ESG – News
TRADE BODY CALLS FOR REGULATION TO IMPROVE ACCURACY OF ESG DATA
An asset management trade body has called for Europe’s ESG data industry to be regulated to reduce the risk of greenwashing. The European Fund and Asset Management Association (EFA- MA) said that its members report a double-digit growth in appetite for ESG assets, which means there is a growing demand from investors to measure the impact that these investments are making.
EFAMA points to what it sees as inconsistences between pro- viders of ESG data, research and ratings. It would also like to see levels of transparency improve around how third-party pro- viders collect and process information from corporates. But it does not want the regulator to do all the work. It would like to see third-party providers take the initiative by spending more time with the corporates they are assessing to better understand the context in which those businesses operate. The flurry of mergers between ESG frameworks is not helping to improve standards or accessibility. Such activity, like Novem-
ber’s agreement between the Sustainability Accounting Stand- ards Board (SASB) and International Integrated Reporting Council (IIRC), reduces competition and in some cases makes it harder for some firms to access the data. Fewer providers mean higher costs, which could make their output too expen- sive for some smaller firms. Regulation is also needed to “preserve the integrity” of the market by reducing the conflicts of interest that could occur with fewer players offering a broader range of products and services. EFAMA’s regulatory policy adviser, Giorgio Botta, said: “Asset managers wish to encourage this ESG investment trend by expanding their offering of sustainable products and by provid- ing investors with trustworthy and comparable information – also in response to EU regulation introduced to fight green- washing and enhance transparency. “To fulfil these objectives, investors need solid and reliable data,” Botta added. “Given the lack of publicly available infor- mation, asset managers are heavily reliant on the information from third-party providers of ESG data, research and ratings, which comes with high costs and many questions.”
RISING CONSUMER DEMAND FOR RENEWABLE ENERGY WILL FUEL INSTITUTIONAL INVESTMENT
New research reveals that 38% of consumers claim to have re- newable energy tariffs for their homes, and just over half (51%) expect to choose these the next time they change tariff. The findings are from Alpha Real Capital and Cornwall In- sight, the provider of research, analysis, consulting and train- ing to businesses and stakeholders in the British, Irish and Australian energy markets.
When asked why they choose renewable energy tariffs, the re- search found 80% said it is because it is better for the environ- ment, but 46% believe they can get a better deal. When it comes to the cost of renewable energy, 26% of respondents are prepared to pay more, of those over 70% would pay a premium of 5% or more.
As an investment manager actively deploying long-term capital on behalf of institutions who support responsible investing and the transition to net zero, these findings are interesting to Alpha, because growing consumer demand should lead to investors looking to increase their exposure to this asset class. Recent research from Alpha revealed that over the next five years, 68% of UK pension fund investors expect allocations to renewable energy to increase. Ben Hall, group consulting partner at Cornwall Insight, said:
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“With climate change now at the forefront of consumers’ minds, renewable energy tariffs are becoming an increasingly popular choice for customers. Whilst this research mainly focused on residential consumers, it’s also clear from our expe- rience the net zero agenda is increasing demand for renewable energy from corporates and large businesses too. “This growing demand will undoubtedly send an important signal to the investment community, boosting the build-out of renewable technologies that will help the UK meet its 2050 net zero goals.” Will Morgan, head of renewables at Alpha Real Capital, said: “Growing demand from consumers for renewable energy underpins renewable energy markets and will lead to more investment opportunity.”
The firm has completed more than 50 transactions and invest- ed or committed more than £600m into UK renewable energy, providing secure long-term cash flows to investors.
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