August 6, 2025 • 48 mins
Amid the backlash against ESG, it’s essential that investors and other market participants be able to separate the signal from noise. In this episode of ESG Currents, Bloomberg Intelligence’s Director of ESG Research Eric Kane is joined by the entire BI ESG team to discuss the key issues shaping ESG in the second half of 2025. Chris Ratti, Conrad Tan, Gail Glazerman, Andy Stevenson, Yasutake Homma, Margot Wentzel, Rob Du Boff, Grace Osborne, Melanie Rua and Shaheen Contractor share insights on sustainable debt issuance, physical risk, regulatory uncertainty, the resilience of ESG in Japan, new and existing efforts to reduce CO2 via compliance, and much more.
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Episode Transcript
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Speaker 1 (00:09):
ESG is constantly evolving. Over the years, it has shifted
from socially responsible investing to impact to sustainable finance. While
the terminology continues to change, what hasn't changed are the
underlying science, market pressures, and tangible physical and financial impacts
of the climate crisis, increasing regulatory scrutiny, and rising consumer expectations.
(00:35):
We aim to filter out the noise by speaking with
industry experts to identify what is really driving value. Welcome
to ESG Currents. I'm Eric Kine, director of ESG Research
for Bloomberg Intelligence. Today we're taking a slightly different approach
to our podcast. Rather than having an external guest, we'll
(00:57):
be featuring the members of the Bloomberg Intelligence ESG team,
and we'll hear their thoughts on Watson's store for ESG
for the second half of twenty thirty five. We'll hear
from Chris Raddy, Conrad Tan Kail Glazerman, Andy Stevenson, Yasu Takihoma,
Margot Wentzel, Rob Duboff, Grace Osbourne, Melanie rue Sheen contractor,
(01:19):
and I'll share some of my thoughts as well. We'll
cover a range of topics that we see driving in
the ESG conversation for the remainder of twenty twenty five,
including linking financial performance, the ESG, sustainable debt issuance, physical risk,
regulatory uncertainty, the resilience of ESG in Japan, and new
and existing efforts to reduce CO two through carbon pricing.
(01:44):
In some I think the discussion will make a plane
that despite the noise created by the ESG backlash, the
underlying issues will continue to create meaningful signals for investors
in corporates and more second half of twenty twenty five
and beyond with that set for the program. So, Chris,
you look after all things sustainable debt, what are your
(02:06):
expectations for sustainable debt issues for the second half of
the year and what are the key drivers of issuance.
Speaker 2 (02:14):
Well, in terms of global sustainable debt, when we look
at this market, we look at it, you know, very holistically.
We're we're looking at everything across all sectors and across
all security types. So a lot of times our estimates
are a lot larger than you know, other peoples when
they're looking at a slightly smaller data set. But in
(02:34):
terms of the global sustainable debt market, we think our
expectations of two point one trillion at the beginning of
the year, we might fall short of that. We're still
expecting around two trillion in total issuance, but that is
a little bit lighter than we were expecting at the
start of the year. A big reason for this is
just that we've seen a lot of political backlash from
(02:54):
the Trump administration and there's just been a lack of
clarity around terrace. But as we start to get some clarity,
we feel like, you know, Itch one should pick up
and remain pretty strong for the second half of the year.
Some of those drivers that that I'm talking about are,
you know, the macro economic environment hasn't been as strong
(03:15):
as as we had hoped. We hadn't seen the rate
cuts that we were expecting either, so we were expecting
kind of a couple of rate cuts right in the
beginning of the year to maybe boost issuance. But economic
growth has been a little bit weaker than we thought,
but without kind of the the rate cuts and the
the support from the central banks that we were looking for.
(03:39):
We also think that there's been, you know, a fluctuation
in credit spreads so far this year, where we've seen
some volatility and spreads widened, and then we've seen spreads
tightened back in already and you know, spreads remain historically tight,
so for the market overall, you know, that's a that's
a bit of a tight market to issue into when
(03:59):
spreads are as tight as they are. But we are
we continue to look at this market and have seen that.
You know, isfuence remains pretty strong. You know, Green Issuance
is the largest contributor, but it's down seven percent through
the first half. We think it's going to be down
year over year, but still remains the largest contributor. You know,
as I mentioned, a large part of that is just
a waiting clarity on terrace and litigation risks. So there's
(04:23):
a lot of issuers that are just waiting on the sidelines,
trying to digest what's happening in the market and wait
for some more clarity. Social bond diffluence has been an
area where there's been a lot of growth and we
continue to expect this to keep growing at a record pace.
A large part of this is through support from agencies
(04:45):
and supernational offerings that we've seen. Jenny May is the
largest single issuer and they continue to be a large
component of the market when we when we think about
this market overall, you know, there are some other drivers
in systemable debt that were not necessarily capturing, and I
just wanted to touch on briefly, and that's kind of
(05:07):
the further expansion of some of the other areas of
the market, like debt for nature swaps, blue bonds and
catastrophe bonds are some of the ones we highlight so different.
Nature swaps is where you know, countries are getting debt
relief in order to reduce their cost of borrowing, but
then they put a certain amount of funds aside to
(05:27):
fund biodiversity and environmental conservation. Blue bonds. You know, when
I speak to blue bonds, a lot of times blue
bonds in the cleanest sense is just debta stenders that
are only focused on marine conservation or marine projects. But
a lot of times when I'm looking at this, I'm
considering just green bonds that are now including marine conservation.
