ESG in Conversation

Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Lindsey Stewart, CFA, Director of Investment Stewardship Research, Morningstar Sustainalytics  Guests:  Ruthann Bartello, Senior Director, Global Lead, Stewardship  Kevin Ranney, Senior Director, Sustainable Fixed Income Research  Allocating Funds to Support a Sustainable Future In this episode of ESG in Conversation, Melissa and Lindsey chat about the continued volatility in the sustainable investing market, as well as luxury brands’ focus on ESG and sustainable supply chains. To kick things off, Melissa interviews Kevin Ranney, Senior Director, Sustainable Fixed Income Research. He talks about the evolution of the sustainable fixed income market and shares insights on the latest enhancements to Morningstar Sustainalytics’ second-party opinion assessment framework. Later, Lindsey sits down with Ruthann Bartello, Senior Director, Global Lead, Stewardship, where they discuss Sustainalytics’ involvement in the Pact for the Future and the importance of bringing the investor voice to the conversation about funding the UN Sustainable Development Goals.   Share Your Feedback   Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com.  Key Moments   00:00:24  Introduction  00:06:25  Interview with Kevin Ranney on the evolution of sustainable fixed income investing and Morningstar Sustainalytics second-party opinion framework.  00:24:44  Interview with Ruthann Bartello about efforts to allocate more funding to the Sustainable Development Goals.  00:36:24  Closing remarks    Links to Select Resources Sustainalytics Insight: Second Party Opinions a Primary Focus  Webinar | Enhanced Assessment Framework for Use of Proceeds Second-Party Opinions      Listen to more episodes here.

Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Lindsey Stewart, CFA, Director of Investment Stewardship Research, Morningstar Sustainalytics  Guests:  Hortense Bioy, CFA, Head of Sustainable Investing Research  Jackie Cook, Senior Director, Stewardship  Trends in Sustainable Investing and ESG-Focused Proxy Voting Activities  ESG In Conversation welcomes Lindsey Stewart as the new co-host for the podcast. He and Melissa chat about current developments in the sustainable investment space and the uncertainties investors and companies face. This month’s episode includes three compelling interviews with some of Sustainalytics’ experts, including Lindsey. Tune in to hear perspectives on sustainable investing trends and the continuously changing regulatory landscape. The discussions also cover recent research examining patterns in investors’ proxy voting activities, how companies’ share structures can influence vote outcomes and how that plays out for certain ballot items like say on pay.   Share Your Feedback   Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com.  Key Moments   00:00:26  Introduction  00:03:32  Interview with Hortense Bioy on sustainable investing trends, regulatory changes and the impact on the investment funds landscape.  00:14:29  Interview with Jackie Cook covering recent research on the impact of dual class share structures on sustainability-focused shareholder resolutions.  00:28:42  Interview with Lindsey Stewart on the widening gap between European and US investors environmentally and socially focused shareholder resolutions.  00:36:24  Closing remarks    Links to Select Resources Six Sustainable Investing Trends to Watch in 2025 Report  Shareholder Democracy and the Challenge of Dual Class Share Structures  Say on Pay: CEO Compensation and the Long Tail of Shareholder Dissent  Voting on ESG: A Gap Becomes a Gulf  Ad: To learn more about the Morningstar Sustainable Investing Summit and to register visit https://www.morningstar.com/business/events/morningstar-sustainable-investing-summit 

Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Guest:  Thomas Kuh, Head of ESG Strategy, Morningstar Indexes  Barbara Lambotte, Head of Sustainable Fixed Income Research  Azadeh Sabour, Director of Climate Thought Leadership, North America  Anne Schoemaker, Director, ESG Products  Catalina Secreteanu, Managing Director, ESG Solutions, Europe  Lindsey Stewart, Director of Investment Stewardship Research  2025: A Year of Change in Sustainable Investing  It’s the start of a new year, a time when many focus on setting new goals and ambitions. In this episode of ESG in Conversation, we explore the resolutions investors and issuers might make when it comes to ESG, climate transition and regulatory issues. Experts from Morningstar Sustainalytics weigh in and share their predictions on what financial market participants will, or should, focus on in the year ahead.   Share Your Feedback   Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com or take this short survey.  Key Moments   00:00:00  Introduction  00:00:35  Thomas Kuh discusses asset owners  00:05:43  Catalina Secreteanu discussion ESG risk and opportunities  00:08:35  Anne Schoemaker discusses regulations  00:12:52  Azadeh Sabour discusses climate transition finance 00:21:58  Lindsey Stewart discusses stewardship  00:26:03  Barbara Lambotte discusses sustainable fixed income  00:30:59  Closing remarks  Links to Select Resources Morningstar Sustainable Investing Index Solutions   Material ESG Issues Resource Center  ESG Regulatory Insights Hub  Climate Solutions Resource Center  Stewardship Services  Corporate Solutions – Sustainable Finance and Lending Solutions 

Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Guest:  Thomas Kuh, Head of ESG Strategy, Morningstar Indexes  Arthur Carabia, ESG Research Policy Director at Morningstar  Kilian Theil, Associate Director, Intelligent Process Automation, Morningstar Sustainalytics    Andrei Hera, former Senior Manager Data Science, Morningstar Sustainalytics     Aymen Karoui, Director of Methodology and Product Architecture, Morningstar Sustainalytics  2024: A Year in Conversation  This year, ESG in Conversation examined the sustainability and climate issues that were top of mind for asset owners, asset managers, companies and financial market participants globally. Featuring insights from Morningstar Sustainalytics, listeners heard from subject matter experts on ESG, climate and regulatory issues affecting the market. In this episode, we share some key insights from this past season. Check out the full episodes via the links below and subscribe to the show on your favorite podcast app to hear what’s on the horizon in the year to come.   Share Your Feedback   Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com.  Key Moments   00:00:00  Introduction  00:00:30  Asset owners share their voice  00:02:48  The AI revolution comes to ESG  00:07:00  Climate disclosure rules come to the US  00:10:10  Harmonizing sustainability regulations remains a challenge  00:16:36  Insights on leveraging ESG ratings in portfolio construction  00:19:50  Closing remarks  00:20:49  The last word    Links to Select Resources: Featured episodes: Asset Owners Share Their Views on the Changing Investment Landscape The AI Revolution Comes to ESG The SEC’s New Rules on Climate When It Comes to Sustainable Investing, It's A Material World Using ESG Data in Portfolio Construction 2024 Voice of the Asset Owner Survey – Quantitative Analysis

Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Guest:  Aymen Karoui, Director of Methodology and Product Architecture, Morningstar Sustainalytics Data as the Foundation for Successful Portfolios  How can ESG ratings help investors identify risk when constructing and maintaining their portfolios? In this episode, we explore the practical answers to this question and more. We also feature research leveraging Sustainalytics’ Low Carbon Transition Ratings and Physical Climate Risk Metrics assessing companies' misalignment with the transition to net zero.   We also discussed COP 16, which is focused on biodiversity and the key role of the private sector in addressing biodiversity loss. A recent article using data from our Biodiversity and Natural Capital Stewardship program found that many companies are at the beginning of their journeys.  Share Your Feedback   Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com.  Key Moments 00:00:00  Introduction  00:01:07  Interview with Aymen Karoui about Morningstar Sustainalytics report series in collaboration with Natixis exploring the ESG Risk Ratings and portfolio risk  00:19:51 Overview of the “Navigating Material Climate Risks in the Global Equities Market” report  00:20:57  Overview of “Mobilizing the Private Sector for COP16: A Critical Juncture for Biodiversity Action”  00:22:29 Highlights of upcoming Morningstar Sustainalytics events   Links to Select Resources Report series with Natixis   ESG Risk Ratings: A 360° Review ESG Risk Ratings: Distilling for Enhanced Performance and Downside Protection ESG Risk Premium: A Further Look Navigating Material Climate Risks in the Global Equities Markets Mobilizing the Private Sector for COP16: A Critical Juncture for Biodiversity Action Morningstar Sustainable Investing Summit 2024  More episodes

Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Guest:  Arthur Carabia, ESG Research Policy Director at Morningstar  In Global Financial Markets, ESG Materiality Matters  On the heels of the EU parliamentary elections and ahead of pivotal contests in the U.S., the U.K. and elsewhere, ESG in Conversation met with Director of ESG Policy Research, Arthur Carabia to discuss what a change in political agendas and shifting priorities could mean for ESG and sustainability-focused regulations globally.   We also explore the topic of ESG materiality and what it means to asset owners globally, and we discuss its foundational role in the enhancements to Morningstar Sustainalytics' ESG Risks Ratings and corporate governance assessment framework.   Share Your Feedback   Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com.  Key Moments   00:00:00  Introduction  00:01:34  Interview with Arthur Carabia about EU election outcomes and the state of ESG regulatory landscape  00:25:14  Overview of the Voice of the Asset Owner Survey 2024  00:26:34  Updates on Sustainalytics’ corporate governance assessment framework  00:28:14  Introduction to “Fundamentals of ESG Materiality: An Overview for Investors”    Links to Select Resources Voice of the Asset Owner Survey 2024: Qualitative Insights  On the Materiality of Corporate Governance: Themes, Applications and Best Practices  Fundamentals of ESG Materiality: An Overview for Investors  Webinar | Single, Double or Dynamic? An Exploration of Materiality in ESG Approaches to Investment  More Episodes

Episode Summary Host: Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics Guest: Arthur Carabia, ESG Research Policy Director at Morningstar The SEC’s New Rule Ushers in Climate Transparency and Reporting in the U.S.  In late March, the U.S. Securities and Exchange Commission introduced a climate disclosure rule that applies to its 10,000 registrant companies. In this episode of ESG in Conversation, we welcome back Arthur Carabia to shed light on what this new rule means for companies and their investors. He also shares his take on how the rule compares to other sustainability and climate disclosure regulations globally.  Sticking to the regulatory theme, you’ll learn about the EU’s regulations on deforestation-free products and why the issue of environmental regulation is so significant across industries according to our ESG Risk Ratings.  Finally, we share insight on the troublingly persistent issue of child labor in the cocoa supply chain.   Share Your Feedback Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com or take this short survey.   Key Moments 00:00:00 Introduction 00:01:38 Interview with Arthur Carabia about the SEC’s new climate disclosure rule 00:12:53 Overview of the EU Regulation on Deforestation-Free Products 00:14:09 Insights from Morningstar Sustainalytics annual Industry Reports 00:15:13 Details on child labor in global cocoa supply chains   Links to Select Resources The SEC’s Climate Disclosure Rule: A Step in the Right Direction EUDR: Navigating the EU Regulation on Deforestation-Free Products The State of ESG Risk Across Industries: Three Key Takeaways From Our Annual Industry Reports Child Labor in Cocoa Supply Chains: Unveiling the Layers of Human Rights Challenges  More Episodes

Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Guests:  Kilian Theil, Associate Director, Intelligent Process Automation, Morningstar Sustainalytics  Andrei Hera, Senior Manager Data Science, Morningstar Sustainalytics   AI Technology is Reshaping the World of ESG Assessments In recent years the marvels of artificial intelligence have been touted across various sectors. As applications of AI technology proliferate, in this episode of ESG in Conversation we chat about how it’s being used in the ESG research space. Members of Morningstar Sustainalytics data research and development teams discuss how the company has been leveraging AI technologies for the past decade and what’s on the horizon in terms of gathering and analyzing corporate ESG risk data.    You’ll also learn more about ESG risks in global supply chains as we share insights from our recently published ESG Spotlight series. The reports explore the impact of supply chain incidents, with a focus on human rights and biodiversity loss. They also offer investors frameworks for assessing supply chain-related risks among portfolio companies and potential strategies to improve portfolio performance and mitigate losses.    Share Your Thoughts About the Show  Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com or take this short survey. Key Moments  00:00:00  Introduction  00:01:17  Interview with Kilian Theil and Andrei Hera on how AI is changing the world of ESG research and assessments   00:20:52  Overview of the ESG Spotlight series on ESG risks in supply chains    Links to Select Resources  Artificial Intelligence for ESG Assessments  Supply Chain Incidents: Understanding the Impacts  Unlocking Human Rights in Corporate Supply Chains  Biodiversity in the Balance: Hedging Portfolio Risks 

Episode Summary Host: Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics Guest: Thomas Kuh, Head of ESG Strategy, Morningstar Indexes  Survey Says... Asset Owners Are Committed to Sustainable Investing In this episode of ESG in Conversation, Thomas Kuh, Head of ESG Strategy at Morningstar Indexes shares the results from Morningstar Indexes and Morningstar Sustainalytics’ Voice of the Asset Owner Survey. Not surprisingly, asset owners are concerned about the influence of global events on the market. They are confused about ever-changing regulations and are seeking improvements and reliability from ESG service providers. Despite these challenges, asset owners also say they remain committed to sustainability and are putting more resources towards their ESG strategies.   You’ll also learn more about the low-carbon transition risks facing some of the world’s biggest food companies and the steps they can take to get their emissions reductions back on track. Finally, the start of 2024 brings new sustainability-focused regulations. The Corporate Sustainability Reporting Directive (CSRD) came into effect in the European Union on Jan. 1 and will apply to nearly 60,000 companies globally. The directive could be a watershed moment for corporate reporting as well as investors seeking more sustainability data from issuers.   Tell Us What You Think  Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com or take this short survey.    Key Moments 00:00:00  Introduction  00:01:30  Interview with Thomas Kuh discussing asset owners’ views on ESG investing   00:10:52  Insights on the low-carbon transition risks of major food companies and how they can reduce emissions  00:12.33  Details on the Corporate Sustainability Reporting Directive     Links to Select Resources Voice of the Asset Owner 2023: Quantitative Analysis  Big Food’s Broken Promises: The Data Behind the Food Industry’s Rising Emissions  CSRD Reporting: Preparing for Mandatory ESG Disclosure Deadlines  More Episodes  

Episode Summary  Host:   Melissa Chase, Senior Content Marketing Manager, Sustainalytics  Guest:   Ruthann Bartello, Commercialization Director, Stewardship Services  Investors’ Greenwashing Concerns and How to Address Them   Greenwashing is a growing concern among financial market participants. Whether it’s measuring the sustainability performance of companies in a portfolio or ensuring that their own firms and offerings are not making exaggerated claims about their sustainability impacts, asset managers are on the lookout for potential greenwashing risks. Adding to the confusion is a lack of clarity around what defines a sustainable investment, as well as the growing list of regulations and reporting frameworks asset managers need to comply with.   In this episode, we discuss the European Sustainability Reporting Standards, the cornerstone of the Corporate Sustainability Reporting Directive, which should pave the way for more accessible and standardized corporate sustainability information. You also hear from Morningstar Sustainalytics’ Ruthann Bartello about the key strategies investors can use to mitigate greenwashing risks in their investment products and across their portfolios.  Share Your Feedback With the Team  Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com.     Key Moments  00:00:00  Introduction  00:01:50  Morningstar Sustainalytics new ebook “Seeing Through the Green: As Guide to Greenwashing Risks for Asset Managers”   00:03:00  The final Corporate Sustainability Reporting Directive and its standards are published  00:4:09  Investor stewardship as a tool to combat greenwashing.   00:5:30  Interview with Ruthann Bartello on key strategies institutional investors can use to address greenwashing  00:06:07  Greenwashing explained  00:08:15  Investor concerns around greenwashing  00:09:58  What’s behind investors’ concerns  00:11:35  Consequences of greenwashing for investors  00:15:05  Key regulations related to greenwashing  00:19:31  Strategies for asset managers to mitigate against greenwashing risks  00:20:23 Tips for asset managers to build a robust investment strategy  00:24:49  Final thoughts    Links to Select Resources  Seeing Through the Green: As Guide to Greenwashing Risks for Asset Managers   Implications of CSRD: What the Final Standards Mean for Investors and Issuers  ESG Stewardship: A Powerful Tool to Mitigate Greenwashing Risks  More episodes

