30 Jun, 2021
Disclosure top of investors' agenda; LatAm mining bonanza raises ESG concerns
The ESG Insider newsletter compiles news and insights on environmental, social and governance developments driving change in business and investment decisions. Subscribe to our ESG Insider newsletter and listen to the "ESG Insider" podcast on SoundCloud, Spotify and Apple Podcasts.
Investors want more information about the backbone of companies: the people who work for them.
That is one of the messages the U.S. Securities and Exchange Commission has received in its request for comment on whether to make environmental, social and governance disclosures mandatory.
"I'm really struck by the call for enhanced disclosures," SEC Chair Gary Gensler said in a speech last week.
"Investors have said that they want to better understand one of the most critical assets of a company: its people. To that end, I've asked staff to propose recommendations for the commission’s consideration on human capital disclosure."
Disclosure was also top of the agenda when the International Organization of Securities Commissions, which encompasses global securities regulators, underscored in a new report the need for consistent, comparable and reliable sustainability reporting for investors. It also said disclosure standards set by a soon-to-be-created International Sustainability Standards Board could become mandatory. IOSCO is backing the IFRS Foundation's work in forming the new board.
In this week's podcast, we speak to International Accounting Standards Board Vice Chair Sue Lloyd about the new standards board, which will address common ESG standards as well as climate-related financial disclosure.
In this week's newsletter, we also examine the consequences of a rare metal mining bonanza in Latin America, and we see how growing shareholder activism in Japan is putting pressure on the country’s lenders to phase out fossil fuel financing.
Chart of the Week
US climate policy, mining reform efforts on possible collision course
The U.S. wants to increase domestic production of lithium, nickel, copper and other metals used to make the lithium-ion batteries necessary for renewable energy. But the Biden administration also wants tougher standards for mining, setting up a possible showdown between environmental groups and moderate Democrats.
Read more >>
Japan's banks face rising climate activism despite vetoed motions
Shareholder activism in Japan has been growing in recent years, mostly directed at corporate governance issues in large companies. Although activist investors failed to push through climate motions at two megabanks in Japan over the past year, pressure is building on lenders to rein in financing for fossil fuel projects and support an international effort against global warming.
Read more >>
Turmoil casts doubt on Latin America's mining of energy-transition minerals
Latin America could be on the verge of a mining boom. Governments and businesses globally are pledging to cut their greenhouse gas emissions, and the region is a critical supplier of the minerals that underpin solar panels, wind turbines and electric vehicles. But extracting those minerals is expensive and creates its own set of environmental and social consequences.
Read More >>
Sustainability-linked bonds in 'rapid growth' as more firms tap ESG debt market
Demand is rapidly growing for sustainability-linked bonds, a debt instrument that awards issuers for their ESG performance. Unlike green and social bonds, this nascent debt comes with no restrictions on how the proceeds can be used. That flexibility is creating a wider range of issuers, and hard-to-abate sectors such as industrials and materials feature far more prominently than in the green bond market.
Read More >>
Podcast
Standard setters work to close climate accounting gaps
In this episode of the "ESG Insider" podcast, we look at how investors are increasingly calling on companies and their auditors to address climate change in financial reporting. Accounting standard setters and international auditing boards are also requesting that firms pay more attention to future climate risks when they produce their financial results. We talk to the International Accounting Standards Board's vice chair about plans for a new international sustainability standards board and we speak to Deloitte for an auditor's point of view.
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