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07 June 2021 / Company news

Scope ESG Insight – Corporate transparency tracked, Italy’s green bond success, banks’ GAR test

Scope Group’s regular round-up of analyst research and legislative, regulatory and capital-market developments related to environmental, social and governance factors provides authoritative insight into European sustainable finance and investing.

Research highlights from Scope ESG, Scope Ratings and Scope Analysis

ESG disclosure: Europe, N. America lead ranking of countries with most transparent companies

“The limited transparency in ESG reporting that we find among… large, high-profile companies is a reminder of the challenges investors face in assessing corporate sustainability in the absence of internationally agreed, standardised data and reporting standards,” said Diane Menville, head of ESG at Scope Group.

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Sovereign ESG financing: Italy’s first green bond gets warm reception, helping ease funding risk

“As foreign investors purchased 74% of this debut green bond, the government has expanded the investor pool by geography, though we recognise that a core historical credit strength of the Italian sovereign has been a strong domestic investor base considering foreign investors are more prone to capital flight in periods of risk-off sentiment,” said Giacomo Barisone, managing director of sovereign and public sector ratings at Scope Ratings.

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European banks: mind the GAR (Green Asset Ratio)

“The GAR embeds the EU taxonomy as a standard for assessing the greenness of banks’ balance sheets. It underlines how crucial it is for banks to urgently acquire a proper understanding of the EU taxonomy and its implications,” says Nicolas Hardy, director for financial institutions ratings at Scope Ratings.

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Greening central banks’ mandates: Hungary leads Czech Republic, Poland in tackling climate challenge

“The shift among central banks towards addressing climate change is gaining momentum, but the varied approaches of the three central and eastern European countries show how far we are from consensus on the optimal approach,” says Zuzana Schwidrowski, director at Scope Ratings.

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Greenhouse-gas emissions: company disclosure falls far behind ESG reporting requirements

“For even one of the most popular and best-defined indicators of climate-linked impacts, it is still very challenging for companies to report data at all, let alone in a consistent fashion,” said Diane Menville, head of ESG at Scope.

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ScopeExplorer - ESG Quarterly Q1 2021 – ESG-funds market shows record growth

“The number of ESG funds in Germany grew more strongly than ever before last year: a total of 249 new funds were launched that fulfil ESG criteria. The number of new ESG funds has increased for the sixth year in a row,” said Andre Härtel, Executive Director at Scope Analysis.

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Green bond funds - segment grows to 39 funds and AuM of more than 15 billion euros

“The market for sustainable bonds is growing steadily. Growing investor interest is driving increasing demand, while the range of products on offer is becoming broader and broader, with an array of different types of sustainable bonds such as Blue Bonds, Climate Awareness Bonds and Transition Bonds,” said Simone Schieg, director at Scope Analysis.

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The world of ESG – a selection of recent developments and opinion

Members of the European Parliament are concerned that the EU’s Sustainable Financial Disclosure Regulation has been watered down to please institutional investors.

The EU plans to label some natural gas power plants as sustainable investments, after an initial proposal to deny them a green label faced a backlash from some member states.

Pressure is growing on banks operating in Brazil to make sure their lending is not contributing to the deforestation of the Amazon rain forest.

A survey from Pay Governance found that the percentage of companies that include ESG measures as part of their executive compensation calculations is rising, up at 29% in 2021 from 20% in 2020.

German premium auto maker Audi AG expects profits from its latest electric models to match those from traditional vehicles in as little as two years.

Many ESG funds have almost no impact and create “a placebo effect to delay the overdue regulatory reforms in government we need” to address issues such as climate change, Tariq Fancy, a former Blackrock chief investment officer, told Reuters.

 

All Scope Group’s latest rating actions, commentary and analysis are available at www.scoperatings.com and www.scopeanalysis.com