(05:50):
So we went from a market that only had like
five instances of green bonds including urine conservation in twenty
twenty three to two h and ten in twenty twenty four,
and we're already at two nine through June thirtieth of
this year. So we've seen a lot more uptick in
in you know, marine conservation and kind of these blue initiatives,
(06:12):
and then capons is somethingthing that we've seen a lot
of growth inituans as well. We're insurers are trying to
transfer the risk to investors for some kind of predefined
disaster such as you know, an earthquake, hurricane, wildfire, some
kind of a huge dorm you know, flooding event that
(06:32):
where they could kind of pass on the risk to investors.
This market has grown. It was seventeen pointy five billion
inituants in twenty twenty four to bring the total market
size over fifty billion. And you know, we've already seen
seventeen point two billion through June thirtieth in new issuanes
this year. So that's another area where we continue to
see growth in kind of sustainable financing. Super interesting, and
(06:56):
you've highlighted that government and supernational issuance has remained resilient
and is the main driver of issuance so far in
twenty twenty five. Can you expand on why corporate issuance
has been so light this year? Yeah, I mean I
touched on it briefly, when I mentioned kind of issuers
waiting on the sideline, that's really the corporate market has
(07:17):
just been in a wait and see mode.
Speaker 3 (07:19):
You know.
Speaker 2 (07:20):
Green hushing is kind of a buzzword that is around
the market now, and a lot of these companies, while
still funding sustainability efforts, haven't necessarily been doing it through
the labeled bond market, through the sustainable bond market or
the debt markets. We have seen some large issuance from
companies doing sustainabil ability link loans, but still a lot
(07:44):
of a lot of corporates are waiting on the sideline
because there is some litigation risks that they're worried about.
They're worried if they kind of come out and start
doing these large financing through these use of proceeds markets
that you know, some policy changes could result and some
kind of litigation against the companies. So there has been
a lot of names that are that are waiting on
(08:07):
the sideline. Now we're not seeing this across all markets.
The main UH market that has been impacted as the
America's regions corporate bond market in terms of sustainable debt
issuments we've seen, you know, Europe is also down but
not as much. And then you know, Asia Pacific, we've
seen a little bit of growth in the market as
(08:29):
governments have come out in support of environmental you know,
financing sustainability efforts, transition to you know, a circular economy,
things of that nature. We've seen the market in Asia
kind of tick up, and we've seen growth in corporateation.
So we're just in a wait and see approach moment
(08:51):
of the market. We don't necessarily see the market kind
of crashing and dying are going away, but there's definitely
is you know, a down trend right now in corporatedations
as they wait for clarity as I mentioned, not early
on terrorists, but on potential litigation risk.
Speaker 1 (09:08):
Awesome, Chris, Thanks so much for taking the time to chat. Conrad,
You've been looking into efforts to decarbonize airlines and marine
shipping over the last couple of months. Looking ahead into
the second half of twenty twenty five and beyond, do
you see momentum on greenhouse gas emissions regulations slowing given
(09:29):
the rollback of various climate initiatives and the backlash we've
seen against the est More broadly.
Speaker 4 (09:34):
Thanks Eric. I would say that despite the very real
pressure that we're seeing on climate and why the ESG initiatives.
There are still important multilateral efforts in progress to reduce
greenhouse gas emissions globally, including regulations already in todays that
are becoming strict by design, and the first is a
new net zero framework recently agreed for international shipping, so
(09:58):
from twenty twenty eight, ships will have to use cleaner
funds or pay as much as three hundred and eighty
dollars per ton for excess emissions to meet new targets
set by the International Maritime Organization. These draft regulations were
approved by a majority vote in April and they are
set to be formally adopted by the IMO in October
(10:18):
before entering the fours in twenty twenty seven. The IMO
targets for shipping emissions reflect various political compromises, and the
overall framework is less ambitious than what some had hoped for,
but it does send a clear signal to ship owners
that conventional bunker fuel will need to be phased out
over the next decade in favor of cleaner marine fuels
such as ammonia. Otherwise, companies face heavy penalties on emissions
(10:43):
and in aviation Almost all airlines globally will face charges
for carbon emissions for the first time in October under
the UN's Carbon Offsetting and Reduction Scheme for International Aviation
or COURSEA. October is when the UNICAO agency publishes sector
growth factor that measures how much international aviation emissions have
(11:03):
grown versus the pre pandemic baseline. This is the multiplier
applied to each airline's emissions to determine its offsetting requirements,
and that's turning positive for the first time this year.
The key uncertainties are how high it will be and
how much airlines will have to pay for carbon offsets,
but the pressure is clearly on airlines to reduce emissions
(11:23):
or start paying for them.
Speaker 1 (11:25):
Great So interview. What are some of the wider implications
of these multilateral efforts to limit emissions growth for companies
and industries.
