Webinar invitation: What Sustainable Investors Want – Climate Adaptation

We’re excited to announce our upcoming “What sustainable investors want” webinar on Climate Adaptation taking place on Thursday 3rd April at 3pm (GMT) where we’ll be joined by Julie Gorte, Sustainable Investing, Impax Asset Management and Shubha Samalia, Economics & Market Strategy, NatWest.

We’ll be covering the most pertinent topics in climate adaptation relevant to investors, including:

• Importance of issuer’s using climate adaptation metrics.
• Investor assessments of climate adaptation analysis.
• Types of reporting and disclosures investors expected from issuers.
• Role for labelled debt market in specific adaptation-focused investments.

Register for our upcoming event "What sustainable investors want".

Recap: What next for sustainable commercial papers? 

This article explores key debates influencing the outlook of this asset class including a holistic approach from issuers, the economic impact of adding a sustainability label, the need for greater transparency and the structural evolution of KPI-linked commercial paper (CP)1. 

Currently, there are 35 sustainable CP programmes, with expected growth likely to attract more investors and issuers.

EU announces release of omnibus package

The European Commission has announced the release of its first ‘Omnibus’ package, including a number of proposals to reduce the sustainability reporting requirements for companies, such as removing 80% of companies from the scope of its Corporate Sustainability Reporting Directive (CSRD)2.  

Further proposals include simplifications and scope reductions to key EU sustainability reporting regulations, including:

• Corporate Sustainability Due Diligence Directive (CSDDD)3, delaying its application to large companies by a year to July 2028.
• Taxonomy regulation, meaning reporting would only be mandatory for companies with revenues over €450m.
• Carbon Border Adjustment Mechanism (CBAM)4, eliminating 90% of importers from the scope of the regulation - read more.

EU launches strategy to drive demand for clean industrial products

The European Commission introduced the Clean Industrial Deal, a comprehensive strategy aimed at accelerating industrial decarbonisation and enhancing the competitiveness of European manufacturing.

The strategy proposes the adoption of a clean industrial deal state aid framework to expedite the approval of state aid measures for renewable energy deployment and to ensure adequate manufacturing capacity for clean technologies.

Additionally, it plans to establish an Industrial Decarbonisation Bank with a funding target of €100bn, increase the risk-bearing capacity of the InvestEU programme, and introduce new financing instruments through the European Investment Bank - read more.

The seventh UK carbon budget has been released

The Climate Change Committee (UK CCC5) recommends a 535 MtCO₂e budget for 2038-2042, including international aviation and shipping, aiming for an 87% reduction from 1990 levels.

It highlights that the following key sectoral changes are needed:

• Energy: A major shift to renewable energy, especially offshore wind, alongside reducing reliance on fossil fuels.

• Transport: Accelerating the transition to EVs and improving public transport infrastructure.

• Buildings: Widespread adoption of heat pumps and better insulation to replace traditional gas heating.

• The CCC emphasises that stronger government policies are needed to achieve these goals, including clearer regulations, financial incentives, and better planning for green infrastructure to ensure industries, businesses, and households can meet their carbon reduction targets – read more. 
  

SBTi launches draft corporate net-zero standard V2 for consultation

The Science Based Targets initiative (SBTi)6 has published an initial draft of its revised Corporate Net-Zero Standard for public consultation, which will run until 1 June.

The draft standard includes key areas of proposed revision including:

• Splitting out Scope 1 and Scope 2 emissions, including a commitment to move to low carbon electricity by no later than 2040.

• New options for tackling Scope 3 emissions reductions such as green procurement and revenue generation targets, as alternatives to setting an emissions reduction target. 

• Considering formally recognising companies which are investing in Beyond Value Chain Mitigation (BVCM)7 and the introduction of interim carbon removal targets.

• An assessment and communication of progress against targets requirement to enhance accountability.

• Simplified requirements for medium-sized companies in developing markets and SMEs – read more.

SBTi and CAFA partner to boost corporate climate action across trade associations

The SBTi has partnered with Climate Action for Associations (CAFA)8 to promote corporate climate action across global trade associations.

The collaboration aims to educate trade associations, especially in high-impact sectors like buildings, steel, and concrete, about setting science-based emissions reduction targets.

Industry associations are seen as key players capable of driving significant change, with a commitment to make science-based corporate climate action standard practice.

