##{"id":94972,"date":"2021-07-15T11:13:53","date_gmt":"2021-07-15T01:13:53","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=94972"},"modified":"2021-07-15T11:13:55","modified_gmt":"2021-07-15T01:13:55","slug":"esg-focus-its-easy-being-green-for-now-part-3","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2021\/07\/15\/esg-focus-its-easy-being-green-for-now-part-3\/","title":{"rendered":"ESG Focus: It’s Easy Being Green – For Now (Part 3)"},"content":{"rendered":"

FNArena's dedicated ESG Focus news section zooms in on matters Environmental, Social & Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future:<\/em> <\/strong>
https:\/\/www.fnarena.com\/index.php\/financial-news\/daily-financial-news\/category\/esg-focus\/<\/a><\/p>\n

ESG Focus: It's Easy Being Green – For Now (Part 3)<\/strong><\/u><\/p>\n

BIS Pursues Green Bond Rating System.<\/p>\n

Part 2 of our green bond story It’s Easy Being Green – For Now <\/em>(link below), touches on the steps to make carbon intensity the common denominator for a green-bond ratings system, to aid fungibility and liquidity, and reduce greenwashing and other abuse.<\/p>\n

Here, FNArena has included a heavily edited version of the Bank for International Settlements' (BIS) complimentary discussion on the subject for bond enthusiasts.<\/p>\n

BIS says ideally:<\/p>\n

“A firm-level green rating system should have three high-level objectives”:<\/p>\n

– It should provide extra incentives for the rated companies to contribute to the attainment of climate goals;
– It should help investors in their decision-making processes, particularly those investors without resources to conduct their own green due diligence; and
– The system should allow investors and other stakeholders such as auditors, regulators and policymakers, to check an organisation’s improvement and verify that the desired climate mitigation effects are achieved.<\/p>\n

By way of solutions for point 1 (incentives), BIS suggests:<\/p>\n

– an organisational level rating for green issuance;
– the right measures (BIS suggests carbon intensity);
– ratings buckets (divided by industry) to make comparison between companies easier, and to motivate corporate competition; and
– the rating placement on a finer grid for organisations with a higher carbon intensity.<\/p>\n

For point 2 (simplifying investor decision-making), BIS suggests:<\/p>\n

-Taking a simple approach to ratings that relies on a backward measure of climate attainment;
– transparency; and
– granularity (so that investors know if the projects fit with their investment strategy) to determine likely performance over time;
– and again use the bucket concept, which is already familiar to investors.<\/p>\n

On the subject of verification (point 3), BIS suggests: <\/p>\n

– adopting the carbon intensity as the standard measurement as it is easily verifiable and is based on outcomes;
– basing verification on scope 1, 2 and 3 emissions (at present, they may be based on just 1 and 2, which ignores company wide emissions) and the broadest types of emissions available, in order to capture the emissions for an organisation’s entire value chain;
– adopting mandatory audits of emissions data and mandatory reporting based on legal standards (which are already being developed); and
– emanding data on broader emission scopes from third-party to help assess an organisation’s overall carbon footprint.<\/p>\n

In summary, existing ratings for green bonds are not a good measure for a corporation’s carbon-intensity performance, measured as emissions relative to revenue.<\/p>\n

By rating firms, rather than bonds, on their overall carbon intensity could encourage them to increase their carbon efficiency and help investors sort the wheat from the chaff.<\/p>\n

It would provide extra incentives for large carbon emitters to battle climate changes.<\/p>\n

For further reading:<\/p>\n

It's Easy Being Green – For Now: https:\/\/www.fnarena.com\/index.php\/2021\/07\/09\/esg-focus-its-easy-being-green-for-now\/<\/a><\/p>\n

It's Easy Being Green – For Now (Part 2): https:\/\/www.fnarena.com\/index.php\/2021\/07\/12\/esg-focus-its-easy-being-green-for-now-part-2\/<\/a><\/p>\n

FNArena's dedicated ESG Focus news section zooms in on matters Environmental, Social & Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future:<\/em> <\/strong>
https:\/\/www.fnarena.com\/index.php\/financial-news\/daily-financial-news\/category\/esg-focus\/<\/a><\/p>\n<\/p>\n

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n

FNArena is proud about its track record and past achievements: Ten Years On<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

This is a heavily edited version of the Bank for International Settlements complimentary discussion on a proposed green-bond rating system for global markets based on carbon intensity<\/p>\n","protected":false},"author":1,"featured_media":95154,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[98],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/94972"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=94972"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/94972\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media\/95154"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=94972"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=94972"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=94972"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}