Speaker 4 (11:35):
Sure, well, there are clear financial impacts, since the rules
are meant to make companies internalize the environmental and social
costs of greenhouse gas emissions, and they're also designed it
to become stricter over time. Shipping an aviation, including air freight,
of course, also underpin global trade supply chains and downstream
distribution networks of many industries globally, so higher costs there
(11:57):
could also flow through to many other industreet, and beyond
increased costs, new opportunities could emerge from the reshaping of
global shipping and aviation. For example, early analysis suggests that
the IMO net zero framework for shipping could increase demand
for some types of low emissions fuel more than others,
and this is a topic we aim to explore with
(12:18):
industry experts in future episodes of this podcast. In aviation,
big airlines are already trying to limit emissions growth by
switching to cleaner fuel, but there simply isn't enough of it.
Total production of sustainable aviation fuel in twenty twenty four
was just zero point three percent of global jet fuel production,
and what's available is expensive, averaging three times the price
(12:41):
of conventional jet fuel. Our teams bi carbon analysis of
the top emitting companies globally suggests many will have to
rely on carbon offsets to get to and stay on
science based decrbonization pathway, and this adds a new dimension
to the transition risks companies face, as they would have
an apate a complex regulatory and policy landscape for carbon
(13:03):
offsets and face the market based cobon price that's followed
top if good offer opportunities for other companies to develop
new cobon crediting projects, but they are key gaps that
need to be addressed before credits generated by such projects
can effectively attack global airline demand for CORSA. Offsetting that
includes the interaction of COURSA with countries's obligations under the
(13:24):
Paris Agreement. We've explored this in detail in our published research,
so listeners working to no more can certainly find this
on any Bluebook terminal or reach out to our team
for more information.
Speaker 1 (13:34):
Excellent Conra, thanks so much for taking the time to chat. Gil.
You focus on integration and always have your finger on
the ESG pulse, so curious to hear from you. With
the change in US administration, the first half seems to
have been dominated by stories of ESG pushback and rollbacks.
What do you expect for the second half and beyond well.
Speaker 5 (13:55):
While the policy support support is clearly important, there are
tangible reality which companies and investors can't escape and which
will probably continue to drive corporate behavior. Physical risks, including
extreme heat and flooding, continue unobated and will require response
and affect business activity and decisions. Or taking example of
data centers as they look to grow to service growing
(14:19):
generative AI demand, these sites will need power and water,
and these resource demands are undergoing increased scrutiny and the
companies are being forced to accept increased financial responsibility. Ohio
recently set rules ensuring large data centers, not consumers, bear
the infrastructure costs for the power the power supply that's
(14:44):
going to be needed.
Speaker 6 (14:45):
And they're far from alone.
Speaker 5 (14:47):
So if AI power forecast hold, companies are going to
have to turn to all available available power sources, including
renewables and even nuclear, as well as find ways to
drive consumption efficiencies.
Speaker 1 (14:59):
Super interesting, and what about on the social side and
the context of the pushback on the E and I.
Speaker 5 (15:07):
Well, at the start, there's been a lot of news
of companies walking away from diversity, equity inclusion commitments, but
it's worth noting that while they changed how they're talking
about these initiatives, and a lot of cases, they're not
really changing what they're doing or nowhere near as dramatically
as how they're talking about it. So how it might
appear on the surface, but to some degree the pushback
(15:29):
may force companies to evaluate their program's goals promises, and
I would expect that the final sustained outcomes will be
less marketing and promotional in nature and maybe more tuned
to the actual business needs thinking about both their stakeholders,
both internally and externally, and that would be good for business,
(15:50):
but also would not preclude having some positive impacts.
Speaker 1 (15:54):
Very interesting, Gil, Thanks so much for taking the time
to chat. Andy. Climate continues to be front and center
of the issue conversation, and there's been a lot of
policy developments relating to climate here in the US in
recent weeks. Can you tell us how President Trump's reconciliation
bill is expected to impact renewable growth and maybe give
examples of how will impact the utility sector.
Speaker 7 (16:18):
Sure, Eric, So, the Pub's administration passed its reconciliation bill
earlier this month, the July fourth, and in that build
there were very strict provisions on how long the subsidies
for renewables would persist. So originally these renewable subsidies were
expected to go out to twenty thirty four, and they've
been rained into basically a year from now July of
(16:40):
twenty twenty six. You can still build beyond that, but
you need to have had some foundations put in place
for you to actually get the subsidies, which, to remind
the reviewers or listeners, is about thirty percent of the
total project costs. So with this change pretty aggressive change
in how long those subsidies will persist. The market itself
(17:03):
is expecting renewables to have a pretty poor showing for
the next ten years or so, cutting the amount of
total capacity at roughly in half by about three hundred
and fifty gigawatts and really raining in total power production
by anywhere between seven hundred and fifty eight hundred and
fifty tarrawat hours in the year twenty thirty five. So
(17:24):
this would require the gas industry to absorb about fifty
six percent or increase rather their power production of about
fifty six percent to offset this lack loss of renewables,
and obviously with AI and other electrify everything projects underway,
it does bring concern to how we can actually meet
(17:46):
these growing power needs with the cut so that we
are seeing in terms of the subsidies. If you want
to give examples of this, there are two companies I
think really highlight how this new policy is going to
affect their kind of future fortunes as it were. Excel Energy,
which has really been in the business of cleaning up
(18:08):
their act for about a decade now, they've been you know,
they went from really one of the heaviest polluters from
an emission standpoint to now one of the cleanest and
on their way still through twenty thirty to basically a
net zero target. That seems still very credible because they
really did most of their investment over the past several years,
with the Kapex for renewables winding down really in twenty
(18:31):
twenty seven. So if you think about how they are situated,
they're pretty well positioned to do two things to fully
execute their renewable plan, and they are expected to see
about five percent power growth from AI, so every electron
that goes on the grid will be more valuable. So
they have kind of a growth story and it's not
(18:53):
interfered with, particularly by the Trump administration's new policies next era.
