As of June, funds targeting biodiversity preservation and reservation have grown to $927m. While ESMA acknowledged that biodiversity funds are still a niche group, they are expected to surge.

Investors reluctant to go beyond minimum requirements on voluntary PAI indicators (31/08/2023)

Analysis by Responsible Investor of reporting from 30 large financial institutions based or with operations in the EU found that just under one third report more than the mandatory two additional indicators under the SFDR. A member of ESMA’s sustainable finance group said that the findings were unsurprising given the heavy reporting burden imposed by PAI statements. They continued that there was no incentive to report against additional indicators unless they were relevant for specific products.