Episode Summary Host: Melissa Chase, Senior Content Marketing Manager, Sustainalytics  Guest:   Arthur Carabia, Director, ESG Policy Research, Morningstar  New Format, Same Great Insights  We are excited to share with you the revamped ESG in Conversation! In this new format, we’re expanding the focus beyond sustainable finance to share the latest environmental, social and corporate governance insights. In addition to highlighting recent research from our global team of ESG experts, we will continue to bring you deep dives into the ESG, climate, impact, sustainable finance and regulatory insights you need to know about.  In this episode you’ll learn about the upcoming greenhouse gas reporting requirements for companies in North America, the implications of Europe’s policy response to the climate crisis, the Fit for 55 package, and what it means for companies that supply goods and services in the EU.     Also, Morningstar’s Arthur Carabia discusses what the recently published International Sustainability Standards Boards reporting standards mean for companies and investors.  Tell Us What You Think  Please take a moment to share your thoughts on ESG in Conversation. You can email us at podcast@sustainalytics.com.     Key Moments  00:00:00  Introduction  00:01:45  Greenhouse gas emissions requirements for North American companies  00:03:50  Interview with Arthur Carabia about the launch of the ISSB standards  00:10:40  Highlights of the EU’s Fit for 55 legislation    Links to Select Resources  Mandatory Scope 3 Emissions Reporting in the U.S. and Canada: Most Companies Are Unprepared  Policy Responses to Climate Change: The EU’s Fit for 55 Package and Its Implications for Companies and Investors  What the New ISSB Climate Standard Means for Investors  More Episodes  

In this episode of ESG in Conversation, we’re exploring the question: what does it take to be a sustainability leader in 2023 and beyond? You’ll hear from Joseph Hill, London Techstars alumn and CEO of Zephframe, about the sustainability challenges facing start-ups. You’ll also hear from Eileen Buckley, VP of Corporate Responsibility at Stryker, about the importance of integrating sustainability across an organization. Gabriel Presler, Global Head for Enterprise Sustainability at Morningstar, also joins in to discuss the role investors play in sustainability leadership.

Host: Curtis File, Editorial Manager, ESG and Sustainable Finance Featuring: Juliette Goulet, Project Manager, Ellen MacArthur Foundation Wayne Hubbard, CEO, ReLondon Joris Laseur, Associate Director, Stewardship, Morningstar Sustainalytics Jonathan Kellar, Manager, Stewardship, Morningstar Sustainalytics As global leaders gain a more nuanced understanding of climate change, they are looking at the circular economy as a potential solution to mitigate their impact. In a circular economy, organizations aim to prevent waste throughout the value chain instead of relying solely on recycling. This approach involves sharing, leasing, reusing, repairing, and recycling materials and products for as long as possible. Proponents say the approach comes with huge potential upside. The Ellen MacArthur Foundation, for example, projects that a circular economy could reduce greenhouse gas emissions by 25%, create 700,000 jobs, and save $200 billion per year by 2040. But the path to achieving those goals is far from clear, and it will require an all-hands-on-deck effort. In this episode of ESG in Conversation, we’re exploring the question: how do businesses, governments and investors fit into the circular economy? You’ll hear from Juliette Goulet, a seasoned sustainability practitioner from the Ellen MacArthur Foundation, about the challenges of implementing a circular economy. You’ll also hear from Wayne Hubbard, CEO of ReLondon, about putting the circular economy into practice in London, England. Joris Laseur and Jonathan Kellar from Morningstar Sustainaltyics’ stewardship team also join to discuss the role investors play in helping businesses reduce their waste and implement circular business practices.

