Finance
ESG round-up: Australia publishes sustainable finance roadmap
The Australian government has published a sustainable finance roadmap, setting out timelines for a series of key policy pillars and regulatory moves. Among the topics covered are mandatory climate-related financial disclosures, taxonomy implementation and developing sustainable product labels.
Kristy Graham, CEO of the Australian Sustainable Finance Institute, said the roadmap provided “welcome clarity” and praised the mentions of nature and climate adaptation in the roadmap.
Aegon UK is set to switch 74 percent of the £12 billion ($15 billion; €14 billion) largest default fund of its workplace pension offering into decarbonising mandates. The allocations, which will be managed by BlackRock, cover passive equity and debt investments, with the switch set to be made by the end of this year. The funds have an initial reduction in emissions intensity against their benchmark followed by 7 percent year-on-year reductions, and are set to also have a 20 percent improvement in taxonomy-aligned green revenues.
The fund will also begin investing in private assets, with allocations to private debt and alternative fixed income to be managed Aegon’s asset management wing. Infrastructure, private equity and forestry assets will be managed by JPMorgan Asset Management. Lorna Blyth, head of investment propositions at Aegon, said the move would “significantly support” the firm’s desire to put £500 million into climate solutions by 2026.
Dutch pension funds have cut their investments in fossil fuel producers by just over two-thirds since the Paris Agreement, according to new analysis by a coalition of Dutch NGOs. The group looked at seven of the largest funds, which together manage around 70 percent of Dutch pension assets, and found that holdings in fossil companies had fallen from €15.5 billion in 2017 to €5.0 billion in 2023. PME, the pension scheme for the mechanical and electrical engineering sector, and civil service pension scheme ABP have seen the largest contraction in holdings, ditching 92 percent and 81 percent respectively.
The UK’s Financial Conduct Authority has one active enforcement case against a company on climate grounds, according to a freedom of information request filed by legal group ClientEarth. Documents shared with lawmakers this year show that the issues in the case “had been a matter of supervisory focus with the firm for more than two years” before the investigation was opened.
Commerzbank has described proposals put forward by the EU’s financial regulators to reform SFDR as “promising” but said there were some aspects that could be developed further. A note from the bank’s head of ESG research, Stephan Kippe, said the product category proposals should address the main shortcomings of the current framework. He added that there should be a separate impact category, and designing a framework for transition criteria “could prove challenging”.
Planet Tracker has accused the plastic industry of engaging in greenwashing due to its promotion of recycling as the “silver bullet” to the plastic pollution crisis, in a new report. “The plastic industry’s tactics have successfully shifted focus away from upstream measures, such as limiting production and adopting alternative materials,” said John Willis, director of research at Planet Tracker. “By promoting the illusion of recyclability, the industry has effectively passed the financial burden of waste treatment onto local municipalities and waste-pickers, often the financially weakest link in the plastic supply chain.” In May, Responsible Investor spoke to investors who are ramping up engagement with companies on the issue.
Crédit Agricole’s wealth management arm Indosuez has launched an Article 9 green bond fund. The fund, a 2028 fixed maturity fund, invests in around 60 ICMA-aligned green bonds across a broad sector and geographical range.
The Society of Pension Professionals has published a practical guide for UK trustees to engage with their asset managers on ESG. The guide aims to provide an outline of various disclosure requirements, ESG obligations for managers, and information that trustees need from them. Sophia Singleton, the society’s president, said there was “still some uncertainty” around the topic and that the guide aimed to raise awareness and understanding.
The number of companies disclosing a transition plan that they regard as 1.5C-aligned has increased 44 percent since 2022, according to CDP, the environmental data disclosure nonprofit. One-quarter of companies (5,906) that disclosure to CDP report having climate transition plans in place last year. But just 1 percent of firms report against all 21 climate transition plan indicators in CDP’s questionnaire.
The Network for Greening the Financial System (NGFS) has published revised guidance on how central banks should disclose climate-related information. The updates to the guidance, first issued in 2021, introduce two tiers for disclosure: “baseline”, for foundational information that supervisors should disclose; and “building blocks”, for more “advanced pieces of information that central banks ‘are encouraged to’ disclose”. Building block KPIs tabled by the NGFS include forward-looking metrics for physical and transition risks, and their external communications strategy for raising awareness on climate risks.
Finance
Stock market today: Dow hits fresh record, stocks close out strong week as inflation cools
Stocks traded mixed on Friday but closed the week on a high as investors embraced an inflation report seen as crucial to the Federal Reserve’s next decision on interest rate cuts.
The Dow Jones Industrial Average (^DJI) gained 0.3% and finished with a fresh record. The S&P 500 (^GSPC) lost 0.1%, but is coming off a record-high close from the prior session. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) sank about 0.4%.
Despite the mixed trading on Friday, the stock gauges all recorded wins for the week after confidence in the economy returned to the market. The Dow and the S&P added about 0.7%, while the Nasdaq rose 1%.
A solid GDP reading, combined with continued cooling in inflation, has cemented growing conviction that the Fed can nail a “soft landing” as it embarks on a rate-cutting campaign.
The August reading of the Personal Consumption Expenditures (PCE) index, the inflation metric favored by the Fed, showed continued cooling in price pressures. The “core” PCE index, which is most closely watched by policymakers, rose 0.1% month over month, lower than Wall Street forecasts.
