Investor and market news

ICMA publishes 2022 guidance updates

• The International Capital Markets Association (ICMA) published a 2022 appendix update to the 2021 versions of the Green Bond Principles and Social Bond Principles. The 2022 update includes new definitions and clarifies terminology and market practice of green and social securitisation.
• The Guidelines for Green, Social Sustainability and Sustainability-Linked Bonds External Reviews have also been updated to include provisions relating to the Climate Transition Handbook. The guidelines now state that Second Party Opinions or external reviews are recommended as opposed to encouraged.
• An updated registry of potential KPIs for Sustainability Linked Bonds (SLBs) was released. The registry includes a materiality matrix for various industries, in addition to a list of approximately 300 suggested KPIs for all sectors, including benchmarks, SDG alignment, and corresponding sustainability themes. This was accompanied by the updated Sustainability Linked Bond Principles Q&A. It outlines the core components of the SLBP and highlights the importance of materiality when assessing KPIs.

Climate Bonds publishes Social and Sustainability Bond Database

• Climate Bonds have launched a Social and Sustainability Bond Database which complements the existing Climate Bonds Green Bonds Database.
• The Social and Sustainability Bond Database will provide investors and policymakers with transparency and credible analysis on global social and sustainability debt, and will evolve with the market.

LMA publishes introduction to sustainability coordinator role

• The Loan Market Association (LMA) published an introductory guide to the sustainability coordinator role.

LMA publishes a series on protecting the integrity of sustainability linked loans

• LMA has published a series of articles focusing on protecting the integrity of sustainability linked loans, including materiality of KPIs (Key Performance Indicators), ambition and additionality, and timeline of a transaction.

ISSB receives global response on proposed sustainability disclosure standards

• The International Sustainability Standards Board (ISSB) has received more than 1300 responses to its draft Climate disclosure standard and draft General Requirements disclosure standard
• ISSB will assess and discuss the responses and the comments will help shape future sustainability disclosure standards.

AASB and AUASB publish their submission to the ISSB’s propose sustainability disclosure standards

• The Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Boards (AUASB) provided their comments on ISSB’s draft Climate disclosure standard and draft General Requirements disclosure standard.
• The AASB and AUASB expressed their view that the proposed sustainability disclosures standards will not achieve the intended objective of improving consistency, comparability and transparency of sustainability-related financial reporting.
• In particular, the AASB and AUASB have concerns regarding the insufficient public consultation period, appropriateness of the proposed industry descriptions and requirements, volume of content being proposed to, and how the proposed industry-based metrics relate to climate.

NSW Government releases interactive Net Zero Emissions Dashboard

• The New South Wales (NSW) Government released an interactive dashboard presenting past and projected future greenhouse gas emissions for New South Wales.
• It provides the public with insight into emission trends and progress being made towards the goals of reducing the state’s emissions by 50% below 2005 levels by 2030 and achieving net zero emissions by 2050.

US Senate passes climate bill to unlock US$370bn for climate action

• The United State (US) Senate passed the Inflation Reduction Act of 2022, unlocking US$370bn to fund climate and energy-focused investments and incentives.
• Climate and energy-focused aspects of the bill will include measures in lowering cost of renewable energy for consumers, promote development of domestic clean energy manufacturing capacity, support climate solutions to decarbonise industry, and invest in climate resilience and mitigation initiatives in disadvantaged communities.

RIAA release Responsible Investment Benchmark Report

• The Responsible Investment Association Australasia (RIAA) released the 2022 Responsible Investment Benchmark Report.
• This report found that responsible investment usually deliver substantial positive financial returns and attributes this to more careful investment selection and more robust risk management practices.

Regulatory developments

Albanese Government passes Climate Change Bill 2022

• The Australian parliament has passed the Climate Change Bill 2022.
• The bill outlines Australia’s emissions reduction target of 43% from 2005 levels by 2030 and for net zero emissions by 2050. It will also establish a formal review process from the Climate Change Authority.

NZ Government passes mandatory climate-related disclosures

• The New Zealand (NZ) Government passed a legislation to make climate-related disclosures mandatory for large publicly listed companies, insurers, banks, non-bank deposit takers and investment managers.
  • The goal of mandatory climate-related disclosures is to ensure that climate change and its effects are regularly considered business activities, help climate reporting entities better demonstrate responsibility, and lead to more efficient allocation of capital to help smooth the transition to a sustainable economy.

Energy efficiency and accessibility standards increase for new homes

• Australian federal, state and territory building ministers have agreed on a series of national reforms to ensure that new homes in Australia will be liveable, accessible and energy efficient.
• Changes will be made to the National Construction Code to include liveable housing provisions, new residentials efficiency standards and condensation mitigation measures.
• The new national minimum residential energy-efficiency standards mean that new houses and apartments will need to meet a seven-star rating, up from the previous six stars.

APRA publishes findings of latest climate risk self-assessment survey

• The Australian Prudential Regulation Authority (APRA) has published findings from its latest climate risk self-assessment survey conducted across banking, insurance and superannuation industries.
• The voluntary survey was designed to provide insights into how APRA-regulated entities are generally aligned to APRA’s guidance set out in Prudential Practice Guide CPG 229 Climate Change Financial Risks.
• The responses to the survey from 64 medium to large institutions, suggest APRA-regulated entities are generally aligning well to APRA’s guidance, especially in the areas of governance and disclosure. Responses indicate that only a small portion of APRA-regulated entities embed climate risk across their risk management framework.

EU approves inclusion of nuclear and natural gas in its green taxonomy

• The European Parliament did not object to the Commission’s Taxonomy Delegated Act to include specific nuclear and gas energy in its taxonomy of sustainable sources of energy under certain circumstances.
• Under the green taxonomy, Natural gas will have to be below certain emissions thresholds and may only be approved to 2030 or 2035 to be labelled as green. New nuclear plants using advanced technologies to extend the life of existing plans may be approved to 2040 or 2050.

Britain’s Financial Conduct Authority calls on outside experts to combat greenwashing

• Britain’s Financial Conduct Authority (FCA) will call on outside experts to advise on policymaking for investments related to environmental, social and governance (ESG).
• The FCA is under pressure to combat potential greenwashing and funds exaggerating their climate credentials.
• The FCA is said to set up a new ESG Advisory Committee as part of its efforts to meet the government’s objective reach a net zero economy by 2050. The committee will include external experts and provide advice on the supervision of how firms apply ESG rules.

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