Newsletter

In Focus: Climate Change Challenges for Financial Sector Players and the Companies They Provide With Capital – Measuring and Managing the Risk

Several encouraging developments for you from the (1) capital markets community and (2) the corporate sector and (3) the combining of forces of each.To start: Morgan Stanley has become the first major U.S. bank to join the Partnership for Carbon Accounting Financials and will begin measuring and disclosing the emissions generated by the businesses that it lends to and invests in.

PCAF is a global collaboration of financial institutions aiming to standardize carbon accounting for the financial sector.  The work of the partnership could profoundly change the way that financial institutions and their corporate clients address climate change issues (and disclose the result of same).  Morgan Stanley will lend its insights and expertise to help the coalition development global standard that can be used by all financial institutions to measure and reduce their own climate impact.

Morgan Stanley’s announcement comes a year after the institution released a report outlining the financial benefits of decarbonization for businesses -- with an earnings potential between US$3-to-$10 billion. In addition to measuring its Scope 3 emissions – including financed emissions, defined by the Greenhouse Gas Protocol as Category 15 emissions.

Also involved in the standards project on the Steering Committee: ABN Amro, Amalgamated Bank, ASN Bank, Tridos Bank, and the Global Alliance for Banking on Values (GABV). Today there are 66 institutions involve in the partnership, with $US5 trillion-plus in collective AUM. The partnership is planning on releasing the standard at the COP 26 global gathering.

The Morgan Stanley Institute for Sustainable Investing builds “finance solutions” that seek to deliver competitive financial returns while driving positive “E” and “S” solutions.  Audrey Choi is the banks Chief Sustainability Officer and CEO of the Institute.  More information is at: www.morganstanley.com/sustainableinvesting.

Second: Encouraging news from the corporate sector and the investor service provider community:  Microsoft (MSFT) is teaming with MSCI – the global investment community advisor on risk and ESG issues – to “accelerate innovation among the global investment industry”.  MSFT’s cloud and AI technologies along with MSCI’s portfolio of tools will be aligned to “unlock innovations for the industry and enhance the ESG ratings agency’s products, data and services”. 

The collaboration begins with migration of MSCI’s products onto the Microsoft Azure cloud platform with Index and Analytics solutions and then on to the MSCI ESG products and ratings. Going forward MSFT and MSCI will explore possibilities to further drive development of climate risk and ESG solutions for investors and corporates.

Third:  Microsoft is aiming to become a Zero-Carbon Enterprise.  The company announced a “suite” of  initiatives to wipe out the carbon “debt” acquired  -- get ready – over the lifetime of this tech company. 
MSFT is joining forces with Maersk, Danon, M-Benz, Natura, Nike, Starbuck, Unilever and Wipro to create a new coalition – Transform to Net Zero. (Environmental Defense Fund/EDF is a founding member).  MSFT peer/competitor/fellow transformation of society company Apple is aiming to have net-zero impact on every product in the next 10 years.

These Top Stories are of a “fit” – as financial institutions develop new approaches to meeting climate change challenges the Global Carbon Accounting Partnership moves forward to bring a new standard to the financial services community.  And the MSCI / MSFT collaboration will be developing tools and resources that align with the standards effort.  MSFT itself is moving toward to become Zero Carbon tech company.  Do stay tuned!

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Top Stories

Morgan Stanley Becomes First U.S. Bank To Measure Carbon Footprint Of Its Loans(Source: OilPrice) Morgan Stanley has become the first U.S. bank to start measuring the emissions generated by the businesses it lends to and invests in, the bank said in a press release.

The news from Microsoft and MSCI on their collaboration:
https://www.msci.com/documents/10199/b8849622-7a48-1901-123e-29d39cca3814

And one more for you – Polly Ghazi of Triple Pundit (part of 3BL Media) prepared an excellent roundup of recent news that includes Morgan Stanley, BlackRock and Boston Consulting.  (And thank you to her for the mention of the G&A Institute S&P 500 research results on corporate reporting.)  We present 3BL media roundups here in the newsletter – look to your right. https://www.triplepundit.com/story/2020/sustainability-reporting-new-highs/121006

Adding Important Perspectives to G&A’s S&P 500 Research Results

What is Greenwashing? The Importance of Maintaining Perspective in ESG Communications   
Source: AlphaSense, Pamela Styles principal of Next Level Investor Relations LLC - “Greenwashing” can generally be described as ‘the practice of only paying lip service to environmental, social and governance (ESG) factors with token gestures.’ In practice, greenwashing occurs when an organization presents...

New report measures boardroom diversity at top S&P 500 companies   
Source: CNBC - There’s a renewed focus on diversity in the boardroom, but a new report shows not much is changing. CNBC’s Seema Mody reports.