Episode Summary Hosts Nicholas Gandolfo, Vice President, Corporate Solutions Aditi Bhatia, Senior Regional Manager, Corporate Solutions What Will the EU Green Bond Standard Mean for the Market?  With the European Union’s Green Bond Standard set to come into effect sometime next year, we look at what it could mean for the global sustainable finance market more broadly. Although the highly anticipated framework is expected to be the gold standard for what we see in the market going forward, there are ongoing concerns about its usability. Some market participants are worried about the potential difficulty in meeting all the requirements of the Green Bond Standard and whether the standard is too prescriptive in its requirements to set up a framework.   Sustainable Finance Meets AI   The sustainable debt market continues to see innovations in the types of projects being funded. One example is the use of green bonds to raise money for artificial intelligence (AI) projects related to green or social initiatives. The green bond issuance highlighted in this episode will finance AI projects related to improving the environmental performance of buildings through data analytics and energy management software. Using AI to support corporate sustainability improvements is not new, but funding such projects using sustainable debt instruments could be the next wave.  Changes Coming to the Podcast! Our sustainable finance insights show will be taking a break for the summer. We’ll be back this fall with some exciting changes to bring you more ESG, sustainable finance and responsible investing insights. In the meantime, please subscribe to ESG in Conversation on your favorite podcast platform and enjoy new episodes each month!  Key Moments 0:00:49  Market overview  0:01:36  CBI Q1 highlights report  0:03:04  LMA sustainability linked loan drafting model  0:03:28  Sustainable bond market risks  0:04:44  Gender-focused social bonds   0:05:37  Transition plan guidelines  0:05:58  Debt for nature swaps  0:06:23  IRENA report on the cost of energy transition  0:07:00  New CBI reports  0:07:42  SLB and SLL overview  0:11:35  Audience questions  0:16:08  Green bonds and loans overview  0:19:25  Labeled products, transition bonds and regulatory updates    Links to Select Resources Climate Bonds Initiative – Sustainable Debt Market Summary Q1 2023  Environmental Finance – LMA Publishes ‘Vital’ Sustainability-Linked Loan Drafting Model  Morningstar Sustainalytics – Anticipating the Inevitable: What to Expect from the European Green Bonds Regulation   Responsible Investor – Details Emerge on EU Green Bond Standard as Concerns About Uptake Remain  Environmental Finance – Sustainable Bond Market Risks Fragmentation Amid ‘Regulatory Overload’  BusinessWorld – No Plans for Follow-Up Offer of Catastrophe Bonds – De Leon  WION – Bhutan Takes Steps to Set Up Green Cryptocurrency Mining Operation: Report  Environmental Finance – ‘Huge Opportunities’ for Gender-Focused Corporate Sustainable Bond Growth  Environmental Finance – GSAM: 36% of European Investors Ready to Invest in Social Bonds  Forbes – Companies Going Green Should Add Finance To Sustainability Strategies  Eco-Business – The Next Wave of Greenwashing: Offsets, Competitor Claims and ‘Transition-Washing’  Environmental Finance – Banks Call on EU to Provide Transition Plan Guidelines  Environmental Finance – Credit Suisse Arranges $1.6bn Debt-for-Nature Conversion With Ecuador  IRENA – Low-Cost Finance for the Energy Transition  Climate Bonds Initiative Reports  Concrete Policies to Underpin the Cement Transition  ASEAN Sustainable Finance State of the Market 2022  Property Certification Opportunities in Tokyo  Sneak Peek: The CBI’s Resilience Taxonomy Blueprint  Sustainalytics Second-Party Opinions  TDC NET Sustainability-Linked Finance Framework Second Party Opinion  UMH Properties Inc. Sustainable Finance Framework Second-Party Opinion  Grupo Bimbo Sustainable Financing Framework Second-Party Opinion  More Episodes

Episode Summary Hosts: Sabrina Tang Sales Associate, Sustainable Finance Solutions Nicholas Gandolfo, Vice President, Corporate Solutions   Is the Sustainable Finance Market Rebounding in 2023? In this month’s episode, Nick and Sabrina dig into the sustainable finance market’s rebound in Q1. Despite the market pressures caused by inflation and the banking shake-ups at UBS and Credit Suisse, sustainable finance activity saw an upward trend in the first part of the year. Although Nick and Sabrina stop short of making any predictions about where volumes will land by the end of the year, they do note some interesting dynamics in the market: green use of proceed bonds remain strong, social and sustainability focused bonds are down slightly, and sustainability-linked finance appears to be gaining some ground again despite continued market scrutiny. Scrutiny Continues for Sustainability-Linked Bonds Despite the rebound in sustainability-linked bond (SLB) activity in Q1 this year, concerns remain about this sustainable debt instrument. Several recent articles and reports discuss the credibility of SLB targets, whether coupon rates offer enough of a penalty if targets are missed, and whether the performance targets and indicators have an impact on sustainability. There’s also some media coverage on SLB issuers missing their stated sustainability performance targets. Although not ideal, missed targets among SLB issuers could be viewed as a sign of their rather than an indication of something being fundamentally wrong. For issuers considering sustainability-linked debt instruments and seeking additional guidance, check out the latest market references from Climate Bonds Initiatives (CBI). The Sustainable Sovereign Debt Club Continues to Grow CBI’s 2022 market summary highlights the growth of sovereign bond issuances. This is great to see because sustainable debt from sovereigns catalyzed the market in many cases. Sabrina highlights the recent activity from Turkey, Austria, Italy, and Cyprus as well as the sovereign green bond program being considered by the Australian government. In addition to more countries seeing the opportunities in sustainable debt instruments, regulators across a growing number of jurisdictions are ramping up sustainable finance activities in their countries. Developments are ongoing in India, Indonesia, Malaysia, Sri Lanka, Japan, and Vietnam to name just a few.   Key Moments 0:00:59 Market overview 0:02:07 Q1 market overview 0:03:25 CBI 2022 state of the market report 0:05:22 Continuing SLB scrutiny 0:06:46 Climate transition plan transparency 0:08:34 More updates to the EU taxonomy 0:09:34 Additional articles and reports to read (see links below) 0:11:34 SLB and SLL overview 0:14:15 Audience questions 0:18:14 Green bonds overview 0:21:13 Green loans overview 0:22:30 Social bonds and loans overview 0:23:25 Labeled products, transition bonds and regulatory updates     Links to Select Resources Climate Bonds Initiative – Green and Other Labelled Bonds Fought Inflation to Amass USD858.bn Volume in 2022 Climate Bonds Initiative – Sustainable Debt: Global State of the Market 2022 Environmental Finance - ‘It’s time to stop step-up-only sustainability-linked bonds’ Environmental Finance – Union Investment: SLBs Can Have Impact Environmental Finance – CBI Launch Sustainability-Linked Bond Certification Scheme Energy Monitor – Are We About to See a Surge in Sovereign Sustainability-Linked Bonds? Environmental Finance – Sustainability-Linked Targets Could Add ‘Discipline’ in Green Bond Markets Retail Banker International – CaixaBank Rolls Out Metaverse Initiative to Promote Sustainability Responsible Investor – Market Hails ‘Surprisingly Helpful’ SFDR Clarifications from European Commission GreenBiz – Should Sustainability Teams Report Directly to the CEO? Climate Action 100+ - Climate Action 100+ Releases the Latest Evolution of the Net Zero Company Benchmark Financial Times – New Standards Keep the Greenwash off Green Bonds The Strait Times – Companies Risk Penalties as Asia and Australia Target Greenwashing Environmental Finance – ‘Greenwashing is rife’ in Green Bonds, Says EU’s Tang IPCC – AR6 Synthesis Report: Climate Change 2023 Environmental Finance – Nature-Related Sovereign Issuances Set to Grow, Insight Predicts Climate Bonds Initiative – Sustainability-Linked Debt Instrument Certification Sustainalytics Second-Party Opinions Hera Group’s Green Financing Framework Second-Party Opinion Council of Europe Development Bank Social Inclusion Bond Framework Second-Party Opinion More Episodes

