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Invert Insights September 1, 2023

– BlackRock declared itself to be backing away of ESG, in theory
– Net Zero Standard for North American banks
– EU lawmakers push to implement a uniform approach for sustainability
– A hidden climate crisis in the United States


Your weekly Invert Insights are here:

  • BlackRock declared itself to be backing away of ESG, in theory
  • Net Zero Standard for North American banks
  • EU lawmakers push to implement a uniform approach for sustainability
  • A hidden climate crisis in the United States

BlackRock Declared Itself to be Backing Away of ESG, in Theory

BlackRock has pulled back on backing shareholder ESG proposals, with the company voting against a record 91% of them, contrasting with prior years’ higher support. The complex reasons for this shift include the politicization of ESG considerations, including state-level legislation limiting ESG investments and proxy battles. However, BlackRock will still discuss decarbonization, corporate governance, and social issues. The company also pointed to the volume of shareholder proposals and the poor quality of many as the reasons for the change in voting patterns. 

Invert Insights:

‘Green terms’ are facing heightened scrutiny, and ESG is no exception. Some have politicized this term, alleging it’s tied to a political agenda, while others wield it as a business weapon. Consequently, it’s no surprise that investors are redirecting their votes towards backed outcomes. A proxy vote against ESG doesn’t signify an environmental setback, but rather a reaffirmation of investors’ dedication to endorsing tangible proposals.

Net Zero Standard for North American Banks

Ceres, a sustainability non-profit organization, proposed a new standard for North American banks that complements the Net Zero Investment Framework (NZIF). The standard aims to set out investor expectations and best practices for their transition to net zero. It focuses on bank’s financed and facilitated emissions (scope 3 emissions), which are over 700 times higher than a financial institution’s direct emissions and covers ten areas (1) Bank commitments, (2) Targets, (3) Exposure and emissions disclosure, (4) Historical emissions performance, (5) Decarbonization strategy, (6) Climate solutions, (7) Policy engagement, (8) Climate governance, (9) Just transition, and  (10) Annual reporting and accounting disclosures. 

Invert Insight:

Given that the scope 3 emissions of a bank are much larger and reflect greater business risks and opportunities, the standard will help them to identify and manage climate-related risks in their portfolios, protecting the long term value of their portfolios and ensuring financial stability. 

EU Lawmakers Push to Implement a Uniform Approach for Sustainability

European Union lawmakers have backed regulations mandating large corporations to identify and mitigate human rights abuses and environmental damage caused by their suppliers. They have given the green light to the draft of the EU Corporate Sustainability Due Diligence Directive (CSDDD). This directive applies to EU companies employing over 250 people with a turnover exceeding 40 million euros ($44 million). Non-EU companies, including those from the United States, are also covered if their net turnover equals or exceeds 40 million euros. Additionally, lawmakers have supported a legal requirement for companies with over 1,000 employees to have their directors oversee a carbon emissions reduction plan.

Invert Insights:

The proposed Corporate Sustainability Due Diligence Directive aims to implement a uniform approach for big companies’ sustainability due diligence obligations. Although it is in the draft, corporations can start preparing by checking current compliance programmes, policies and processes and closely monitoring legislative developments.

Trending: A Hidden Climate Crisis – The United States is Using Up It’s Groundwater Like There’s No Tomorrow

The New York Times’ investigation reveals a hidden climate crisis in the United States: widespread depletion of aquifers, the primary source of 90% of the nation’s water supply. As industrial farms and cities exploit groundwater at unsustainable rates, irreversible damage is being inflicted on the economy and society. The depletion reduces crop yields, land subsidence, and even land cracking. Over-pumping accelerates arsenic contamination, saltwater intrusion, and water scarcity. Climate change compounds the issue with shrinking snowpacks and increased reliance on groundwater. This urgent predicament lacks comprehensive regulation and necessitates coordinated action to prevent further catastrophes.

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