The PCE reading appeared to goose up bets on another jumbo-sized rate cut from the Fed next month. More than half of traders — around 52% — now expect a 50 basis point cut.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Elsewhere, China added to its stream of stimulus measures, boosting markets once again. Mainland stocks scored their biggest weekly win since 2008, and luxury stocks are set for their best week in years as hopes for Chinese demand rise. Meanwhile, shares of Alibaba (BABA, 9988.HK), JD.com (JD, 9618.HK), and Meituan (3690.HK, MPNGY) surged amid the buying spree.
Live13 updates
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Zuckerberg faces deposition in AI copyright lawsuit from Sarah Silverman and other authors
One of the most important debates sparked over the sudden rise of generative AI tools is whether the process of training large language models using existing artistic works is a new form of copyright infringement.
An array of authors, media outlets and other creative professionals have sued to stop AI companies from using their content on the internet, arguing that their works are being used without compensation in order to advance a new technology and market opportunities.
Meta CEO Mark Zuckerberg will soon play a direct role in one of the most important lawsuits tackling this subject. Earlier this week a US District Court judge overseeing a suit brought by authors including Sarah Silverman and Ta-Nehisi Coates rejected Meta’s bid to prevent the deposition of Zuckerberg, the Associated Press reported Friday.
Meta had tried to block Zuckerberg’s deposition by arguing that he does not have unique knowledge of the company’s AI operations and other Meta employees could provide the same information. Zuckerberg’s participation will likely draw even more attention to the legal matter, similar to his high-profile appearances on Capitol Hill during Congressional hearings on the role of social media in society.
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Finance
Investors eye PCE, Costco shares under pressure: Yahoo Finance
Wall Street is digesting this morning’s release of the latest Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred measure of inflation. Meanwhile, Costco (COST) shares are under pressure following the wholesale retail giant’s latest quarterly results. Despite recent increases in membership fees, the company fell short of sales expectations. Yahoo Finance’s trending tickers include BlackBerry Limited (BB), SuperMicro Computer (SMCI), and Coinbase (COIN).
Key guests include:
9:05 a.m. ET : Tiffany Wilding, PIMCO Managing Director and Economist
9:30 a.m. ET Angelo Kourkafas, Edward Jones Senior Investment Strategist
10:15 a.m. ET Rich Lesser, BCG Global Chair
10:45 a.m. ET Stuart Kaiser, Citi Head of U.S. Equity Trading Strategy
11:30 a.m. ET Ed Hallen, Klaviyo Chief Product Officer & Co-Founder
Finance
Biodiversity still a low consideration in international finance: Report
Biodiversity-related projects have seen an increase in international funding in recent years, but remain a low priority compared to other development initiatives, according to a new report from the Organisation for Economic Co-operation and Development (OECD).
The report found total official development finance (ODF) for such projects grew from $7.3 billion in 2015 to $15.4 billion in 2022. That’s still less than what the nearly 200 governments that signed the Kunming-Montreal Global Biodiversity Framework (GBF) in December 2022 agreed would be needed to halt biodiversity loss: at least $20 billion annually by 2025, and $30 billion annually by 2030.
Government funding made up the bulk of the ODF for biodiversity-related projects in the OECD report, which is welcome news, Campaign for Nature (CfN), a U.S.-based advocacy group, said in a statement.
“We welcome the increase in international biodiversity finance reported in 2022 but that good news is tempered by a range of concerns,” Mark Opel, finance lead at CfN, told Mongabay.
One concern, CfN notes, is that funding specifically for biodiversity as a principal objective declined from $4.6 billion in 2015 to $3.8 billion in 2022. CfN reviewed hundreds of projects from 2022, which formed the source for the OECD’s report, and found that many either had vague descriptions or focused on other policies like agriculture but were counted toward protecting or restoring nature.
“We need to see more emphasis on funding with a primary focus on biodiversity,” Opel said. “So-called ‘principal’ funding that has biodiversity as its primary goal continues to be down since its 2015 peak. Increases in this type of funding are essential to meet the goals of the GBF … These goals cannot be met through funding with biodiversity as only a ‘significant’ goal that mainstreams biodiversity into projects with other primary goals like humanitarian aid or agriculture.”
The report also found that funding for biodiversity-related activities represent just 2-7% of the total ODF portfolio.
“It is concerning that biodiversity considerations still represent a relatively low share of the total official development assistance,” Markus Knigge, executive director of Germany-based nonprofit foundation Blue Action Fund, told Mongabay. He added it was also problematic that most funding came via loans, which have to be repaid, rather than grants, which are often more appropriate for conservation finance.
CfN says grants are preferable to loans because they don’t add to the debt burden of low-income recipient countries.
At the same time, development funding from major donors such as Germany, France, EU institutions, the U.S. and Japan have been cut in recent years.
“We have seen minimal announcements of new international biodiversity finance since [the GBF signing],” Opel said. “We estimate that only the equivalent of $162 million annually has been pledged since [then], which doesn’t come close to filling the $4.6 billion gap between the $15.4 billion in 2022 and the $20 billion commitment in 2025.”
Banner image: Javan lutung by Rhett A. Butler/Mongabay.
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