Host: Curtis File, Editorial Manager, ESG and Sustainable Finance Featuring: Sune Andersen, Manager, Stewardship Simon Butler, Associate Professor, University of East Anglia Gayaneh Shahbazian, ESG Research Manager, Biodiversity The statistics are concerning. The International Union for the Conservation of Nature (IUCN) estimates that up to 28% of all species are at risk of extinction. Given these alarming figures, it is crucial for investors to take action and ensure their investments do not further harm our vulnerable ecosystems. Join us on the latest episode of ESG in Conversation, where we delve into the critical question: how can investors effectively address biodiversity loss? Gain valuable insights from Dr. Simon Butler, an esteemed professor specializing in acoustic ecology, whose work underscores the urgent need to tackle biodiversity issues. Additionally, hear from Morningstar Sustainaltyics' stewardship and ESG research teams, providing valuable perspectives on investor engagement on biodiversity loss and the challenges faced by corporations in disclosing nature-related risks.      

Episode Summary  Hosts:  Nishant Bhagchandani, Sales Manager, Sustainable Finance Solutions  Nicholas Gandolfo, Vice President, Corporate Solutions     Regulation, Guidance and Taxonomy Updates Keep Market Participants on Their Toes   In this episode, Nick and Nishant discuss the flurry of updates in the sustainable finance regulation and guidance space. The European Union has reached a long-awaited deal on the first set of comprehensive rules for issuing green bonds. Although voluntary, the EU Green Bond Standards will help investors identify high-quality green bonds and may set a precedent for other jurisdictions.   The Green Loan Principles, Social Loan Principles, and Sustainability-Linked Loan Principles were also recently updated to align more closely to current market practice and provide additional guidance to borrowers (e.g., recommendations that borrowers obtain an independent external review of their green, social and sustainability-linked loan processes). Other updates include recommendations for the sustainable finance taxonomies being developed in Australia and Canada, as well as the new draft version of the Taskforce for Nature-related Financial Disclosures (TNFD) framework.         What the Final TNFD Framework Could Mean for Sustainable Finance   With the release of the fourth beta framework from the TNFD, market participants eagerly await the final version, due to be published this fall. This latest beta release includes a full draft reporting framework and a set of disclosure metrics, along with assessment metrics to be used by companies. The disclosure metrics will also include some core measures which are applicable to all sectors. The final framework will help to standardize the sustainability metrics companies report on, making them usable in sustainability-linked instruments and speeding up the framework’s adoption.     Key Moments  0:00:59  Market overview  0:02:32  Market forecast  0:03:22  SVB failure and climate tech  0:04:05  Morningstar Sustainalytics launches Low Carbon Transition Ratings  0:04:37  Relinking in sustainable finance  0:05:11  TNFD release beta version 4 of framework  0:05:56  Insights from Kanga News Sustainable Debt Conference  0:06:30  Taxonomy developments in Australia and Canada  0:07:24  Agreement of EU Green Bond Standards  0:08:33  High Seas Treaty will boost blue bond issuance  0:08:45  SLBs as a hedge against sustainability policies  0:09:00  Transition finance standards  0:09:12  Updated principles for green, social and sustainability-linked loans  0:10:58  SLB and SLL overview  0:13:48  Audience questions  0:17:43  Green bonds overview  0:20:56  Social bonds and loans overview  0:22:40  Labeled products, transition bonds and regulatory updates      Links to Select Resources  JD Supra – Asian ESG Debt Markets Take a Breath After Record Run  Bloomberg – Green Bonds Turbo Charge ESG Debt Sales to Busiest February Ever  ESG Clarity – Natixis Q&A: ‘Liquidity Will Be Driven by ESG Transparency and Clarity’  Environmental Finance – Credit Suisse: Another Headwind for 'Green' AT1 Bonds   Morningstar Sustainalytics Launches its Low Carbon Transition Ratings  Bank of China Ltd Announcement – Sustainability Re-Linked Notes Coupon Adjustment: Annual Coupon Adjustment of Sustainability Re-Linked Notes  Environmental Finance – Forthcoming TNFD Metrics Would Work in Sustainability-Linked Instruments  Environmental Finance – Traffic-Light System Recommended for Australia's Taxonomy   Environmental Finance – EU Green Bond Standard: Provisional Deal on Landmark Regulation Agreed   ESG Clarity – High Seas Treaty Will Boost Interest, Access and Issuance of Blue Bonds  Climate Bonds Initiative – India’s Debut in the Sovereign Green Bond Market: First Deal Landed a Greenium!  IRENA – Investments in Renewables Reached Record High, But Need Massive Increase and More Equitable Distribution  International Energy Agency – Global CO2 Emissions Rose Less Than Initially Feared in 2022 as Clean Energy Growth Offset Much of the Impact of Greater Coal and Oil Use  Climate Bonds Initiative – Climate Bonds Standard Expands With New Agri-Food Transitions Criteria: Commodity and Supply Chain TWGs And IWGs Now Onboarding    More Episodes  

