TPT May 2020

G LOBA L MARKE T P L AC E

Companies and asset managers are increasingly using ESG ratings agencies to reassure and attract investors who prefer to avoid firms that contribute to climate change. However, Mr Maijoor described current supervision as: “far from optimal”. “The lack of clarity on the methodologies underpinning those scoring mechanisms, and their diversity, does not contribute to enabling investors to effectively compare investments which are marketed as sustainable, thus contributing to the risk of greenwashing,” Mr Maijoor told the European Financial Forum in Dublin in February. “Personally I believe that, where ESG ratings are used for investment purposes, ESG rating agencies should be regulated and supervised appropriately by public sector authorities.” European standards are also needed to give greater credibility to “green” bonds that use ESG ratings, Mr Maijoor said. “I believe that public authorities are needed to provide the strong registration and supervision required to prevent greenwashing.” ESMA is planning a public consultation on specific disclosure requirements and, together with its EU counterparts for insurance and banking, will codify what is required when firms market products that claim to have ESG characteristics. Following the news that Norwegian oil company Equinor has abandoned oil exploration projects in the Great Australian Bight, environmental groups are celebrating an “incredible win for nature”. Activists have protested against the planned drilling operations in an area described as “rich in biodiversity”, and the Australia Institute think-tank called on the Australian government to grant the Great Australian Bight world heritage protection. The Great Bay is a breeding ground for southern right whales, and is home to populations of great white shark, sperm whale, Australian sea lion, albatross, fishing eagle and penguin. Equinox is the third energy giant, after BP and Chevron, to drop drilling plans in the area. The National Offshore Petroleum Safety and Environmental Management Authority extended its review process into Equinor’s drilling plans before approving them, but finally Jone Stangeland, Equinor’s country manager for Australia, announced drilling would be abandoned on economic grounds. Australian Resources minister Keith Pitt called the decision: “extremely disappointing”. Equinor concluded that the project’s potential was not commercially competitive, compared with other exploration opportunities, but drew attention to the operation’s approval by Australian authorities: “The approval of the Stromlo-1 exploration well Environment Plan confirmed our ability to safely operate in the Bight.” Stangeland said: “We will engage with the federal and state authorities regarding our decision to discontinue the exploration programme. We hold an exploration permit [for] offshore Western Australia and will maintain other ongoing interests and activities in Australia.” Environmentalists celebrate victory over drilling off Australia

to improve ventilation and maintain temperature under the strong Middle Eastern sun. The sensors and their corresponding app help employees to find the best way to travel to and from work and alert them to which of the building’s three restaurants has spaces at lunchtime. The app also alerts staff as to fellow workers’ whereabouts. Intel Israel’s CEO, Yaniv Garty, confirmed that the tracking and data collection is on an opt-in basis: “We believe in a relationship which is based on output,” he said. After ending 2019 on a low, there are signs of optimism for German manufacturing In the Munich-based Ifo Institute for Economic Research’s Business Climate Index for February 2020, German business reported higher morale than of late. The new optimism will slightly ease the fears of recession in the German economy, which slowed in the fourth quarter of 2019 after private and state spending weakened, and reflects an improvement in the manufacturing sector, which had witnessed a fall in exports. The Ifo (an acronym of Information and Forschung) institute announced the February reading rose to 96.1 – from 96.0 in January – which compared favourably with a Reuters forecast that it would drop to 95.3. Ifo president, Clemens Fuest, said in a statement: “The German economy seems unaffected by developments surrounding the coronavirus,” and reiterated a first-quarter growth forecast of 0.2 per cent. The institute warned, however, that the survey could not fully reflect or predict the potential economic results of the coronavirus. A reduction in exports, combined with an automotive sector facing disruption from a costly move to electrification, has prompted the German economy to lose momentum. Ifo said a sub-index, that measures morale in the manufacturing sector, rose for the third consecutive month due to “a better orders outlook.” “The small rebound in February will be a relief for those braced for a big hit from the coronavirus, but it leaves the index below its [96.3] level in December,” said Andrew Kenningham, chief Europe economist at Capital Economics. “After flat-lining in Q4 last year, we suspect that the German economy will not grow in the first half of this year either, even if the effects of the coronavirus are contained.” Official figures released in February highlighted the weakness in the manufacturing sector, showing that December 2019 recorded the biggest fall in German industrial output since 2009. Call for greater control over companies’ ESG claims Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), is recommending that agencies who issue ESG (environmental, social and governance) ratings be better supervised in order to combat “greenwashing”. (Greenwashing is making an unsubstantiated or misleading claim about the environmental benefits of a product or practice, making the company appear more environmentally friendly than it really is.)

Gill Watson Features Editor (Europe)

49

www.read-tpt.com

MAY 2020