9 Jun, 2021
Europe's banks link executive pay to diversity; putting a price tag on nature
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.
How much would you pay for a bumblebee?
That is the kind of unusual question that asset managers, executives and insurers will increasingly be asking as they seek to measure the impact businesses have on the world's natural resources and how that rising toll could, in turn, affect revenue and profit. The effort to put a price tag on nature takes a small yet important step forward June 10 with the launch of the Taskforce on Nature-related Financial Disclosures, or TNFD.
The TNFD launch is timely — earlier this week scientists reported that CO2 hit the highest level since accurate measurements began 63 years ago. "If we want to avoid catastrophic climate change, the highest priority must be to reduce CO2 pollution to zero at the earliest possible date,” said Pieter Tans, a senior scientist with NOAA's Global Monitoring Laboratory.
In this week's newsletter, we look at how the energy sector is grappling with the future of natural gas as it accelerates toward less carbon-intensive operations. We also explore the challenges Europe's major banks face in linking executive pay to diversity and inclusion targets. And we talk to Ceres about what Exxon's recent board ouster means for directors in other sectors.
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Top stories
Plight of the bumblebee: Task force takes aim at nature-related financial risk
The Taskforce on Nature-related Financial Disclosures launches this week with the goal of delivering, in 2023, a framework for companies and other organizations "to report and act on evolving nature-related risks, in order to support a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes." In other words, to usher in a coherent system of definitions, benchmarks and indicators that allow companies to measure, report and eventually address nature-related risks in their supply chains.
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Natural gas in transition: High-stakes battles over gas use take shape
With costs falling for renewable power, the longevity of the gas sector depends on cost competitiveness and its flexibility to back up intermittent power sources. Changes in gas use will in turn dictate demand for pipeline capacity, with some assets at risk of becoming stranded. Other pipelines stand to benefit from growing liquefied natural gas demand and forays into hydrogen blending in the gas stream. Read the first article in a five-part series on natural gas and the energy transition.
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Europe's major banks link exec pay to diversity targets as trend gains momentum
Nearly all of Europe's major banks are now linking executive pay to diversity and inclusion targets, S&P Global Market Intelligence data shows. Adopting diversity targets in executive pay evaluations is "important, because ultimately, the things that you use to determine pay are a really strong indication of the things that you're saying are important strategically," says Katy Bennett, a director focused on diversity and inclusion in financial services at PricewaterhouseCoopers. But getting those targets right is the hard part.
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Corporate governance reform can help drive long-term value in Asia-Pacific
Corporate governance is becoming a hot-button topic among investors, governments and companies in Asia-Pacific. Regulators and companies in the region are seeking to ensure that all stakeholders, including company management teams and shareholders, are on the same page, with the goal of creating long-term value. The right talent, technology and transparency are needed to improve corporate governance, new research finds.
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Podcast
Exxon Mobil shareholders recently voted to replace three board members with directors proposed by a small activist investor group — known as Engine No. 1. The group claimed Exxon was not moving fast enough to address climate change and that the board needed a fresh perspective to speed things up. To get a sense of what the vote means for both Exxon and other companies, we talked with Andrew Logan, senior director of oil and gas at Ceres, which works with investors to press companies to tackle climate change.
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