With all the noise about ESG in the news, it can be hard to discern what is really going on. We know that the increased demand for companies to address ESG issues has meant that organizations have had to make significant changes to how they work. But when it comes to addressing, managing and reporting on ESG issues, what’s really going on behind corporate doors?   In this episode of ESG in Conversation, we explore that question by examining how the roles of CSR and sustainability professionals are evolving to address material ESG issues. You’ll hear about the results of the Morningstar Sustainalytics Corporate ESG Survey, with insights about the challenges, concerns, and evolving roles of CSR and sustainability professionals around the world.  View the show notes in full detail at the Sustainalytics Resource Centre.    Read the full Morningstar Sustainalytics Corporate ESG Survey Report 2022   Download the report to learn about the ESG challenges companies face around the world and the resources CSR and sustainability professionals are using to meet them, key steps to ESG maturity, where companies are focusing their ESG investments, and how companies are using their ESG ratings and scores. 

Episode Summary  Hosts:  Winnie Chung, Senior Associate, Corporate Solutions  Nicholas Gandolfo, Vice President, Corporate Solutions   Growing Innovation with Sustainable Finance Instruments  In this episode, Nick and Winnie chat about the latest news and transactions in the sustainable finance space. With a focus on innovation, they discuss the new ways in which issuers are leveraging sustainable finance instruments to fund their green and social projects. For instance, the World Bank’s recent bond issuance will forgo investor coupon payments, instead using the funds to finance a project manufacturing water purifiers in Vietnam. Using purifiers will replace biomass burning (traditionally used to boil water to make it safe to drink), resulting in lower carbon emissions. The carbon emissions saved will be turned into carbon credits and sold to fund a coupon payment to bond investors. Nick also notes innovation picking up in the areas of blue bonds and the maritime economy as well as biodiversity-focused finance activities.    Investors Swing Back to Use of Proceed Instruments  Winnie and Nick also touch on the growing ambivalence towards sustainability-linked instruments. In 2022, sustainability-linked bonds and loans seemed to lose some of their appeal as scrutiny of targets and performance indicators intensified and accusations of greenwashing arose. Adding to the discontent – slipping targets. Analysis from Barclays finds that nine out of 12 SLBs with target measurement dates in 2023 are off track to hit those targets. Consequently, we’re seeing a swing back toward traditional use of proceed instruments. This is particularly true within the green bond market which took less of a hit compared to other types of labelled bonds in 2022. With more green bond disclosure guidance and regulations expected from more jurisdictions, such as India, Bolivia, EU and Latin America, investors will likely continue to seek security in the more structured green bond market.   Key Moments 0:02:20  Market overview  0:02:37  Expected market rebound  0:03:15  Innovative structure from World Bank  0:04:03  Swing back to use of proceeds?  0:04:23  Innovative structure from ENEL  0:05:10  Blue and biodiversity activity  0:05:31  Continued scrutiny of SLLs and SLBs  0:06:40  ASEAN developments  0:07:34  New CBI reports  0:08:04  SLB and SLL overview  0:11:52  Green bonds overview  0:17:35  Green loans overview  0:17:57  Audience questions  0:21:05  Social bonds and loans overview  0:22:03  Labeled products, transition bonds and regulatory updates    Links to Select Resources Bloomberg – ESG Bond Sales Hit 12-Month High; Debut Deals Pile Up  Environmental Finance – Sustainable Bonds Insights 2023 Published Environmental Finance – World Bank Issues ‘Unique’ Carbon Credit-Linked Bond Environmental Finance – IFC adds ‘Blue’, Biodiversity Projects to Green Bond Framework UN Environment Programme – Countries Search for Financing to Counter Biodiversity Crisis  Responsible Investor – SLB Issuers ‘Likely to Miss Majority of 2022 and 2023 Targets’ Environmental Finance – SLB Issuers ‘Lose Their Halo,’ says HSBC LSTA – Drafting Guidance for Sustainability-Linked Loans (Feb 17, 2023) Environmental Finance – Philippines Opens Consultation on Sustainability-Linked Bonds Standards Financial Times – Sustainability Bond Market Stumbles as Investors Get Picky CarbonCredits.com – JBS “Green Bonds” and GHG Emissions Under Investigation  Bloomberg – Barclays Sees Real Greenwashing Risk in ESG Debt-Swap Market Climate Bonds Initiative – Sustainable Agriculture Brief Climate Bonds Initiative – Scaling Credible Transition Finance – ASEAN Edition Capital Monitor – Why Japan Embraces Transition Bonds  Business Standard – SEBI Asks Issuers for Additional Disclosure in Guidelines on Green Bonds ESG Clarity – Mandatory Climate Finance Disclosure ‘Evens Playing Field’ for Australia Sustainalytics SPOs: Nokia Sustainable Finance Framework Second Party Opinion State Bank of India ESG Financing Framework Second-Party Opinion Hertz Green Finance Framework Second-Party Opinion    More Episodes  

