Upcoming: AFME European Sustainable Finance Conference

NatWest is once again sponsoring the AFME European Sustainable Finance Conference. This is a key gathering for those shaping sustainable finance across Europe, featuring 70+ senior speakers from regulators, standard setters, investors, banks and more. 

Our team will be speaking across several sessions, including; progress and priorities for financing the transition, EU Taxonomy: how can usability be enhanced?, and setting a benchmark for ESG data quality.

Book your place.
 

Recap: What sustainable investors want 

NatWest held its 20th webinar in the series ‘What sustainable investors want’, this time honing in on climate adaptation and how investors are evaluating issuers’ strategies and disclosures. Panellists in the conversation were Dr Julie Gorte, Senior Vice President for Sustainable Investing at Impax Asset Management, and Shubha Samalia, ESG Macro Strategist at NatWest.

Read more on this insightful discussion. 

Omnibus update: ‘Stop the Clock’ proposal approved

The European Parliament has approved the ‘Stop the Clock’ directive, part of the EU's Omnibus package, which will delay the implementation of key sustainability reporting and due diligence regulations, including the Corporate Sustainability Reporting Directive (CSRD)1 and Corporate Sustainability Due Diligence Directive (CSDDD)2.

The Council’s Polish presidency said of the proposal: “simplification is one of the priorities of the Polish presidency. Today’s agreement is a first step on our decisive path to cut red tape and make the EU more competitive.”

The postponement still requires formal adoption by the European Parliament and Council.

Read the press release. 

CDP, EFRAG release mapping connecting CDP disclosures with CSRD climate reporting standards

European Financial Reporting Advisory Group (EFRAG)3 and The Carbon Disclosure Project (CDP)4 have published a mapping between the CDP question bank and ESRS E1, which is the EU climate reporting standard.

This initiative aims to demonstrate the degree of alignment between the two disclosures, providing clarity for companies navigating their reporting requirements and building reporting efficiency.

Areas with high levels of interoperability highlighted by the organisations include transition plans for climate mitigation, climate change mitigation targets and gross Scope 1,2 and 3 emissions.

This collaboration highlights the importance of standardising climate-related disclosures for improved transparency and accountability in corporate reporting.

 Read the EFRAG article.

Germany’s new coalition government eliminates sustainability due diligence law

Germany’s conservative CDU/CSU and centre-left SDP coalition intends to eliminate Germany’s human rights and environmental supply chain due diligence law, the Supply Chain Act (LkSG).

The agreement states that the LkSG will be replaced with the EU’s CSDDD, though under the Omnibus this regulation will likely only apply from mid-2028 and will require less frequent monitoring than the LkSG.

The coalition further noted that existing obligations will not be sanctioned until the CSDDD comes into force, other than in cases of severe human rights violations.

Read ESG Today article.

IFRS, TNFD launch formal collaboration on nature-related sustainability reporting

The Internation Financial Reporting Standards (IFRS)5 Foundation and Taskforce on Nature-Related Financial Disclosures (TNFD)6 have announced a new agreement to enable nature-related financial disclosures for capital markets, including building upon the TNFD recommendations in the work of the IFRS’ International Sustainability Standards Board (ISSB)7.

The ISSB is currently researching sustainability-related risks and opportunities associated with biodiversity, ecosystems and ecosystem services (BEES)8 as part of its 2024-2026 work plan.

As part of the collaboration, the ISSB and TNFD will share expertise to inform the ISSB’s BEES initiatives as well as the nature-related aspects of its industry-focused SASB standards enhancement.

Read ESG Today Report.
 

ISS launches new Sustainability Bond Rating

ISS ESG has launched a Sustainability Bond Rating, which aims to provide investors with a sustainability impact and risk assessment for green, social, sustainability and sustainability-linked (GSS/S) corporate and sovereign bonds.

The new rating will use a 12-point grading scale ranging from A+ to D- and will consist of three key pillars, including Alignment with International Standards, Environmental and Social Impact Assessment and the Issuer’s Sustainability Strategy, with each pillar broken down into more granular indicators.

Read ISS Insight.

