Category Archives: ESG

Green Bonds: Addressing Solvency II Benchmarking Requirements

Solvency II is the new region-wide supervisory framework for insurance and reinsurance companies operating in the European Union.  The new regime includes three pillars, calculation of capital reserves, management of risk and governance, and reporting to the national supervisory authority.  Moving to a risk-based approach in calculating solvency capital requirements (SCR) will require reassessment of Read more […]

Carbon Pricing Is Essential for Effective Climate-Related Financial Disclosure

The Financial Stability Board’s Task Force on Climate-related Financial Disclosures published its final report on June 29, 2017, leaving many companies and market participants considering how best to implement its important recommendations. The recommendations are groundbreaking because they recognize climate change as a systemic risk to the financial stability of the global economy and present Read more […]

China’s Bank Stress Test and its Exposure to Environmental Risk

In just over two years, China has developed a policy framework for green finance that aims to shift capital from “brown” fossil fuel industries to “green” low-carbon technologies. We have also seen impressive growth in Chinese green bond issuance that has taken the world by surprise. On joining-up green finance policy and practice, China is Read more […]

Green Bond Update for May 2017

Green bond Issuance picked up in the first two weeks in May compared with the previous two-week period.  Twenty new green labeled bond offerings were announced, including 11 U.S. municipal offerings with maturity structure (215 unique instruments).  Issuance totaled USD 7.56 billion, of which USD 2.4 billion was in U.S. municipal bonds.  Of note, German Read more […]

Better Carbon Disclosure Is the First Step Toward Meeting Japan’s Energy Transition Challenge

Japan’s Nationally Determined Contribution (NDC) under the United Nations Framework Convention on Climate Change is a 26% reduction in greenhouse gas emissions by 2030 from 2013 levels.1 To achieve this, the Japanese government has set carbon targets for all sectors backed up by a national carbon tax and Tokyo emissions trading scheme. In the first Read more […]

Measuring ESG Improvement: Impact Reporting Versus Impact Measurement

As the importance of ESG investing grows, especially in the U.S., the ability to quantify and measure the impact of an ESG-incorporated portfolio will become more relevant.  In evaluating performance, traditional investors focus on standard metrics such as return, risk, tracking error, and other familiar modern portfolio theory statistics; however, ESG investors require all of Read more […]

Natural Resources, a Potential “Natural” Play on Higher Inflation Expectations

As the economy expands and inflation ticks up in the post-election world, fueled by a pledge by President Trump to increase fiscal spending with improvements to America’s crumbling infrastructure, market participants will have to keep in mind the negative effects of increasing prices.  They may want to consider hard-asset-related investments to help maintain the purchasing Read more […]

Evolution of the Green Bond Market

Over the recent weeks, there has been much debate about the notable increase of issuance in the fledgling green bond market.  Indeed, green bond issuance ramped up significantly in 2016, and the accelerated pace is expected to continue this year.  Total issuance of bonds labeled as green in 2016 amounted to USD 92.9 billion, nearly Read more […]

Why Companies and Investors Need to Value Water Differently

March 22, 2017, is World Water Day, the U.N.’s annual bid to raise awareness about the water crisis.  Climate change, pollution, and overconsumption are making fresh water an increasingly scarce resource.  Worldwide, 663 million people currently have no access to clean water.  By 2030, it is predicted that there will be a 40% shortfall in Read more […]

Will Low-Carbon Trends in the U.S. Continue?

When people think of a low-carbon economy, the U.S. may not be the first one to come to mind.  In almost all things ESG, Europe is considered the leader.  However, the U.S. market has made some strides in recent years.  The carbon footprint of the S&P 500® has actually been declining since 2011, as illustrated Read more […]