Episode Summary Hosts Nicholas Gandolfo, Vice President, Corporate Solutions Sabrina Tang, Sales Associate, Corporate Solutions In this episode, Nick and Sabrina reviewed what’s new in sustainable finance and shared some notable deals and transactions that have hit the market. They discussed the overall decline of global bond markets and expressed some optimism for the year to come, as sustainability is a central issue for investors, companies and governments and is still closely tied to capital markets. They also shared research on the carbon performance of food producers and a report on how to scale credible transition finance among countries in Southeast Asian.  Sustainable Market Hopes for 2023  If you’ve been following sustainable finance market activities, it’s no surprise that 2022 was not a great year overall. Markets were down in volume for the first time in 11 years. According to figures from Environmental Finance, total annual sustainable bond issuance fell 19%, from US$1.05 trillion in 2021 to US$845 billion in 2022. Social, sustainability and sustainability-linked bonds were hit hardest – down about 25% compared to 2021, while green bonds fared a bit better with a more modest 14% issuance decline.  Despite the lower issuance volumes, there is hope for a rebound in 2023 as overall markets stabilize and issuers seek financing. This year may see use of proceed instruments like green bonds continue to gain ground compared to performance based, sustainability-linked bonds. We may also see more transition deals, social and biodiversity focused activity, as well as more complicated transactions going to market. It’s still early days, so let’s see how things develop.  Updated Standard for Reporting Financed Emissions in Sovereign Debt  If you’re a bank trying to figure out how to report on your financed emissions, be sure to read through Partnership for Carbon Reporting Financials’ (PCAF) recently updated standard. Global GHG Accounting and Reporting Standard for Financed Emissions addresses demands from financial institutions and provides a methodology to help investors in sovereign debt account and report greenhouse gas emissions. The methodology on sovereign debt includes bonds and loans of all maturities, however, only debt issued by the central bank on behalf of the sovereign would be covered. The methodology also requires reporting of scope 1, scope 2 and scope 3 emissions and recommends getting the information from countries’ reported data via the United Nations Framework Convention on Climate Change. Key Moments 0:01:16 Market overview 0:03:24 COP15 insights 0:04:22 Australia sustainable finance taxonomy 0:05:04 BNP Paribas social impact bond 0:05:16 TPI paper on food producers' carbon performance 0:06:53 Updated PCAF standard 0:07:31 Banks' transition planning under scrutiny from ECB 0:08:05 Activity in carbon markets 0:08:45 Austria launches green commercial paper program 0:09:14 CBI paper on transition finance in ASEAN 0:10:17 SLB and SLL overview 0:15:34 Audience questions 0:21:00 Green bonds overview 0:23:56 Green loans overview 0:25:06 Social bonds and loans overview 0:27:38 Labeled products, transition bonds and regulatory updates   Links to Select Resources Environmental Finance – Annual Sustainable Bond Issuance Falls for First Time Since 2011 Bloomberg.com – Global Debt Market Lost at Least $75 Billion of Business in 2022 Reuters – ESG Watch: Despite Setbacks, Green Finance Ends 2022 in Good Health Global Capital – High Hopes for Corporate Issuance in 2023 Environmental Finance – COP15 Agreement 'Significant,' but Credit Impact Depends on Implementation Environmental Finance – Climate Change Litigation: 11 Key Cases for Insurers to Watch Australian Sustainable Finance Institute – Taxonomy Project Global Capital – Saving Biodiversity: The Next Mountain for Capital Markets Transition Pathways Initiative – TPI Carbon Performance Assessment of Food Producers: Discussion Paper Environmental Finance – PCAF Sovereign Debt Methodology Plugs Gap in Emissions Accounting, Says Allianz European Central Bank – Supervisory Priorities and Risk Assessment for 2023-2025 Environmental Finance – Carbon Markets Can Help Provide Nature-based Solutions The Hindu Business Line – Sovereign Green Bonds Will Act as Benchmark for Private ESG-linked Debt: RBI’s Rao Global Capital – Austria to Launch Green Commercial Paper in 2023 Climate Bonds Initiative – Scaling Credible Transition Finance – ASEAN Edition Sustainalytics SPOs: UNIQA Green Bond Impact Report Mosaic Solar Green Use of Proceeds Securitized Bond (2022-3)