Newsletter: March
Welcome to Canbury’s March newsletter. This month, we cover insights into scenario analysis, our green bond tool, conflict, and preparing for SDR.
Scroll to learn more about the impact of EUDR and CRMA, our recent discussion with asset owners on nature, as well as a summary of the FRC’s recent advice for 2024 Stewardship Code signatories.
If you’d welcome a call on any of the content in our newsletter, please get in touch. Or if you find yourself in Central London, do call in.
- Many thanks,
- The Canbury Team
Our approach to scenario analysis
We’ve developed an approach to scenario analysis that is efficient and easily comparable across strategies and portfolios. Our approach maps portfolios to the variables most likely to be impacted in different climate scenarios through academic research and NGFS models and data (see NGFS-inspired figure above).
Our scenario analysis is a core component of many climate reporting regulations, such as TCFD product-level reporting and ISSB S2 standards.
Click here to read more on scenarios, including the issues with them and the actions we believe investors can and should take to mitigate these issues.
C-CAT: Our tool to standardise green bond disclosures
C-CAT: Our tool to standardise green bond disclosures
C-CAT utilises our AI search capabilities to find, analyse, and source information on green bonds, before standardising then to help with portfolio-level reporting.
Green bonds can have very different aims and C-CAT standardises these aims to compare real impact. C-CAT also considers how green bond proceeds are deployed, to facilitate targeted engagement.
Click here to see more updates our recent developments.
Preparing for SDR
Preparing for SDR
Through detailed analysis of their portfolio, in scope asset managers will need to understand and prepare for the anti-greenwashing rule by 31 May 2024, as well as consider labelling of their investment products by 31 July 2024.
At Canbury, we help clients with a range of SDR issues, from training through to developing KPIs and assessment methodologies.
If you’re interested, click here for information on the FCA’s SDRs. Visit our website for insights on other ESG-related UK and EU regulations.
Discussing nature with asset owners
Canbury recently co-hosted with Dentons a discussion with leading UK asset owners integrating nature considerations into their investment approaches, to coincide with the PRI’s update on its nature stewardship initiative, Spring. The discussion included:
- An Overview of nature, biodiversity and natural capital
- Companies’ impact, dependency and lobbying on the drivers of nature and biodiversity loss
- Fiduciary duties as a flexible and permissive framework
If you’re interested in learning more on how nature can be considered in your portfolio, including nature health checks and supply chain exposure, please get in touch or view our article on biodiversity and nature.
EUDR and CRMA: Impact
With the incoming EU Deforestation Regulation (EUDR), companies will need to, from December 30 2024:
Provide a “due diligence” statement: this confirms that products have not been sourced from illegally deforested land or have led to forest degradation, since December 31 2020
Comply with the relevant legislation of the country of production: this includes laws related to human rights and the rights of indigenous peoples
EUDR is designed to ensure products sold in EU do not contribute to deforestation or forest degradation.
The EU Critical Raw Materials Act (CRMA) is part of a broader strategy aligned with the EU’s Green Deal Industrial Plan and the Net Zero Industry Act Companies, and has key objectives such as strengthening domestic supply chains, enhancing international partnerships, and promoting innovation and reducing bureaucracy. The regulation covers materials materials vital for manufacturing products like electric cars, solar panels, wind turbines, and smartphones.
Visit our website for insights on other incoming ESG-related regulations
FRC’s Stewardship Code Reporting Advice
The FRC’s spring Stewardship Code reporting deadline is approaching, and they have recently released advice for 2024 signatories and applicants. In summary, the FRC advises signatories to:
Use an “apply and explain” approach: Showcase stewardship activities and alignment with the Code’s Principles through detailed, transparent reporting.
Cover a broad spectrum of stewardship activities: Reflect efforts across different assets and investment strategies. The focus should be on demonstrating progress and engaging in meaningful stewardship practices.
Produce reports that are informative and engaging: Minimise jargon and emphasise clarity and conciseness to make reports accessible to a wide audience.
Emphasise a fair and balanced overview of your stewardship practices: Include both successes and challenges.
At Canbury, we prepare, support and review Stewardship Code reporting. If you’d like some advice, please contact us.
Conflict
As a topic, conflict is not well-covered by investors. Given the breadth of sustainability issues, conflict may seem like an issue low on investors’ priority lists. Conflict, however, dominates our news feeds, and peace, in many regions across the world, feels fragile.
As we turn our attention to energy transition, the materials necessary to transition are often sourced from countries in conflict. Indeed, in some instances, price pressure in supply chains and supply chain governance, may be a contributor to instances of conflict.
To read more on this topic, you can find our article here that includes a list of further resources.