Of course, the biggest renewable player in the world world,
and obviously the biggest one of the United States, has
a kind of a different situation where they are heavily
dependent on renewables as a growth story. Both at FP
(19:15):
and l which is their Florida Power and Light, which
is their you know, Florida utility that is looking to
basically take their growth forecasts. They want to use solar
to basically cover all of it, so that covers, you know,
through the next ten years. You're looking at subsidies for
the first couple of years for those projects, but thereafter
(19:37):
it's going to be very difficult for them to do
what they plan to do without seeing their margins compress.
Also with next their energy, the company has a huge
renewable arm, and the renewable arm is really really hit
by this. In the outer years. Again, we think twenty
six twenty seven, the capex is probably okay, but just
(20:00):
twenty eight and twenty nine you're looking at forty three
billion dollars of expected wind and solar investment that is
at least at risk of margin compressions. So overall we
see you know, kind of different stories across different companies.
Outside of that, there are companies like Fluence and Plug Power. Fluence,
(20:22):
you know, looking at storage and plug Power on the
hydrogen side, both of which are still see their subseas intact.
Maybe slightly different growth stories, but at least those policies
at least they can operate with those policies in mind.
Speaker 1 (20:38):
Really interesting and so maybe a follow up question. Obviously
you went through a lot, but is there anything else
in the Reconciliation Bill that concerns you on the climate front?
Speaker 7 (20:49):
Just the entire makeup of the because we are seeing
higher dependence on renewables, is definitely a concern. So the
analysis that has been done to date is we're looking
at probably a five hundred million ton increase in CO
two output through twenty thirty five relative to the base case,
which was kind of a revised base case. Understanding the
(21:13):
President Trump is in office. This is not the more
aggressive program under the President Biden that was looking to
zero out emissions. So it is definitely a concern, and
it covers obviously the transportation sector. Now with the EV rollback,
as we mentioned power, you know, the gas is really
going to play a front and center role. Coal plants themselves,
(21:36):
especially in light of the fact that the EPA is
working to kind of roll back any greenhouse gas admissions
rules for the coal industry will obviously probably excuse me,
will extend a few coal plants a few years further.
So there's a number of things, but they all kind
of sum up to a big number, which is half
(21:57):
a gig a ton of CO two says output from
the US, which obviously, given what's going on with the climate,
the less we can do on that front the better.
Speaker 1 (22:07):
Absolutely, Andy, thank you so much for taking the times
chat Homazon. Japan seems to be resilient to the overall
ESG backlash that we're saying. Curious to hear from you.
What is the outlook for Japan ESG investing and assets
under management?
Speaker 8 (22:24):
Thanks Eric. I know there has been a lot of
speculation around whether the bank clash against the ESG in
the US might spill over into Japan, but honestly, I
don't see strong evidence of a similar retreat happening here.
Let me give you a few reasons. When I looked
at ESG index performance, especially the ones adopted by Japan's
(22:47):
largest asset on a gpif the results were actually not
disastrously the common efficient gender diversity industes both rather outperformed
the topics. In the first half of this year. We
are also seeing solid the funder flows into ESG products.
In fact, es G ETFs located in Japan attracted about
(23:10):
four hundred million US dollars over the last six months.
That's not a sign of riage read and importantly gpif
recently we are farmed, it's commitment to ESG in March
stating they plan to go deeper into susample investing. Plus,
more public and private pension funds are joining the newly
(23:31):
established asset Owner Principles which emphasize sussample investment. So overall
the outlook for ESG investing in Japan feels quite stable
or rather possibly even poisoned for growth.
Speaker 1 (23:44):
Really interesting, and Japan did a House of Counselors election
in July. Can you tell me and our listeners about
any implications towards ESG investment in Japan?
Speaker 8 (23:56):
Great question, Thank you. The ruling coalition LD and the
Cometal last nineteen seats in the last election, bringing them
blowing the halfway mark in the chumber. That said, they
still hold the largest share of all. What's interesting, though,
is the rise of smaller parties like the Democratic Party
(24:18):
for the People a DPFP and sun Sato, which are
starting to have more influence over policy. A DPFP, for example,
supports building new nuclear power plants as necessary for Japan
to meet its net zero goals. Sun Sato, on the
other hand, is more skeptical of climate change and the
(24:38):
push toward carbon neutrality, but they advocate for next generation
nuclear as well as biomass, hydrogen and the geo thermal
energy sources mainly from the perspective of energy security. So
while their motivations differ, there is still a share to
focus on stable alternative energy sources. That leads me to
(25:01):
believe that from an ESG and asastability, at some point,
especially in the energy sector, we are likely to see
policy continuity and the relatively stable environment going forward.
Speaker 1 (25:13):
Super interesting, Homozan, thank you so much for taking the
time to chat.
Speaker 8 (25:16):
Thank you so much, Marco.
Speaker 1 (25:19):
You've recently initiated coverage of compliance based carbon markets. Curious
to hear from you how the major carbon markets have
performed this year so far and what we can expect
through the rest of the year.
