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ESG roundup: European Parliament OKs taxonomy climate rules

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ESG roundup: European Parliament OKs taxonomy climate rules

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The European Parliament has effectively approved the rules containing the technical screening criteria for climate change adaptation and mitigation under the EU taxonomy.

A majority of MEPs yesterday evening rejected two objections to the climate delegated act. The Council, representing member states, still has to decide on the delegated act, and last month requested a two-month extension to the scrutiny period, until 8 December.

If no objections are raised by the Council, it will be published in the Official Journal of the EU and enter into force on the 20th day thereafter. If the Council objects, the delegated act will not enter into force and the Commission will be required to redraft the legislation.

The parliament’s effective approval of the climate delegated act comes as the Platform on Sustainable Finance (PSF), which is advising the Commission, is working on feedback received to public consultations on an extension of the environmental taxonomy – which it is not calling a “brown” taxonomy – and a social taxonomy.

In a webinar this morning, Nathan Fabian, chief responsible investment officer of the PRI and chair of the PSF, said the advisory body thought it was “getting close to something that works”. The PSF is due to finalise its taxonomy design recommendations this autumn.

Private equity investors align on key metrics

Pension funds have teamed up with private equity managers on a project to advance an initial standardised set of ESG metrics and mechanism for comparative reporting.

The ESG Data Convergence Project has been led by CalPERS and Carlyle, and is also backed by limited partners including APG, PGGM, and the Wellcome Trust, and general partners including Blackstone, Bridgepoint and Permira.

The group has agreed on a core set of six initial ESG metrics, drawn from existing frameworks, for GPs to report in a standardised format for underlying portfolio companies. The data is to be shared directly with invested LPs and aggregated into an anonymised benchmark by Boston Consulting Group.

The plan is for the group to meet meet annually to assess the prior year’s data, and to refine and build on the initial metrics, prioritising materiality.

The collaboration is said to be intended as “a long-term mechanism to increase the quality, availability, and comparability of ESG data in private markets”.

Peter Branner, CIO at APG Asset Management, said that although APG’s ambition went beyond the six metrics identified by the project, “we are excited by the momentum generated, with data collection by private equity managers already underway”.

“Through this collaboration, we expect to push towards comparable ESG performance measurement and wider adoption of ESG as an integrated objective of private equity.”

The partnership is open to any GPs and LPs that agree to support the principles of the group’s work.

GRI revises foundational standards, launches first sector standards

The Global Reporting Initiative (GRI) has completed a major update of the foundation of its standards for sustainability reporting by companies, and also published its first sector standard.

Announcing the launch of its revised Universal Standards yesterday, the organisation said these would provide “the first and only reporting standards to fully reflect fully reflect due diligence expectations for organisations to manage their sustainability impacts, including on human rights, as set forth in intergovernmental instruments by the UN and OECD”.

The standard-setter also today published its first sector standard, which is for oil and gas. It said the standard would “enable complete disclosure on the complexity of transparency demands facing the sector”.

The work of the GRI is being drawn on by the body responsible for drafting the standards for mandatory corporate sustainability reporting in the EU. The EFRAG project task force has also signed a cooperation agreement with Shift, a human rights non-profit that was chaired by the late John Ruggie, author of the UN Guiding Principles on Business and Human Rights. Ruggie passed away last month.

MSCI launches application for net-zero management

MSCI has announced the launch of MSCI Climate Lab, a new application it said would provide institutional investors with the data and tools they need to track and assess companies’ progress towards net-zero commitments and align their portfolios with climate targets for a net-zero future economy.

In particular, it said the application would enable aggregation at the portfolio level of its recently released company Implied Temperature Rise dataset service. Investors will be able to monitor the forward-looking metric across all the funds they manage.

“With Climate Lab, investors finally have the tools to transition their existing investment strategies to net-zero,” said Remy Briand, global head of ESG and climate at MSCI.

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