European Commission welcomes adoption of ambitious rules to limit fluorinated gases and ozone depleting substances

The European Commission has adopted strengthened rules on fluorinated gases (F-gases) and ozone-depleting substances (ODS) as part of the EU Green Deal. F-gases and ODSs currently account for more than 3% of the EU’s total greenhouse gas emissions. The new rules aim to eliminate hydrofluorocarbons (HFCs), the most common F-gases, by 2050. Notably this will impact the Transmission System Operator (TSO) sector where the gases are commonly used in switchgears. By 2030, HFCs placed on the EU market will be phased down by 95% below the 2015 level, reaching complete phase out by mid-century. Export of obsolete equipment with high global warming potential refrigerants from the EU is prohibited, while enforcement measures and market monitoring will control imports, exports and the illegal trade of gases and related equipment. The regulations align with the EU’s 2030 climate goals and climate neutrality by 2050, contributing to global efforts to combat climate change.

Long-awaited agreement on the EU Corporate Sustainability Due Diligence Directive is reached

The Corporate Sustainability Due Diligence Directive (CSDDD), which will require companies to conduct environmental and human rights due diligence, will apply to companies in the EU that have more than 500 employees and a net worldwide turnover of at least €150m. The provisional agreement reached needs to be endorsed and formally adopted by the European Parliament and the Council, and the application dates are yet to be defined.

EU lawmakers approve delay to sector-specific ESG corporate disclosures to 2026

A two-year delay has been approved for the adoption of sector-specific sustainability reporting standards until June 2026. This should allow companies to prioritise implementation of the first set of European Sustainability Reporting Standards (ESRS) that were adopted in July 2023, and aim to mitigate regulatory burdens on companies. Members of the European Parliament (MEPs) have proposed that the Commission still publishes the eight sector-specific reporting standards as soon as possible. The sectors covered include: oil and gas, mining, road transport, food, cars, agriculture, energy production and textiles. 

MSCI develops solution to centralise private market climate and sustainability disclosures

MSCI has launched MSCI Private Company Data Connect, a centralised hub providing access to private companies’ climate and sustainability data and disclosures to general partners (GPs). The platform is designed to support GPs in executing due diligence and risk management processes, responding to sustainability reporting requirements from clients and regulators, and developing sustainable value creation strategies. For companies without emissions data, the platform helps them simplify carbon accounting through software from Persefoni, an AI-powered carbon reporting and measurement tool.

ISS ESG enhances Biodiversity Impact Assessment Tool with Portfolio Report

ISS ESG announced the launch of its Biodiversity Impact Assessment Tool (BIAT) Portfolio Report which will enable investors to compare a portfolio’s biodiversity risk and impact against a benchmark, as well as to view a breakdown by sector, country and key biodiversity drivers. The BIAT Portfolio Report will support investors in light of evolving global frameworks, for example, by showing the portfolio’s impact based on a set of additional Taskforce on Nature-related Financial Disclosures (TNFD) requirements.

Primary and Secondary Market

For analysis and information on the Primary Market, along with updates on the Secondary Market, please look at the full monthly newsletter on Agile Markets. If you do not have access to Agile Markets, please contact us here.

The emerging asset class restoring the world’s lost forests 

Carbon markets are becoming an important tool in restoring and preserving the world’s forests and in ensuring that carbon is captured and remains safely locked away in the future. The rise of voluntary carbon markets, driven by corporate net-zero commitments and regulatory requirements, has the potential to reach an annual traded value of $50bn by 2030. As the market continues to expand, quality assurance is fundamental to ensure the integrity of carbon projects. Projects must (a) prove the ‘additionality’ (providing a carbon storage benefit that would not exist otherwise), (b) mitigate the risk of ‘leakage’ (displacing deforestation) and (c) avoid ‘double-counting’. High-quality credits will be an essential source of funding for nature-based climate mitigation solutions and offer significant opportunities to investors within the broader sustainability context.

Social bonds bounce back as new issuers strengthen global market momentum 

Social bond issuance in the first nine months of 2023 was up by 20% compared with the prior year, outpacing all other sustainable fixed income classes including green bonds. By the end of the third quarter of 2023, social bonds developed into a €552bn market, almost a third the size of the green bond market. Europe is the main driving force in the social bond market, and its role is reflected in the volume of euro-denominated social bonds, which account for 59% of outstanding issuance, although the market is beginning to diversify to emerging markets. Two key factors driving the expansion are the strength of investor appetite and the potential for the entrance of new corporate issuers, although, accelerating this expansion will require wider adoption of issuer standards and increased reliability of data.
 

Sustainable signals: understanding individual investors’ interests and priorities

The Morgan Stanley Institute for Sustainable Investing published the fifth edition of their individual investor survey, highlighting that the interest in sustainable investing is high and growing among global investors (77%). The top drivers for rising interest in sustainable investing globally include the recent inflationary environment (56%), new climate science findings (53%) and the financial performance of sustainable investments (52%). The top barriers for investors globally is the lack of transparency with ESG data (63%) and concern about greenwashing risk (61%). Two years ago, the top barrier was the financial performance of sustainable investments (76%).

Regular articles from us on market-moving themes, and updates on what we are doing to further our ESG commitment.

• Sustainability-Linked Bond market: Q4 2023 
• £1m safety net for domestic abuse survivors as SafeLives and NatWest renew crucial frontline fund 
• Half of 16 – 25-year-olds in the UK say the cost-of-living crisis has had a worse impact on their life than the pandemic 

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Or, for Corporates looking to discuss any of the above further, please reach out to our authors:

• Dr Arthur Krebbers, Head of Corporate Climate and ESG Capital Markets 
• Gustavo Brianza, Head of Debt and ESG Advisory
• Daniel Bressler, Climate and ESG Capital Markets
• James Lander, Credit Trader
• Philippe Bradshaw, Head of European Syndicate
• Rui Zu, ESG Advisory
• Thomas Gidman, ESG Advisory
• Dean Shahfar, Sustainable Finance UK
• Pietro Stimamiglio, Climate and ESG Capital Markets 
• Niceasia Mc Perry, Climate and ESG Capital Markets
  
  

*For any unfamiliar terms used within this article please refer to our Insights glossary