Speaker 6 (25:32):
Thanks Eric. I really want to talk about three of
the largest carbon markets, namely the EU ETS, the China
National ETS, and REGGIE, which is the carbon market of
the US Northeast. These markets together cover roughly twenty percent
of global GHG emissions, just a lot overall. All three
(25:56):
of these markets are undergoing some regulatory updates which could
apply some upward price pressure throughout the rest of this year,
despite a slightly muted start to the year. So I'll
start with the EU ETS prices have really helped study
for the first half of this year around sixty five
euros a ton, but we're currently at above seventy euros,
(26:19):
so that has increased a bit and we could expect
to see that rise further throughout the year with the
phase out of free allowances starting next year. Moving on
to the China national ETS prices have actually fallen about
twenty eight percent throughout this year if we compare to
the end of last year, and that could be likely
(26:40):
due to liquidity constraints as a result of the compliance
is The compliance market is compliance only participants, so there
are no speculative participants in that market. However, the market
is expanding to cover cement, feel and aluminum, which will
increase coverage and potential regular tightening and improved emissions disclosure
(27:03):
could enhance that price recovery. Moving to Reggie, Reggie prices
have been pretty stable throughout the year, which could seem
like a barrassed signal. However, demand remains pretty strong with
the entire cost containment reserve depleted at the first auction
of this year, and Virginia actually withdrew from REGGIE, and
(27:25):
there hasn't been such a large price ball that has
indicated that making the case that demand may actually be rising.
So we could see that early CCR depletion drive a
price spike towards the later auctions of this year, which
is what happened last year as well. So overall we
could see some upward price pressure, but we'll have to
(27:46):
see how some of these regulatory changes pan out.
Speaker 1 (27:50):
Very interesting and you mentioned, of course regulatory changes. So
with the passage of Trump's Reconciliation Bill, which repealed many
federal clean energy tax credits, what do investors need to
know about the impacts on the US compliance schemes.
Speaker 6 (28:06):
I can talk about REGGIE, so perhaps focused on the
US Northeast, but we think that reggie's role here and
in some of the broader carbon markets becomes even more
critical with the repeal of federal tax incentives under the
Big Beautiful Bill AX, as clean energy build out responsibility
shifts to the state level. REGGIE states have historically used
(28:30):
nine billion dollars in auction revenues to fund renewable energy
efficiency programs, consumer benefit programs, and the tightening cap and
continued demand could amplify amplify the price signal for the
second half of the year, creating stronger incentives for clean
energy investment. So overall, we may say we may see
a great state level policy divergence where some states are
(28:54):
doubling down on climate initiatives and others are not.
Speaker 1 (28:58):
Very interesting Marco, thank you so much for the regulation
is top of mind for everyone in these days and
a key part of your focus. Curious to hear from you.
What regulatory changes have we seen in the early days
of the new administration and what do we expect going forward.
Speaker 9 (29:15):
Well, the changes have really come fast and furious since
the inauguration in January. For purposes of this discussion, I'm
going to set aside the one big beautiful bill, which
we know is going to slow a lot of decarbonization
investments through rollbacks on clean energy credits. I really just
want to focus on changes that may impact town investors
are able to actually integrate ESG analysis into the process.
(29:36):
So this really starts with disclosures. The current SEC leadership
withdrew support for previously issued climate disclosure rules which required
companies to disclose both the financial impacts and the greenhouse gasomations.
So without required disclosures, US investors basically have to rely
on voluntary disclosures, and those tend to be both inconsistent
(29:58):
and complete, especially when you look at other develop markets
like Europe. Similarly, President Trump's executive order targeting illegal discrimination
as pressuring companies to end DEI programs under threat of
prosecution or at least reframe how they're discussed, which can
also leave investors in the dark. And this is not
(30:19):
just in the US. We've also seen the EU start
to streamline and sustainability of reporting rules amid pushback from
some of the companies over there. And then the other
major change was how they sec trade shareholder proposals, particularly
environmental and social proposals. The number of shareholder proposals in
the recently completed proxy season, for example, fell to around
(30:41):
five hundred, which is actually down twenty four percent from
last year, and for contexts, those numbers have actually been
going up quite significantly in the previous four years. Moreover,
we've seen average support for environmental and social proposals go
down from about sixteen percent in the twenty twenty four
proxy season or around twelve percent this year. So what
(31:03):
was behind that big shift? For one, the SEC in
February put in place significant changes on what it viewed
as eligible shareholder proposals. Also issued new guidance on how
certain large shareholders should be engaging with companies on ESG issues.
And then in addition to that, you have a number
of moves at both the state level and in the courts.
It's also led to quite a chill in investment stewardship.
(31:27):
Now going forward, a major change we're looking for later
this year are rules around ESG investment products. The Department
of Labor, which as you may know, regulates private retirement plans,
is once again looking to restrict the use of ESG
analysis and these funds. The first Trump administration put out
a rule that put high hurdles on plans seeking to
incorporate so called non pecuniary factors meant to basically target ESG.
(31:52):
This was ultimately reversed by the Biden team, but the
DL has indicated they'll flip once again. This may impact
and estimated one hundred and fifty thousand funds that incorporate
ESG analysis, so it's a bit of a big deal.
The rules could also pressure these plans to abstain from
or even vote against all ESG shareholder proposal.
