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ICYMI, The Green Lobby is Taking Over

Change is in the air, but progress on social factors still lags.

In a week in which one was tempted to reassess any claims of progress toward ethnic or gender equality, let alone an understanding of mental health issues, one of the most tin-eared takes on current affairs was The Times’ ‘HSBC bows to green lobby’.

I suppose one could lament a once-great financial institution being pushed about by a woke mob. Or one could give at least two cheers as investors worth US$2.4 trillion (including Europe’s biggest asset managers and the world’s biggest listed hedge fund group) successfully made the not-unreasonable case that a global bank with a history of fossil fuel finance should put some flesh on the bones if it wants its 2050 net-zero pledge to be taken seriously.

During recent negotiations, investors coordinated by NGO ShareAction even nudged HSBC into new territory, becoming the first mainstream bank to eschew reliance on negative emissions technologies to achieve alignment with Paris goals. Bowing down or walking tall?

Elsewhere, it seemed bowing to the green lobby had gone viral. This was, of course, the week new European rules came into force, requiring asset managers to justify in detail the green labelling of investment products. Not satisfied with rules ensuring direct investments know their E, S and G, the German government took a step closer to ensuring large companies apply due diligence on human rights and environmental issues throughout supply chains. Significant steps were also taken toward a global reporting framework for sustainability reporting.

There was a time when you could rely on the US to stand up to the green lobby. But that looks all over now, bar the shouting. After the US Securities and Exchange Commission announced the creation of a Climate and ESG Task Force in the Division of Enforcement, we also learned that the Department of Labor won’t enforce Trump-era rules, making it easier for fiduciaries to factor in ESG considerations into investment decisions.

In the Asia-Pacific region, there was also evidence of major financial institutions bowing to the green lobby, with Japan’s Dai-Ichi Life Insurance joining the UN’s Net-Zero Asset Owner Alliance. The pace of change is more mixed overall across the region, but the direction of travel seems clear.

If those primarily focused on environmental risks, such as climate change and biodiversity loss, are the green lobby, what’s the collective term for those equally concerned with social factors? Whatever it is, they’re clearly gaining ground. The UK’s planned green gilt will be the first to report on social impacts, potentially signalling a blending of existing sustainability-related bond categories, while the ongoing row about a proposed new UK coal mine further underlines the intractable links between E, S and G.

All in all, quite a week. But for reasons painfully obvious to anyone in the UK, it’s perhaps best to end where we began on Monday, considering what more can be done to create an equal and safe environment for women in society and business.

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