For analysis and information on the Primary Market, along with updates on the Secondary Market, please take a look at the full monthly newsletter on Market Insights. If you do not have access to Agile Markets, please  Contact us.

UK carbon markets and nature standards released

The UK government has unveiled a new standard for 'high-integrity' nature markets aimed at boosting investment in nature-based projects.

Developed by the British Standards Institute (BSI)9 on behalf of the government, the Overarching Principles Standard ensures consistency and integrity across various nature market types.

This standard encompasses both carbon markets and biodiversity credit markets, promoting sustainable environmental practices.

The initiative highlights the government's commitment to fostering a robust framework for nature investment opportunities.

Global carbon credit standard is launched

Hyphen Global and Social Carbon launched a new standard – ‘world's first Carbon Credit Standard’ – to measure carbon credits through greenhouse gas (GHG)10 fluxes. 

An open-source standard available to all carbon projects, it uses atmospheric monitoring of greenhouse gas fluxes to quantify removals or removals in real-time. 

Western European vs. US Fund Flows – weekly and cumulative SRI/ESG (2024-2025ytd)  

New research suggest investors are more likely to dispose of carbon-intensive assets outside home markets

The paper introduces the concept of carbon home bias, highlighting that European investors tend to overinvest in carbon-intensive domestic firms while divesting from similar foreign firms.

Post-Paris Agreement, European investors have actively decarbonised their portfolios by reducing investment in carbon-intensive stocks both domestically and internationally, particularly influenced by institutional ownership.

Findings indicate that higher domestic institutional ownership correlates with firms reducing carbon emissions, and institutional investors prefer to maintain investments in domestic carbon-intensive stocks post-legislation while divesting from foreign ones.

The research suggests that observed carbon home bias is not driven by differences in risk premiums associated with carbon assets, as foreign carbon premiums appear to be higher than domestic ones. – read more. 

Multinational development banks could unlock sustainable investment at scale: ILX Management

Multinational development banks are increasingly vital in unlocking investment for sustainable development in emerging markets, especially as private capital becomes more scarce.

Despite the commitment made at COP29 to triple climate finance for emerging markets, developed nations provided only $116bn in 2022, demonstrating a significant reliance on public funding.

To bridge the investment gap, Amsterdam-based ILX Management argues multinational development banks need to adopt an ‘originate-to-share’ model that leverages their expertise to create attractive investment opportunities for private capital.

The upcoming summits, such as FfD4 and COP30, present a critical opportunity to reset global financing objectives and encourage private sector engagement in supporting sustainable development initiatives. – read more.

Regular articles from us on market-moving themes, and updates on what we are doing to further our ESG commitment. 

• How transition finance will drive decarbonisation of the UK economy | NatWest Corporates and Institutions

• EU Omnibus proposals – path to revision and simplification of sustainable finance legislation | NatWest Corporates and Institutions

• Electric vehicles: slowing market likely to accelerate again

For the full monthly newsletter login to Market Insights. Don’t have access? Contact us here.

Or, for Corporates looking to discuss any of the above further, please reach out to our authors:

• Caroline Haas, Head of Sustainable Finance Advisory 
• Dr Arthur Krebbers, Managing Director, Sustainable Finance Advisory 
• Rui Zu, Sustainable Finance Advisory
• Thomas Gidman, Sustainable Finance Advisory
• Daniel Bressler, Sustainable Finance Advisory
• Helen Ferguson, Sustainable Finance Advisory
• Niceasia Mc Perry, Sustainable Finance Advisory
• Isabella Crack, Sustainable Finance Advisory
• Zeyno Yurddas, Sustainable Finance Advisory

1. CSRD [1] Corporate Sustainability Reporting Directive
2. CSDDD [2] Corporate Sustainability Due Diligence Directive
3. EFRAG [3] European Financial Reporting Advisory Group
4. CDP [4] Carbon Disclosure Project
5. IFRS [5] The Internation Financial Reporting Standards
6. TNFD [6] Taskforce on Nature-Related Financial Disclosures
7. ISSB [7] International Sustainability Standards Board
8. BEES [8] Ecosystems and ecosystem services
9. BSI [9] British Standards Institute
10. GHG [10] Greenhouse gas
11. FCA [11] Financial Conduct Authority