ESG+ Newsletter – 6 March 2025

Shareholder engagement practices following the release of new SEC guidance

After initially pausing their engagement activities in response to new guidance from the US Securities and Exchange Commission (SEC), large passive investors BlackRock and Vanguard have now resumed discussions with portfolio companies, as reported by Reuters. Firms had temporarily halted engagements to review the SEC’s updated disclosure requirements for investors seeking to influence issuers on environmental, social and governance (ESG) matters. 

While these engagements should remain valuable for exchanging information and perspectives, the inability of passive investors to clearly advocate for a preferred course of action under the new guidance may make it more challenging for issuers to interpret the direction of these discussions. 

UN pledges $200bn for nature amid warnings of greenwashing

More than 140 countries have agreed on a strategy to raise and distribute $200 billion annually by 2030 to protect nature, according to the Financial Times. The agreement, reached at the UN COP16 summit in Rome, offered a “light of hope” amid global tensions and US cuts to climate programs. It followed a previous failure to establish a funding strategy in Cali, Colombia. While a decision on a dedicated nature fund was postponed until 2028, delegates set a framework to support conservation through 2030, aiming to halt biodiversity loss and protect 30% of the planet’s land and seas. Outgoing COP16 President Susana Muhamad emphasised the importance of multilateralism in achieving these goals despite geopolitical challenges. 

Meanwhile, ISS ESG has warned investors about potential greenwashing as the term ‘nature positive’ gains popularity, as reported by Environmental Finance. The lack of a clear, unified definition of nature positive poses risks, as it generally refers to activities with a net positive environmental impact. However, some initiatives may benefit one aspect of nature while harming another. Unlike climate-focused investments, where green and brown activities are distinctly classified, the ambiguity surrounding nature positive makes it difficult to assess whether economic activities are genuinely beneficial. This uncertainty could allow companies to make misleading claims about their environmental impact, contributing to greenwashing. 

EU Omnibus divides investor opinion

The European Commission’s proposal to simplify sustainability reporting has divided investors, according to Responsible Investor. As reported in last week’s ESG newsletter, this first Omnibus Simplification Package seeks to streamline sustainability regulations and reduce administrative burdens. The proposed changes would significantly reduce the scope of the CSRD, CSDDD and the EU Taxonomy. Some investors and industry groups have supported the move, arguing that it reduces regulatory burdens and enhances competitiveness, with many praising the Commission for retaining the double materiality principle. Others have voiced their concerns that the new streamlining efforts risk diminishing transparency, creating legal uncertainty and undermining sustainability efforts. There are also fears that the removal of sector-specific standards and limitation of obligations under CSDDD to direct suppliers could create data gaps for investors. Due to the partial “opt-in” regime for the EU taxonomy, as well as delays to CSRD, third party ESG data and ratings will still have to be used by investors. Some critics go as far to say that the simplification proposal calls the EU Green Deal into question and puts sustainable growth at risk. 

International and domestic climate commitments evolve

As the Trump Administration continues to set priorities for its second term, international and domestic climate commitments are on the chopping block. The Financial Times reported that US representatives have not attended the Intergovernmental Panel on Climate Change (IPCC), the world’s leading climate science body, and have been missing from critical meetings since the start of the current administration. While the IPCC claims the body will not “stand or fall with one single country”, the organisation relies on collaboration between the best global experts on climate change. This, combined with the expectation that the US will withdraw its IPCC funding and quit the Paris climate agreement, signals a gloomy outlook for global climate collaboration.

Further, Reuters reports that the US Senate has overturned a Biden administration fee on methane emissions which complicates EPA measures to slash greenhouse gas emissions. Given the soft pullout on UN climate engagement and removal of climate change adaptation-oriented EPA taxes, it is evident that this trend of continued rollback from international and domestic climate commitments will continue throughout the Trump Administration’s second term.  

ICYMI 

• China has launched its sovereign green bond framework ahead of its much-anticipated green bond debut expected this year, Environmental Finance reports.
• Fidelity International announced its intention to adopt the ‘Sustainability Mixed Goals’ SDR label for three funds within its UK domiciled multi asset range.  
• TNFD will imminently begin pilot testing nature transition planning. According to Environmental Finance, a six-month process started this week with 15 organisations piloting test transition plans based on the Global Biodiversity Framework and other relevant public policies and standards.