Sustainability Standard Setters & Policy Makers

As we monitor developments, we see steps forward and steps backward –

• US Government Accountability Office: ESG Disclosure Is Prevalent but Problematic
  (Source: SASB)
• SEC Adopts Rule Amendments to Provide Investors Using Proxy Voting Advice More Transparent, Accurate and Complete Information(Source: SEC)
• Upward trajectory for ESG disclosure requirements(Source: GRI)
• Exploring Human Capital Management—and Measurement(Source: SASB)

JUMP TO MORE Sustainability Standard Setters & Policy Makers

ESG / Sustainable & Responsible Investment

More good news for Sustainable Investors – one of the leading global asset managers launches an S&P 500® ESG Exchange Traded Fund (ETF).  State Street Global Advisors (SSgA), providers of a suite of themed ETFs, adds a low-cost ETF choice to help investors incorporate ESG in their portfolios:

• State Street Global Advisors Launches S&P 500 ESG ETF(Source: Business Wire)

And some good news about ESG investing through 401-k plans...

• New LEED Guidance Helps Cities and Communities Expand Resilience Efforts in Response to the COVID-19 Pandemic (Source: USGBC)

And some bad news with backward-looking, anti-progress views from the U.S. Department Labor (DOL) intended to limit sustainable investing choices for fiduciaries and their beneficiaries…

• The Bad News: https://www.thinkadvisor.com/2020/06/24/dol-proposes-limit-on-esg-investments-in-retirement-plans/
• Investor Reaction:  https://www.thinkadvisor.com/2020/07/27/dol-plan-to-limit-esg-in-401ks-draws-growing-opposition/

And a broad view from investors on the necessary steps for financial regulators to address the threats to the financial system posted by climate change…

• 40 investors with nearly $1 trillion join other leaders to urge U.S. financial regulators to act on climate change as a systemic financial risk(Source: Ceres)

JUMP TO MORE ESG / Sustainable & Responsible Investment

Corporate Sustainability / ESG

• Effective stewardship means focusing on sustainability: BlackRock stewardship report released(Source: Lexology)
• Microsoft unveils new sustainability steps in effort to remove all carbon produced in company history(Source: Geekwire)
• World's largest oil firm agrees to carbon cuts to tackle climate crisis(Source: The Guardian)

JUMP TO MORE Corporate Sustainability / ESG

From the Agora: Consumers & Sustainability

As we consider the impact of corporate sustainability – ESG – citizenship – CSR and the like on consumer marketing, there is a continuing examination of what the impact is / or may be on the U.S. consumer market segments.  For example, what are members of the Millennial and Gen-Z thinking and doing in their purchasing, investing, and job search activities?  We share some perspectives here:

• How Leading Global Companies Are Using Sustainability As A Market Differentiator(Source: Forbes)
• Survey Shows Growing Consumer Demand for Sustainable Practices(Source: South East Ag Net)
• Survey: Consumer sentiment on sustainability in fashion(Source: McKinsey)

JUMP TO MORE Consumers & Sustainability

Global Sustainability : Forward Momentum!

Are we making progress in global sustainability efforts by companies, investors, governments, civic leadership with the serious challenges posed by the COVID-19 crisis, widespread protests in the U.S., and global economic slowdown?  Plus challenges to forward movement posed by cutbacks in environmental protection in the U.S.?  Here’s some views for you:

• Ceres applauds new House climate action plan that would...(Source: Ceres)
• UN Publication Offers New Ideas for Sustainable COVID-19 Recovery(Source: Indepth News)
• Europe is progressing most towards these UN Sustainability Goals: A report card for Europe(Source: World Economic Forum)
• New LEED Guidance Helps Cities and Communities Expand Resilience Efforts in Response to the COVID-19 Pandemic (Source: USGBC)

JUMP TO MORE Global Sustainability : Forward Momentum!

Sustainability Data That Matters

• Data Dashboard Visualizes SDG Status Across the World(Source: IISD)
• Latest Research From NYU Stern Center for Sustainable Business and IRI Shows That Sustainability Is Surviving COVID-19(Source: IRi)

JUMP TO MORE Sustainability Data That Matters

The Sustainability Highlights eNewsletter is prepared by Governance & Accountability Instittute, Inc. based on continuous monitoring of trends and developments in Sustainability and ESG. Copyrights for other providers are noted where appropriate. Please credit the source if quoted. Content © 2009 - 2020 - All Rights Reserved.

Governance & Accountability Instiute is the "Sustainability Headquarters™" for clients in the corporate, investment, public and social sectors. Based in New York, G&A is a for-profit consulting organization providing a range of value-added strategies, services and resources related to ESG & sustainability to clients in the corporate and capital markets communities. For G&A's full range of services, click on each of the links: Sustainability / ESG Consulting Services, Communications & Recognition Services, Investor Relation Services. For more information, visit www.ga-institute.com or contact us at 646.430.8230 or info@ga-institute.com.