Roundup

Elderson’s climate remarks spark backlash

March 7, 2024|Written by Ingrid Walker|Autorité des marchés financiers, International Sustainability Standards Board, European Central Bank

ECB board member’s comments trigger staff row, new tools out for tracking ISSB standards adoption globally, pressure grows for EU deforestation laws to cover banks, and more in this week’s roundup.

ECB staff respond to Elderson’s ‘reprogramming’ comments

Comments made by a European Central Bank executive board member at an internal meeting have sparked a row about the bank’s management style.

Frank Elderson’s remarks, first reported by Politico, suggested that the ECB should no longer take on employees who are not on board with the bank’s green commitments. Elderson reportedly questioned the need to “reprogram” staff with differing approaches to climate policies.

In response, the ECB said: “Climate and nature risks affect our monetary policy and banking supervision mandates, and all colleagues should understand what it means for their work.”

A letter from the ECB staff committee to the senior team, seen by the Financial Times, complained about “disrespectful” language which was “in direct contradiction to the democratic values the ECB and EU stand for”.

President Christine Lagarde has made assurances to EU politicians that “diversity will not be diluted by the passion of something that is critically important”.

New tools released for tracking global adoption of ISSB standards

A new tracker for keeping up-to-date with the global adoption of the International Sustainability Standards Board (ISSB) standards has been released by Responsible Investor.

The regularly updated tool will keep tabs on the progress regulators are making to introduce the IFRS 1 and 2 reporting standards. The tracked information will cover the current status, implementation date and assurance requirements in each jurisdiction.

Although 64 jurisdictions have committed to adopting the ISSB standards, only 14 have begun a formal process to date. The tracker shows that half of the countries that have begun the process so far are in Asia Pacific.

Meanwhile, the ISSB has released a draft version of its adoption pathways guide, which aims to assist regulators throughout the process. A final version will be published in the second half of 2024.

The International Reporting Standards Foundation has also published a list of ongoing and completed consultations on standard adoption worldwide. The resource includes links to relevant outputs from consultations.

CBI: EU should include financial institutions in its deforestation regulations

The EU’s deforestation regulation should be extended to include financial institutions, said the Climate Bonds Initiative (CBI) in its latest report.

The European Union deforestation regulation aims to combat deforestation in forestry and agriculture supply chains by implementing revised due diligence requirements for certain commodities. Under the new requirements, every unit of the commodity sold must have the supporting geo-location data and due diligence systems in place.

Non-compliance can result in fines and exclusion from the EU market.

The regulation does not currently include financial institutions, but it contains a review clause for 2025 that the CBI says it foresees will likely see regulatory coverage expand to include financial institutions.

In its position paper, the CBI states that it supports the inclusion of financial institutions as they are crucial stakeholders in preventing deforestation through capital allocation screening frameworks.

EU regulations require reporting on transition plan financing, says French regulator

Reporting on transition plan financing is one of the biggest adjustments firms must take to meet the EU’s transition plan reporting standards, said French regulator Autorité des marchés financiers (AMF).

In the run-up to the first publication of the transition plans required under the EU’s corporate sustainability reporting directive, the AMF’s user guide explains and contextualises relevant regulatory provisions of the ESRS E1 standard.

Transition planning should not be a box-ticking exercise, the guide says, but a continuous and strategic improvement process for meeting climate commitments.

It also stresses that firms should report high-quality data on the financial and human resources allocated to actions outlined in their plans.

Companies should also implement external evaluation processes that cover scope 3 emissions and allow for dynamic monitoring over short, medium and long-term horizons.

Development banks must innovate to triple their financial capacities

The financial sector must innovate to mobilise the US$2.4tn needed annually for investments in renewables, climate adaptation and other climate-related issues in developing economies, said the UN’s climate chief Simon Steill.

“We need torrents – not trickles of climate finance” to meaningfully execute the transition, said Steill. Multilateral development banks (MDB) should take bold steps to leverage triple the amount of additional concessional and grant climate finance, he added.

Steill stated that MDBs should reassess their approaches to investment risk and the allocation of special drawing rights. Adding that development banks should pursue innovative sources of financing and creative mechanisms to tackle unreasonable debt burdens.

Steill also stated that a multi-decade scaling up of adaptation finance would “blunt the damage of extreme climate events”, and highlighted the importance of building a loss and damage fund that yields rapid and real-world results.

This page was last updated March 7, 2024

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