By Ira Srivastava
1. 4 in 5 companies expect challenges collecting CSRD data. The European Union’s Corporate Sustainability Reporting Directive came into force in early 2023, with member states expected to comply by July 2024. Workiva’s global 2024 ESG Practitioner Survey found that 83% of respondents shared that data collection to comply with the CSRD would be difficult. 98% of the 2,200 surveyed professionals were “confident in the accuracy of their ESG data”. The CSRD will require over 50,000 companies that operate in the European Union to disclose environmental impacts as well as both human rights and sustainability risks. Despite the high data burden this new legislation creates, 81% of respondents that currently would not have to comply with the CSRD are voluntarily planning to align their disclosures with the new legislation.
2. Norwegian sovereign wealth fund backs ESG. The largest sovereign wealth fund in the world continues to take ESG considerations into account when making investment decisions despite global backlash. ESG has become highly politicized and divisive in the United States. The European Union, long seen as a sustainability trailblazer, is starting to see the impacts of this backlash as well. Protests erupted across the EU in response to nature restoration legislation, and member states lobbied to weaken the language of the landmark due diligence and reporting laws that were recently passed. Norway’s wealth fund, however, is leaning into ESG. Nicolai Tange, Norges Bank Investment Management CEO, shared that “We think [ESG] is part of long-term investing. You really need to care [about] the impact that companies have on the environment otherwise you’re not going to make good long-term investing”.
3. Climate change puts mineral production at risk. Minerals such as copper, cobalt, and lithium are critical to the net-zero transition. PwC’s report on Climate Risks to Nine Key Commodities found that nearly 75% of global production of these three minerals is at high risk of drought by mid-century. Today, that figure sits at just 10%. The analysis also found that three key crops — wheat, rice, and maize — face significant heat and drought risks. These crops make up almost half of the calories consumed around the world. Food security around the world is at extremely high risk of collapsing if climate change and emissions are not managed as soon as possible. Companies will need to improve their supply chain resilience, focus on adaptation opportunities, and work with stakeholders and governments to push for systemic climate action. Read the full report here.
4. ISSB announces research into nature and human capital risks. The International Sustainability Standards Board will begin conducting research on risks and opportunities related to biodiversity, ecosystem services, and human capital. This research will inform future initiatives by the ISSB. However, the ISSB has stated its main priority will remain supporting the implementation of the IFRS S1 and S2 standards. The ISSB will not be initiating new projects related to human rights issues and integration of human rights reporting, but has indicated they may be open to it in the future. A consultation summary is expected to be released in June along with an outline of the organization’s priorities between now and 2026.
5. Asian sustainable funds falter in Q1 of 2024. According to Morningstar, Asian sustainable funds excluding China and Japan saw net inflows of US$622 million in the first three months of the year. This is a significant drop from the US$1.7 billion inflows in Q4 of 2023. Chinese sustainability funds saw outflows of US$367 million, concentrated in energy-related funds, while Hong Kong funds saw similar outflows. Funds in India and Singapore also saw significant outflows. Taiwan was one of the few Asian markets to buck the trend, as US$1.2 billion flowed into Taiwanese sustainability funds.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.