With investors pushing back on what they see as weak or immaterial claims by issuers of sustainability-linked debt, banks are now citing similar concerns – though they are still arranging deals seen as questionable.
The lucrative business of securities lending – often criticised for lacking transparency and not being aligned with long-term responsible investment – is in the spotlight more than ever. But ESG-related standards are being developed for the industry.
As one of the more eager issuers of bonds linked to inflation, the UK faces the prospect of higher borrowing costs as high inflation begins to look less temporary than initially expected. Sustainability-linked bonds, relatively new instruments, could provide a long-term antidote.
New research reveals many insurers are still shying away from tightening up their oil and gas policies in line with International Energy Agency recommendations. That said, they have made solid progress on coal, having generally closed the gap on the asset and liability side.
Capital Monitor research shows that only one in four banks have linked CEO pay to environmental impact metrics, and the ESG targets that have been set often lack transparency and impact – despite growing stakeholder pressure to address such issues.
The world’s biggest fund house is to offer wider proxy voting rights to many of its institutional clients. But there is scepticism over how much impact the move will have, and other big asset managers are reluctant to make similar commitments despite rising pressure to do so.
Sustainability expertise has become a key priority for corporate boards in Europe but the sharp rise in demand for ESG-focused top-level executives has not driven an equivalent jump in pay, say recruiters.
Investors increasingly claim to be incorporating ESG factors into their portfolios. But are they doing so genuinely and for the right reasons, and what should best practice entail in ESG integration? The concept is still vague, with a clear definition some way off.
Frameworks such as the UK’s Senior Managers & Certification Regime may be adapted – and expanded to sectors beyond financial services – to put company directors on the hook for climate-related commitments.
Under fire for their lack of transparency and buying of out-of-favour fossil fuel assets, private equity managers are being urged by their clients and others to use their capital and clout more positively.
With the US Congress divided over proposed climate and infrastructure bills, and plenty of financial sector opposition to President Joe Biden’s plans, major North American retirement funds stress the need for environmental policy stability.
While banks prefer to hire former bankers for ESG jobs, there is a strong demand for individuals with sector-specific, non-financial backgrounds, Capital Monitor analysis reveals.