The search for climate-savvy board directors

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As the turbulent year nears its end, we look back at some of 2021’s hottest topics in sustainable business and finance. Among them is the discussion of “divement vs. engagement”. Another interesting case study came this week as UBS Asset Management announced that it would exclude ExxonMobil and four other energy groups from the scope of “climate-friendly” funds.

UBS, like many money managers, claims that owning a large oil company in these funds can put pressure on them to accelerate the green transition. Three years ago, we started lobbying 49 companies that we identified as delays in energy conversion. Francis Condon, Head of Thematic Engagement at UBS Asset Management, says most people have improved their screenings. “But if we don’t see any concrete progress, we’re taking action.”

With dozens of fossil fuel producers still holding sustainable funds, UBS has barely abandoned its focus on engaging with the management of fossil fuel companies. But that move shows that fossil fuel divestment drives are gaining momentum. Some questions Are you doing anything to raise the cost of capital for polluted companies?Recently Report According to the Global Fossil Fuel Divestment Commitments Database, there are approximately 1,500 institutions currently working on some form of fossil fuel divestment, with $ 39.2 trillion managed in between. This is up from just $ 52 billion in 2014, the report said.

Investor stewardship discussions will continue to be highly valued in the 2022 Sustainable Business Agenda. Check out the January 5th special edition to see what else the New Year brings.

In the meantime, we take a two-week break and hope that all readers will have a safe and peaceful winter vacation. — Simon Mondy

Companies are facing a gap in ESG skills

According to a new global survey by Insead Business School and headhunter Heidrick & Struggles, three-quarters of board directors now see climate change as a central issue for a company’s long-term success. However, only half said the subject was properly integrated into the business’s investment decisions, and the majority said the board needed to increase its knowledge of climate.

“Many directors are overwhelmed by the scale and complexity of their environmental, social and governance (ESG) responsibilities,” the report warns. This represents an increasingly problematic situation for many boards. People with severe climate expertise usually lack the business experience traditionally required for company directors.

Survey results show that more than 200 companies are currently Involved Until net zero emissions are reached by 2040.

Recruiters told Moral Money that companies aren’t just facing a shortage of candidates with strong sustainability qualifications at the board level.

“ESG talent is highly sought after,” said Ellen Weinreb, CEO of Weinreb Group, a sustainability-focused recruiter. Workers in this area have more work options and bargaining power than ever before, she said.

PwC showed significant demand for talent in this area when it announced that it would invest $ 12 billion to create an ESG-focused 100,000 role in the next five years.

Others take a hands-on approach to skill gaps. AllianceBernstein has developed a course on climate-related risks with Columbia University for analysts and fund managers. Accenture provides ESG training to 600,000 employees through online interactive video content for each department.

The demand for these skills has already begun to influence the agenda of business schools in MBA programs. Integration Make ESG topics a core course. However, students who have just graduated from business school, even if they are familiar with sustainability, rarely address the shortage of climate-savvy board candidates.

“Ultimately, we all will need sustainability experts,” said one respondent to the Insead / Heidrick & Struggles survey. “Ultimately” may not be enough for companies that are under pressure to carry out high-climate pledges. (Kristen Talman)

As the aspirations grew, questions were raised about trees and customers.

Deforestation area of ​​the Amazon Rainforest in La Brea, Brazil

Deforestation area of ​​Amazon rainforest in La Brea, Brazil © AFP via Getty Images

This year, the tree planting business is enjoying in the sun.Major banks like Lloyds When JP Morgan It has partnerships with conservation groups, and some investment trust companies are also squeezing cash for trees when shareholders switch to electronic distribution of documents.

However, few financial institutions are as aggressive in tree planting as Aspiration, a California fintech that offers online savings products. Ambitious customers can fund saplings when they round up their purchases to the nearest dollar and are eligible to be rewarded when they reach certain tree planting milestones. The business also has a growing corporate division that has built corporate partnerships with companies such as the Los Angeles Clippers Basketball Team and Hanwha Group’s subsidiaries in South Korea.

