Welcome to Sustainable Views’ knowledge hub: the section of the site where we archive useful research we have read over the past weeks, so you can improve your knowledge and easily refer back to your favourite resources
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A call for carbon pricing
If you have not maxed out on predictions for this year, you may want to take a look at Scope’s 2022 outlook report. It centres on measurements, disclosures and regulation as policy makers dive deeper into sustainable finance.
One of the questions the report’s authors ask is: can carbon pricing address climate reporting’s complexity and the risk of greenwashing? Disclosures are key, they note, but they say that “expanded accounting and regulatory frameworks [created] to simultaneously serve multiple stakeholders risk turning out to be lengthy, costly, and insufficiently orchestrated.” And so conclude that “a complementary – if not more effective – approach is to ensure that negative externalities are directly reflected in financial statements through, in the case of greenhouse gas emissions, better and more transparent carbon pricing.”
The divestment dilemma
The decision to divest from or engage with a company because of environmental, social and governance concerns is not always straightforward, so Aon has put together a report to help pension funds decide. Could be interesting material for any other type of investor who has not reflected on this issue yet.
From the report: “Proponents of engagement activity identify positive changes implemented at target companies, citing public support for collaborative investor organisations which have successfully engaged. This contends that to divest is to lose one’s voice, and that bringing about those changes is far more difficult without the influence of asset ownership. On the other side of the debate are those believing that engagement activity may not be worthwhile – what is the benefit of engaging with a firm with the sole purpose of tar sands oil extraction, given the low probability of changing its business model?”
ESG regtech
To anyone fascinated by regtech, this report by Cube will be doubly fascinating. It went through regulatory activity on climate change around the world and found that although the EU has produced more than 47 per cent of total regulatory “issuances” to date, Asia is not too far from the US, both at around 23 per cent.
It also diced the data by individual policymakers to find that while large institutions like the European Commission and the UK’s Information Commissioner’s Office have released more than 30,000 items related to climate change, only about 500 of these were part of regulation currently in force. Interestingly, they found the relatively small Hawaiian government to have been more prolific than much larger peers in this respect.