Speaker 1 (32:11):
Very interesting so to hear maybe how companies are responding
to these changes.
Speaker 9 (32:18):
Yeah, that's really the interesting thing, you know. I think
the biggest pain point for the corporates is the instability,
you know, having to build processes in places to accommodate
new rules, only to see them change every four years. Now,
most companies build long term plans meant to last well
more than four years, So how they're dealing with this
is not necessarily changing their long term strategies wholesale, but
(32:39):
rather reframing how they communicate them. So take DEI. Most
companies still see the value of diverse workforces, but instead
of maybe setting definitive or even aspirational quotas for underrepresented
groups in the workforce, they'll reframe these as more vague
goals to improve representation. Diversity goes from more women and
(33:00):
minorities to a variety of experiences and backgrounds. Equity inclusion
gets relabeled as belonging. But ultimately, what we're finding is
that companies that link ees and g issues to actual
business fundamentals were able to write out the turbulence, so
companies that were maybe using it more as a marketing
exercise are seeing probably the most uncertainty.
Speaker 1 (33:21):
Very very interesting, Rob, thank you so much for taking
the time to chet race. You look after banks and
sustainable finance more broadly, so following the wave of exits
from the Net Zero Banking Alliance earlier this year, have
fossil fuel financing patterns shifted and should investors rethink how
they assess interim financed emissions targets.
Speaker 10 (33:45):
Yeah, I think it's pretty interesting. Our analysis of the
seventeen banks that exited the alliance and that was prior
to HSBC exiting, found that financing two gas clients actually
fell by no bridge of eighteen percent in the first
half of this year versus the volumes we saw in
the first half of twenty twenty four. And I think
(34:07):
one thing that's particularly interesting is that we saw that
to an extent, it's the Japanese banks that ext to
the Alliance that have been plugging this gap. For example,
Sumatomo Mitsui Financial Group saw a one hundred and forty
nine percent increase in financing volumes to the sector. They
also sort of doubling in their number of deals, and
(34:29):
we're seeing Japanese banks play key roles in areas such
as financing LERG in the US, and to an extent,
they appear to be financing where other banks seem to
be kind of drawing the line. I think one example
of that is the midst of the Shi Financial Group.
They replaced Credit Agricole as the financial advisor for the
Pappula LNG project after twelve other banks indicated they went funder.
(34:54):
So there's kind of some interesting regional dynamics between the banks.
But I would say with the exception of Wells Fargo,
we have seen most banks keep their enterm financial emissions targets. However,
where we've seen the NZBA loosening requirements to well blow
two degrees and banks such as HSBC citing things like
(35:14):
policy uncertainty lack of technological advancements consume uptake limitations in
them meeting these targets, so we may see some banks
dilute their twenty thirty financed emissions targets slightly. Going forward,
we've seen kind of some of the banks come out
and placing more emphasis on their role in financing high
carbon sectors to enable them to transition. And while this
(35:38):
is at odds with the kind of recent SBTi net
Seria standard for financial institutions that has just come out,
I think overall we're likely to see a short term
up to and financed emissions despite the banks confirming and
reasserrating their commitments to nets aera twenty fifty.
Speaker 1 (35:58):
Super interesting. With sustainable finance commitments largely intact posts that
serial banking alliance, where are the real growth levers in
their opinion?
Speaker 10 (36:10):
Yeah, I think with the exception perhaps of RBC bank
sustainable finance targets have largely remained intact. We actually see
four of the exiting US banks are in the top
ten banks in terms of volume of global sustainable CHMER
aligned bonds financed year to date. And then this JP
Morgan generated sixty six million dollars in revenue and banks
(36:33):
are continuing to allocate capital to green and sustainable clients
because of this as a revenue generator for them. And
I think another interesting thing we saw recently with HSBC's
exit that it saw some of its sustainable clients announced
intentions to move their business to all turn to banks
such as Lloyd's Bank, and at a scale, of course,
(36:55):
that could have implications for sustainable finance targets looking ahead,
particularly with things like g fans mobilizing and de risking
private finance in emerging markets, We're actually seeing an increase
from banks and asset managers in launching things like sustainable
emerging market products. We saw in June Goldman Sachs launched
(37:18):
their twenty nine million dollar Emerging Markets Green and Social
Bond Active ETF. This includes sustainability bonds from Serbia, social
bonds from Columbia, and green bonds from dep World based
in the UAE. So we're seeing in I guess, emergents
in banks engaging in emerging markets and sustainability space, also
(37:39):
through other products like things like debt for nature swats.
I think JP Morgan structured one billion dollar deal for
El Salvador, So definitely, I think we're going to see
continued growth and sustainability sustainable volumes globally, and I think
we're seeing this interesting kind of uptick to emerging markets,
evolving product areas like nature, and of course different regional dynamics.
(38:04):
Again in the US, I think we likely see kind
of an aggressive capital deployment renewables in the short term
up to kind of twenty twenty seven, before you know
they lose that investment tax credit benefit. So definitely regional nuances,
but I think we will continue to see momentum in
the sustainable finance space despite exits.
Speaker 1 (38:24):
Wonderful. I appreciate the bit of optimism there, Chris, thank
you so much for taking the time to chat. Melanie.
