ISSB draft standards. ISSB is holding two live webinars on 28 April for all stakeholders on its proposed standards on general sustainability-related disclosures and climate-related disclosures. The consultation period ends on 29 July 2022, with the aim to finalise the requirements by the end of the year, subject to feedback. Join this webinar to get an overview of the proposals and for an opportunity to ask questions.
India in US cross hairs on human rights. Last week, US Secretary of State commented on US relations with India:
“The United States is supporting India’s ambitious COP26 clean energy commitments by investing in renewable energy projects and mobilizing private sector financing. We also share a commitment to our democratic values, such as protecting human rights. We regularly engage with our Indian partners on these shared values, and to that end we’re monitoring some recent concerning developments in India, including a rise in human rights abuses by some government, police, and prison officials.”
In addition, other reports indicate the Biden administration is “discouraging India from increasing its purchases of Russian energy… ‘The President made clear that he does not believe it’s in India’s interest to accelerate or increase imports of Russian energy and other commodities,’ [Press Secretary] Ms. [Jen] Psaki said.”
Our view: Blinken’s statement could be an indicator that India is potentially changing to a less preferred status for businesses, even as many companies move more manufacturing there from China. This development will be important to monitor as a meaningful change in status, or even credible information about human rights abuses in the country, could have a drastic impact on how companies deal with Indian suppliers in light of corporate ESG commitments.
EU ETS Rethink. Bloomberg reported that:
“European governments and the EU Parliament are currently negotiating a set of climate and energy reforms to implement a tougher emissions-reduction goal for 2030. Some elements, such as limiting the supply of pollution rights, need revising because the upheaval to natural gas and coal markets due to the war is likely to stay for longer than thought…
‘What we need above all is an orderly low-carbon energy transition,’ said [Jos] Delbeke, a former senior official at the European Commission and currently professor at the European University Institute in Florence. ‘Given the new situation related to gas, a higher use of coal in the energy mix can be expected in the short term, and this will lead to a higher demand of carbon allowances.'”
Our view: The actions contemplated in these comments relate to EU energy independence in the face of the Ukrainian crisis and Russian energy, but in my view they were destined to occur regardless. Even before the Russian invasion, the contribution of energy cost increases to inflation was already on the political radar screen, catalyzing calls for governmental action to reduce energy costs. This shows that the public may not be ready to pay higher costs for a rapid, likely disorderly and costly low carbon transition. If you would like to read more on this, the dynamic is explored in detail in my book – available exclusively as a complimentary part of a practicalESG.com membership. You can become a member online or by emailing email@example.com.
Texas’ New Bond RFP. At the beginning of the month, I posted the full text of letters sent to 19 financial service providers/investment management firms stating:
“Your company may appear on the State of Texas’ list of financial companies that boycott energy companies.
Such a listing will prohibit Texas governmental entities from investing in, and may potentially require divestment from, your company; your company’s affiliates and subsidiaries; or investment vehicles affiliated with your company, its affiliates or subsidiaries.
Your Company may be presumed to be boycotting energy companies under Texas law if you fail to timely respond to this request.”
Even though the period for companies to respond has not yet closed, the The Texas Public Finance Authority issued an RFP for $3.4 billion in rate-relief bonds, which apparently was not sent to the 19 advisors who received the original information request. Among the requirements a responding firm must demonstrate are that the firm:
- certifies it does not boycott Israel and will not boycott Israel through the term of this Contract;
- verifies and affirms it and its parent company, wholly owned or majority owned subsidiaries, and other affiliates, if any, do not boycott energy companies and will not boycott energy companies during the term of this Agreement; and
- verifies and affirms that it and its parent company, wholly owned or majority owned subsidiaries, and other affiliates, if any, do not have a practice, policy, guidance, or directive that discriminates against a firearm entity or firearm trade association and will not discriminate against a firearm entity or firearm trade association during the term of this Agreement.
Our view: This is yet another new development to watch in the ESG world, particularly in red states. There is a growing anti-ESG movement by some investors and other legislatures. Time will tell.
From TheCorporateCounsel.net: Liz writes:
- Auditors are getting targeted and proxy advisors and investors are showing they’ll consider climate resolutions on a case-by-case basis.
- Canada mandates TCFD for banks.