The sunny story of the inspiration captivated Wall Street’s photosynthetic machines. The company has recently been worth $ 2.3 billion and is ready to merge with a blank check company in early 2022. Last week, Aspiration secured a $ 315 million investment from Oaktree Capital and former Microsoft CEO Steve Ballmer.

But some people are questioning their desires.New York University Professor Scott Galloway I got it Aspiration has touted 5 million members, but in a footnote to the investor material, Aspiration states that it has a total of 361,000 actual customers. (The company defines a member as someone who has signed the Terms of Service, even if they have not yet created an account.)

“It’s apples and oranges. We, and almost every FinTech there, have different measurements for members participating in our community and customers using one or another product. That’s why I think we’re talking about members, “said Andrei Cherny, Aspiration’s CEO and co-founder. I told moral money.

ProPublica, Research Journalism Website, It pointed out The inspirational claim that we planted a 35m tree includes a tree that we paid for but is not yet on the ground. The company then modified it to claim to have planted a 16m tree.

Aspiration is a company certified by B Corp — Nonprofit Group B Lab to achieve high environmental and social standards. Since 2016, Aspiration has been BCorp’s “World’s No. 1” winner. 7 times or more. However, following the concerns raised by Galloway and ProPublica, B Lab said it is considering these allegations as part of the complaint assessment process. BLab declined to comment further.

Sustainable product providers are gathering levels of scrutiny that other sectors, such as high-flying tech start-ups, have managed to avoid.Often this scrutiny For good reason.. However, to reach the true root of the problem, we will need the widely adopted global standards for carbon offsets and other types of green accounting.

“I welcome them [standards] It makes it clear who is doing this the right way and who isn’t doing it right, “Cherny said. (Emily Goldberg and Patrick Temple-West)

Advice from Tamami

Nikkei’s Shimizu Tamami helps keep stories that you may have missed in the Eastern Hemisphere up to date.

This month Typhoon in the Philippines It highlights the serious dangers posed by climate change in Southeast Asia. However, despite growing climate threats, the region is set to increase carbon emissions from new coal-fired power plants.

By 2030, the Philippines, Vietnam and Indonesia have a combined coal pipeline of approximately 45 gigawatts of coal-fired power plants. New report According to the Institute of Energy Economics and Financial Analysis.

Haneea Isaad, a research associate at IEEFA, states that 45 gigawatts is “huge” when compared to the total power capacity of the Philippines (currently around 26 gigawatts). Isaad argued that the additional coal capacity could pose a risk to the success of the Asian Development Bank’s early retirement plan for coal-fired power plants.

Last month, ADB launched a program called the Energy Conversion Mechanism (ETM). The program plans to purchase coal-fired power plants in the region, eliminate them within 15 years, and reduce their normal lifespan by more than half.

The ambitious plan aims to reduce about 50% of coal-fired power plants in the three countries through a public-private partnership. According to ADB, the success of this program could reduce carbon dioxide emissions by 200 million tonnes annually. This is equivalent to removing 61 million cars from the road.

“The size of the Southeast Asian coal pipeline shows the reality that coal confinement worsens only if the business continues normally,” Isaad said. She urged policy makers to take appropriate steps to ensure that the ETM scheme works properly.

Grant Hauber, an energy finance analyst at IEEFA, said the loss of power capacity or employment due to the closure of coal-fired power plants should be addressed elsewhere, “just transitioning” the green shift to western investors. I urged him to play a role.

“If ETM lacks this balance, future investors will have to insist on this approach,” said Hauber. “Not only is it good for the inflowing economy, but a sound ETM design is actually Helps mitigate the whole. Risk to investors. “

Smart lead

  • London-based fund manager Schroeder will pay £ 358 million to acquire a 75% stake in Green Court Capital, one of Europe’s largest renewable infrastructure managers.This move is the latest example of closing a deal in the asset management industry and is highlighted. Greater demand for renewable energy assets.

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