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ISSB publishes an adoption guide for jurisdictions

The International Council for Sustainability Standards (ISSB) has published its Jurisdiction Adoption Guide to help countries design and plan the implementation or use of its standards. The guide is an evolution of the preview published in February. The ISSB said the resource aims to show market participants how jurisdictions are making progress towards providing globally consistent and comparable sustainability-related information. It describes different approaches to the adoption or use of standards, including full adoption, partial adoption, and consent to use. The IFRS Foundation has also published a regulatory implementation programme, summarizing tools, educational materials and capacity building that will be provided to support jurisdictions.

A group of investors with $5.2 trillion in assets under management has said in a joint statement that it would be “detrimental” to long-term investors if the current US system of shareholder interests is undermined and an increasing number of companies turn to the judicial system to settle disagreements over shareholder proposals. The investors – including AXA Investment Managers, the AP funds, CalSTRS, PGGM and USS – endorsed the Council of Institutional Investors’ position that the US Securities and Exchange Commission (SEC) should remain the preferred arbiter of shareholder proposals. “We believe the SEC is best positioned to lead discussions between companies and investors, including on how to improve the proposal process,” they wrote in the statement.

They added that they believe that the ability to submit and vote on shareholder proposals are fundamental shareholder rights, and that these rights may be at risk in light of the lawsuits filed by ExxonMobil against Follow This and Arjuna Capital, and the amicus brief from the U.S. Chamber of Commerce and the Business Roundtable, which labels sustainability-related proposals as “ideologically driven and detrimental to financial performance.” The investors said they were concerned that these actions will deter submissions on the sustainability issues that are material to the performance of investors’ equity and fixed income portfolios. RI has approached Exxon for comment.

Legal and general investment management (LGIM), Schroders and Abrdn all voted against the climate resolution of the Dutch activist Follow This. The proposal called on the oil giant to “align its medium-term emissions reduction targets, which cover greenhouse gas (GHG) emissions from the use of its energy products (Scope 3), with the target of the Paris Climate Agreement.” LGIM said it voted against the Paris alignment because the wording of the proposal “imposes inflexibility on a company subject to the non-linear demands of the energy transition and could lead to several unintended consequences, including those related with security of supply and the impact of divestments to less responsible operators as we transition to a net-zero emissions economy.” LGIM also voted against Shell’s energy transition strategy.

Abrdn said it “works frequently with Shell” and has set climate “milestones” for the company. It said the change in targets could “erode” investor confidence and make this a “key issue” for future engagement. However, like LGIM, Abrdn said he was concerned that the resolution may not result in real emissions reductions and could have other unintended consequences. Schroders did not publish any reasons. Meanwhile, HSBC Asset Management voted in favor of the climate proposal, saying it believed it would contribute to the “better management” of climate-related issues.

TotalEnergies received almost 80 percent support for his climate strategy during Friday’s General Assembly, a drop in support of about nine percentage points compared to last year. CEO and chairman Patrick Pouyanné was re-elected as director with the support of 75.7 percent of the shareholder votes. This was also slightly lower than the last time Pouyanné was re-elected in 2021, when he received 77.4 percent support. In the run-up to the General Meeting, Total saw increasing pressure from investors to separate the roles of chairman and CEO, following a decision not to place on the agenda a non-binding proposal co-sponsored by 19 institutional investors .

The Global Reporting Initiative (GRI) and the International Financial Reporting Standards (IFRS) Foundation are collaborating on an interoperability project, building on the MOU signed in 2022. The collaboration will optimize how GRI and ISSB standards can be used together to facilitate reporting on an organization’s impact, risks and opportunities. The standards bodies have committed to jointly identify and align common disclosures of their respective standards, both for thematic and sector-based standard setting. A first outcome of the collaboration will be a methodological pilot, building on the recently published GRI 101 Biodiversity Standard and the ISSB’s upcoming project on biodiversity, ecosystems and ecosystem services.

The US has released high-level principles to support the operation of voluntary carbon credit markets domestically and globally. The government said in a statement on Tuesday that it believed carbon offsets “can and should play a meaningful role in facilitating global greenhouse gas emissions,” but acknowledged reports showing that “several popular credit schemes are not meeting decarbonization outcomes have achieved what they claim”. The principles reflect those developed by sector initiatives such as VCMI and ICVCM, and encourage credit schemes to “be credible… and represent genuine decarbonisation” and to “avoid environmental and social harm”.

The EU’s taxonomy advisors are looking on ways in which SMEs can access sustainable finance using the bloc’s green framework. It comes following the publication of research by the Platform on Sustainable Finance on the costs and benefits of making taxonomy alignment public for SMEs. Platform chair Helena Viñes Fiestas said in a statement that the work will consist of developing “simple, practical and easy-to-use tools” for disclosure “without increasing complexity or administrative burden.”

The G7 finance ministers and central bank governors have launched a public policy manual to support a just green transition. At the domestic level, the handbook suggests that policymakers examine carbon pricing, develop pro-growth climate policies and use public communications “to improve the political acceptability and legitimacy of climate policies.” At the international level, the G7 proposes that governments develop common approaches to calculating carbon intensity and minimizing carbon leakage – with companies transferring production to countries with laxer emissions rules.

ESMA has emphasized the importance of the involvement of control functions and senior management in the internal processes and procedures related to the development, design and supervision of marketing communications containing sustainability-related claims. In a new report examining the joint supervisory action launched by National Competent Authorities (NCAs) to gather evidence on the topic of greenwashing, the market regulator said this was necessary to ‘mitigate the risks of greenwashing’ and ensure that sustainability claims are ‘honest, clear and not misleading’. The report adds that ESMA is concerned about the non-compliant examples shared by NCAs regarding sustainability claims in marketing materials, which risk misleading investors.

The Australian Sustainable Finance Initiative (ASFI) has launched a public consultation on its sustainable finance taxonomy. It seeks feedback on the draft headline ambitions for the taxonomy’s environmental objectives, and the draft climate change mitigation criteria for the first three priority sectors under development: electricity generation and supply; minerals, mining and metals; and construction and the built environment. The consultation runs until June 30. The second round of public consultation is planned for the fourth quarter, when further feedback will be sought on climate mitigation criteria for manufacturing and industry, transport, agriculture and land use. There will also be consultations on the Do No Significant Harm (DNSH) framework and minimum social safeguards.

Stay in Australia, Sydney-based asset manager Australian Ethical, has acquired fixed income specialist Altius Asset Management to grow its bond business. The deal will add A$2 billion ($1.3 billion; €1.2 billion) in fund assets to Australian Ethical’s AUM, and bring in seven staff.

Candriam has launched a Sustainable Equity Emerging Markets ex-China Fund. The Article 9 Fund provides exposure to long-term sustainability themes in emerging markets, including technology and innovation, healthy living, climate change, resource efficiency and waste management, and demographic shifts.

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