ESG Investor’s weekly round-up of news on technology and tools in the sustainable investing sector, including FTSE Russell, BondLink, Moody’s, Intercontinental Exchange and more.
Global index, data and analytics provider FTSE Russell has partnered with the Japan Exchange Group (JPX) and JPX-owned subsidiary JPX Market Innovation and Research to launch the FTSE JPX Net Zero Japan Index series. It consists of two indexes, the FTSE JPX Net Zero Japan 500 index and the FTSE JPX Net Zero Japan 200 index. Both are aligned with the EU’s Climate Transition Benchmark (CTB) standards, therefore enabling investors to reallocate capital based on the climate credentials and carbon performance of companies in the index. The series aims to align with a net zero by 2050 path by applying an average 7% annual reduction in carbon emissions and fossil fuel reserves, while also achieving a 30% relative reduction compared to its respective base index. To track investee companies’ progress, both indexes are incorporating Transition Pathway Initiative (TPI) Management Quality and Carbon Performance scores. “COP26 in Glasgow highlighted the critical need for financial markets to be part of the solution to the climate emergency, and this partnership reinforces our commitment to enable this transition,” said Arne Staal, FTSE Russell CEO. “The FTSE JPX Net Zero Japan 500 Index will give investors the ability to align their exposure with the 2015 Paris Agreement using the TOPIX 500 as a base universe,” he said. FTSE Russell also recently expanded its FTSE ESG Government Bond Index suite with two indexes: the FTSE ESG Emerging Markets US Dollar Government Bond index and FTSE ESG Emerging Markets Government Bond Capped Index. The series measures the performance of sovereign bonds while incorporating a tilting methodology that adjusts market value weights according to countries’ ESG-related performance, which is calculated using FTSE Russell’s Beyond Ratings Sovereign Risk Monitor.
A new sustainable bonds solution has been launched for the US municipals market by BondLink, a specialist cloud-based investor relations and debt management platform. According to BondLink, the new resource “significantly improves” the ability of municipal issuers to highlight how they’re addressing current ESG credit risks and showcase their green bond programs to investors in the US$4 trillion municipal bond market. BondLink’s ESG solution includes a centralised website for issuers to share overviews, documents, project updates; a tagging system that labels information addressing ESG credit factors; and opportunities for investors to quickly identify issuers who are sufficiently reporting and addressing ESG credit risks. Green bond designations represent the majority of ESG municipal issuance, accounting for US$19 billion of par volume or 43.6% of ESG issuance for 2021, according to the IHS Markit. Our new ESG solution enables state and local governments to more easily market their green and sustainable bond programs to investors who are increasingly seeking them,” said Colin MacNaught, CEO and co-founder of BondLink.
Moody’s Investors Service has extended application of its ESG Issuer Profile Scores and Credit Impact Scores to rated entities in the global manufacturing, aerospace and defence, retail and apparel, construction, and building materials sectors. The scores were also recently expanded across other corporate sectors, as well as to more financial institutions and US local governments. Launched in January 2021, Moody’s will continue to roll out scores for additional sectors throughout 2022. Issuer Profile Scores assess an entity’s exposure to ESG considerations material to credit, while Credit Impact Scores communicate the impact ESG considerations have on an entity’s credit rating. “We seek to incorporate all material credit considerations, including ESG issues, into credit ratings,” said Marie Diron, Managing Director at Moody’s Investors Service. “Our continued rollout of ESG issuer profile and credit impact scores assists in making the integration of ESG in credit analysis more transparent and formalised.”
Data, technology and market infrastructure provider Intercontinental Exchange (ICE) has launched a data solution to enable asset managers and other service providers to comply with the EU’s Sustainable Finance Disclosure Regulation (EU SFDR). ICE’s SFDR PAI (Principal Adverse Impacts) Solution offers users event-triggered updates for all of the mandatory adverse sustainability indicators applicable to investments in companies, sovereigns and supranationals. The EU’s PAI regime requires specifically formatted disclosure on ESG-related indicators, including GHG emissions, board gender diversity, and energy consumption ratios, which are available as part of ICE’s SFDR PAI Solution. According to ICE, the service allows customers to link equity and fixed income securities to the closest disclosing corporate entity, offering users a way to quickly match a security to the nearest parent entity with disclosed data.
Vaayu, a climate tech start-up that helps retailers reduce their carbon footprint in real-time, has closed an US$11.5 million seed funding round led by Atomico, with follow on from CapitalT and participation from Reddit co-founder Alexis Ohanian’s firm Seven Seven Six, along with a group of angel investors including Cristina Stenbeck, Chairperson of the Zalando Supervisory Board and non-Executive Director of Spotify and Bryant Chou, co-founder and CTO of Webflow. As part of this round of investment, Atomico Partner Terese Hougaard will join Vaayu’s board, making it 75% female. This is the second investment the business has attracted in eight months, taking the total seed amount raised to US$13 million.