You've done a lot of work looking at the physical
impacts of climate in recent months, including co leading the
work on our water deep dive. Curious to hear what
trends are emerging as companies adapt to rising water stress
(38:48):
in twenty twenty five and beyond.
Speaker 11 (38:51):
Sure, so you know, just focusing in on the physical risk,
I mean looking at what current events. We're seeing a
lot of water related extremes escalate across the globe. Just
to give examples. In the last month, Iran began restricting
water supply after experiencing one of its worst droughts on record.
(39:13):
But heat is intensifying across southern Europe, so we're seeing
countries like Portugal, Turkey, Greece and Albania battling wildfires, and
on the other end of the spectrum. China has seen
deadly flooding following excessive rainfall. So this is all underscoring.
You know, how a fiscal risk can cut both ways,
(39:34):
and for US, our research is focusing on how this
translates to corporate and asset level exposure. And so we
found that nearly one point one terra watts or thirty
seven percent of global power capacity is located in areas
that are projected to face high or extreme water stress
by twenty thirty under the wri's business as usual scenario.
(39:59):
And so these include water dependent thermal and hydro assets
in countries like China, like India, South Africa and Italy.
But beyond power, industries like mining and steel with large
waterfootprints are also facing elevated risk. Some global miners, for example,
have up to seventy five percent of their asset base
(40:21):
in high stress zones, which could influence permitting efficiency or
long term project viability. And so with growing demand for
that forward looking risk assessment, we do expect this to
become a core lens in the analysis.
Speaker 1 (40:36):
Super interesting and what kind of companies do you think
are ultimately positioned to benefit as water becomes a more
constrained resource Yeah.
Speaker 11 (40:46):
We're seeing opportunity emerge in companies that help others manage
water more efficiently, so whether through infrastructure, through services, or technology.
In the oil and gas sector, for example, firms like
Select Water Solutions and Ariswater Solutions are managing the growing
volumes of produced water tied to shell production, and that
(41:08):
includes transportation, it includes treatment, reuse, so services that become
more critical as water stress intensifies, and disposal capacity titans
you know. In power companies that are expanding solar and
wind in aired regions are also worth watching. So our
data shows that operators like Acwa Power and China Detained Corp.
(41:31):
Have deployed gigawatts of low water intensity renewables in high
stress regions, so reducing their operational exposure. And these sighting
strategies could offer long term resilience advantages as heat and
drought become more severe and as physcal water risk continues
(41:52):
to rise, we do expect attention to shift toward companies
whose business models or capital planning align with the future
constrained water access.
Speaker 1 (42:02):
Very interesting, Melanie, Thank you so much for taking the
time to chat. Thanks for having me Sahen. Your ESG
Alpha research focuses on the link between ESG and financial performance.
So curious to hear from you as ESG faces headwinds.
The link to performance is becoming increasingly important. What do
(42:23):
we see here and how does it link back to
material issues?
Speaker 3 (42:26):
I would say the link to performance is not only
becoming increasingly important but also fair. So we back tested
our Bloomberg ESG scores, which focus on material issues, over
more than six and a half years, you know what
you mentioned as our ESG alpha product, and we found
some interesting things. So I'll give you a couple of examples.
(42:47):
The one that really stands out to me is for
industries like mining and chemicals. It was really the occupational
health and safety issues score that stood out and here
we found that better score. So companies with better scores sorry,
so our performance of over three and a half percent
annually versus those with worse scores. Now, if you know,
(43:09):
link back to your question about materiality, this does make sense, right,
And industry is like mining, these are amongst the most dangerous,
and we think health and safety things like fatality, race,
accident rates, they can be approxy for operational risk. So
that's that's one example of you know, linking back to materiality.
(43:29):
The other one I have is maybe for an environmental topic,
and here in energy, so specifically oil and gas, we
found Greenhouse Gas management scores to see our performance. So
again these are some examples. I'll just add that, you know,
when we think about performance, many many studies out there
(43:50):
due to the index level, and I think, given how
nuanced an industry specific ESG is, going into that deeper
level is really where the value lie.
Speaker 1 (43:59):
Absolutely, I certainly agree with that last statement about the
importance of the industry specific nuance. So you mentioned an
s example. Of course with health and safety, you mentioned
an environmental example. What about governance? Are we seeing any
signals on that side?
Speaker 3 (44:16):
Yeah, So governance is more industry agnostics. So what I
looked for here is what worked across the multiple industries
and sectors. So here shareholder rights stands out as a
governance theme that had both risk and return benefits. It
had the most across all the industries and sectors we tested,
just for some context, So Shelter Rights US scores. They
(44:39):
enabled investors to understand how well company policies protect shareholders,
particularly minority shareholders, and how responsive the company is to
the needs of shareholders. So this particular theme. So in
the material sector we saw draw Dan's lower by at
least five percent across all industries. So think of raw
(44:59):
dance as a max your portfolio can lose. So lower
road aans equals less risk. So this just points to
the importance of effective oversight. On the other hand, and
other sectors we saw outperformance. So we saw this in
three of the five sectors we tested, energy, technology and materials,
So it was really shareholder rights that stood out. I'll
(45:20):
just add that what I thought was really interesting is
that board composition as a theme, the benefits were really
elusive here. We didn't find much on outperformance and I
just found that surprising given the importance of things like
board independence and diversity. So for G, it's all about
the shareholder rights similar work on performance. I'd like to
(45:41):
throw a question back to you when we think about this,
you know, link between ESG and performance. Are there other
ways in which we can answer the question that could
help investors going forward?