CAFA will integrate science-based targets into its outreach efforts, providing resources and guidance for associations to help their members set and achieve ambitious climate goals – read more. 

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 here.

European Commission to launch carbon intensity labels for steel, cement and simplify emissions reporting

The European Commission will introduce a voluntary carbon intensity label for industrial products, starting with steel in 2025, followed by cement. 

The initiative is part of the Industrial Decarbonisation Accelerator Act, set for finalisation in late 2025. 

Labels will rely on Emissions Trading System (ETS)9 data and CBAM methodology to harmonise carbon accounting. The EU aims to simplify emissions reporting and reward low-carbon producers with market incentives.

Watershed launches RFP to add 1m tonnes of carbon removal to its portfolio

Watershed is opening its first-ever request for proposals (RFP)10 to procure 1 megatonne of carbon removal credits, aimed at meeting the needs of over 500 global companies with high-impact sustainability programmes. The RFP seeks a combination of nature-based and engineered carbon removal solutions to diversify available options for its customers. 

Suppliers selected through the RFP will benefit from an efficient sale and contracting process and will gain long-term access to Watershed’s growing customer base. They’ll also be prioritised for future purchase cycles and multi-year agreements. 

Watershed’s customers will enjoy aggregated buying power to reduce costs and simplify contract negotiations, enabling them to access high-quality carbon removal projects typically available only to larger buyers. The initiative aims to help companies meet their sustainability targets in a constrained market - read more.

GSAM launches biodiversity bond fund

GSAM intends to invest in issuers that have a “positive impact” on biodiversity and the fund will seek to hold between 40 and 70 mainly investment-grade corporate bonds across global developed and emerging markets. 

GSAM is targeting between $300m and $500m in assets for the fund over the next three to five years.  

A fifth of the fund will be made up of bonds that are labelled to indicate proceeds will flow into biodiversity-related activities, such as forest restoration. The remainder will be unlabelled, general-purpose bonds from issuers whose business supports the preservation of nature, for example waste management companies. 

The fund, which will be registered under the European Union’s Sustainable Finance Disclosure Regulation’s strictest category, Article 9, will seek to match the performance of the Bloomberg Global Corporate Index – read more.

FCA states there are no rules preventing ESG investors from investing in defence companies

The UK Financial Conduct Authority (FCA)11 has clarified that there are no regulations preventing investors with ESG mandates from investing in defence companies. The FCA confirmed that its sustainability rules do not treat the defence sector differently from other industries.

The clarification comes amid concerns that ESG principles might conflict with defence investments, particularly in light of the EU’s Taxonomy Regulation, which some believe creates obstacles for investing in defence. However, the FCA stressed that its rules focus on ensuring sustainability-related information is reliable and transparent, and not on dictating investment choices.

The FCA highlighted that the decision to invest in defence lies with individual financial institutions and their risk appetite, separate from any regulatory requirements, and that ESG rules should not be confused with these internal policies - read more.

Western European vs. US fund flows – weekly and cumulative SRI/ESG (2024-2025) 

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

• NatWest’s Macroeconomics, Geopolitics & Sustainability event in Copenhagen | NatWest Corporates and Institutions
• What next for sustainable commercial papers? | NatWest Corporates and Institutions
• New label issuances attract investor demand: EU Green Bond Standard | NatWest Corporates and Institutions

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

• Caroline Haas, Global Head of Climate & ESG Capital Markets
• Dr Arthur Krebbers, Head of Corporate Climate & ESG Capital Markets
• Rui Zu, ESG Advisory
• Thomas Gidman, ESG Advisory
• Daniel Bressler, Climate & ESG Capital Markets
• Helen Ferguson, ESG Advisory
• Niceasia Mc Perry, Climate & ESG Capital Markets
• Isabella Crack, ESG Advisory
• Zeyno Yurddas, Climate & ESG Capital Markets 

1. CP [1] Commercial Paper
2. CSRD [2] Corporate Sustainability Reporting Directive
3. CSDDD [3] Corporate Sustainability Due Diligence Directive
4. CBAM [4] Carbon Border Adjustment Mechanism
5. CCC [5] Climate Change Committee
6. SBTi [6] Greenhouse gas
7. BVCM [7] Beyond Value Chain Mitigation
8. CAFA [8]  Climate Action for Associations
9. ETS [9] Emissions Trading System
10. RFP [10] Request for proposalS
11. FCA [11] Financial Conduct Authority