THIS MATERIAL IS A MARKETING COMMUNICATION.
ESG Monthly (June 2022)
This month’s highlights:
EU approves the inclusion of nuclear and gas in the EU Taxonomy; Supreme Court of USA limits federal power to cut carbon emissions; HKEX launches International Carbon Market Council; Mirae Asset insights on physical climate change.
Commentary on ESG news and developments:
- In the European Union (EU), the European Parliament approved nuclear and gas to be classified as sustainable investments under the EU Taxonomy amid controversial views within the EU (Reuters, July 2022).
- In the EU, the European Council set a binding target of 40% renewable energy in the energy mix (up from the previous target of 32%) and a 9% reduction in energy consumption compared to 2020, for the European Union’s “Fit for 55” initiative to cut greenhouse gas (GHG) emissions by 55% by 2030 compared to 1990 levels (ESG Today, July 2022).
- In the United Kingdom (UK), the Financial Conduct Authority (FCA) published for the first time its climate-related financial disclosures in alignment with the Task Force for Climate-related Financial Disclosures (TCFD), covering both regulatory and corporate activities (Financial Conduct Authority, July 2022).
- In the UK, the government launched a task force to support the integration of social factors into the ESG investing practices of its pension schemes (UK Govt, July 2022).
- In the United States (US),the Supreme Court restricted the Environmental Protection Agency’s (EPA) authority to mandate carbon emissions reductions creating uncertainty around the Securities and Exchange Commission’s (SEC) climate disclosure proposals (Reuters, July 2022).
- In Switzerland, the Swiss Federal Council launched voluntary climate disclosure standards called ”Swiss climate scores” for financial institutions of the country (ESG Today, July 2022).
In Asian Pacific markets…
- In Thailand, the Securities and Exchange Commission of Thailand (SEC) and UNDP Thailand jointly launched the Thailand Sustainable Development Goals (SDG) Investor Map, identifying 15 investment opportunities in 8 SDG-related sectors (SDG Investor Map Thailand, July 2022).
- In Japan, the Financial Services Agency (FSA) released the world’s first (voluntary) Code of Conduct for ESG data providers, a move that is expected to increase scrutiny of the quality of ESG evaluation and data provision services across the market (Responsible Investor, July 2022).
- In Hong Kong, the Hong Kong Exchanges (HKEX) announced the launch of the Hong Kong International Carbon Market Council to explore carbon opportunities by developing a Hong Kong-based international carbon market with best-in-class market infrastructure, products and services (HKEX, July 2022).
- In Malaysia, the Khazanah Nasional Berhad $30bn sovereign wealth fund ruled out divesting from the country’s fossil fuel companies, putting questions over their commitment to achieving net zero emissions across its portfolio by 2050 (Financial Times, June 2022).
ESG Insights from Mirae Asset:
Investment Risks and Opportunities of Physical Climate Change
- Asia will likely be one of the regions most vulnerable to climate change, with droughts expected to increase between 5-20% by 21001, larger exposure to energy insecurity and heightened risks of malnutrition, vector and water-borne diseases.
- Physical climate change may cause lower economic productivity and thus lower investment returns. However, on the flip side, it may also give rise to investment opportunities if companies can benefit by incorporating climate adaptation initiatives in their business operations.
- At Mirae Asset, climate considerations are integral to the fundamental research undertaken by our investment analysts to review their sectors’ and each company’s exposure and resilience to physical climate change.
- We leverage physical climate change insights to inform our investment decisions and engagement efforts.
Source: Mirae Asset Global Investments, June 2022
1. Eastspring Investments, April 2021
Chart of the Month: Ramp up of Global Clean Energy Spending
Source: IEA, June 2022
August 02, 2022
Staying Ahead with Mirae Asset’s Latest Insights
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