Speaker 1 (45:54):
Thanks Sane. It's an interesting question, and I think you know,
one of the things that we're always trying to do
here within the big team has developed impactful and rigorous
ways to kind of demonstrate the link. So I would say,
you know, recently we introduced our market Moving News research
which looks back at about nine years of data to
(46:16):
identify industry specific ESG events and analyze where there was
a corresponding impact on stock price and or credit spread.
So an oil and gas for example, what we see
is that oil spills were among the most frequent event
type and had consistently negative impacts on stock price, but
actually led to tightening of credit spreads. So I think
(46:39):
this body of research, which you know, hopefully we'll expand
to a couple dozen industries over time, really helps provide
a key piece of the overall you know, linking ESG
to financial performance puzzle.
Speaker 3 (46:51):
And again the materiality aspect, I think absolutely. So, I
think that's super interesting just to maybe a wrap up. So,
based on everything the team has discussed today, what do
you think is key for ESG in the second half.
Speaker 1 (47:06):
Of this Yeah. Yeah, it's definitely tough to distill into
a single key, but if I had to, I think
it's similar to something that I mentioned during the intro,
which is it's all about separating the signal from the noise.
I think it's really clear that the ESG pushback is
having impacts, and we discussed many of those on today's episodes,
(47:29):
including impacts on sustainable debt issue in a decline and
certain types of shareholder proposals or retreat and DNI efforts.
But that ultimately doesn't change the realities of how climate
change or other issues are impacting companies, industries and markets.
So really, in my view, the work that we're doing
(47:50):
to help investors and others understand, measure, and assess these
issues remains more critical than ever. Thank you excellent, Thank
you Shaheen, and thank you to the rest of the
team for joining today's episode. For our listeners out there,
you can find more information on all things ESG, including
(48:11):
our midyear outlook for twenty twenty five, by going to
our dashboard bispace ESG go on the Bloomberg terminal, and
as always, if you have an ESG quandary or burning
question you'd like to ask bi's expert analysts, please send
us an email at ESG Currents at Bloomberg dot net.
Thank you very much and we'll see you next time.
ESG is constantly evolving. Over the years, it has shifted
from socially responsible investing to impact to sustainable finance. While
the terminology continues to change, what hasn't changed are the
underlying science, market pressures, and tangible physical and financial impacts
of the climate crisis, increasing regulatory scrutiny, and rising consumer expectations.
(00:35):
We aim to filter out the noise by speaking with
industry experts to identify what is really driving value. Welcome
to ESG Currents. I'm Eric Kine, director of ESG Research
for Bloomberg Intelligence. Today we're taking a slightly different approach
to our podcast. Rather than having an external guest, we'll
(00:57):
be featuring the members of the Bloomberg Intelligence ESG team,
and we'll hear their thoughts on Watson's store for ESG
for the second half of twenty thirty five. We'll hear
from Chris Raddy, Conrad Tan Kail Glazerman, Andy Stevenson, Yasu Takihoma,
Margot Wentzel, Rob Duboff, Grace Osbourne, Melanie rue Sheen contractor,
(01:19):
and I'll share some of my thoughts as well. We'll
cover a range of topics that we see driving in
the ESG conversation for the remainder of twenty twenty five,
including linking financial performance, the ESG, sustainable debt issuance, physical risk,
regulatory uncertainty, the resilience of ESG in Japan, and new
and existing efforts to reduce CO two through carbon pricing.
(01:44):
In some I think the discussion will make a plane
that despite the noise created by the ESG backlash, the
underlying issues will continue to create meaningful signals for investors
in corporates and more second half of twenty twenty five
and beyond with that set for the program. So, Chris,
you look after all things sustainable debt, what are your
(02:06):
expectations for sustainable debt issues for the second half of
the year and what are the key drivers of issuance.
Speaker 2 (02:14):
Well, in terms of global sustainable debt, when we look
at this market, we look at it, you know, very holistically.
We're we're looking at everything across all sectors and across
all security types. So a lot of times our estimates
are a lot larger than you know, other peoples when
they're looking at a slightly smaller data set. But in
(02:34):
terms of the global sustainable debt market, we think our
expectations of two point one trillion at the beginning of
the year, we might fall short of that. We're still
expecting around two trillion in total issuance, but that is
a little bit lighter than we were expecting at the
start of the year. A big reason for this is
just that we've seen a lot of political backlash from
(02:54):
the Trump administration and there's just been a lack of
clarity around terrace. But as we start to get some clarity,
we feel like, you know, Itch one should pick up
and remain pretty strong for the second half of the year.
Some of those drivers that that I'm talking about are,
you know, the macro economic environment hasn't been as strong
(03:15):
as as we had hoped. We hadn't seen the rate
cuts that we were expecting either, so we were expecting
kind of a couple of rate cuts right in the
beginning of the year to maybe boost issuance. But economic
growth has been a little bit weaker than we thought,
but without kind of the the rate cuts and the
the support from the central banks that we were looking for.
(03:39):
We also think that there's been, you know, a fluctuation
in credit spreads so far this year, where we've seen
some volatility and spreads widened, and then we've seen spreads
tightened back in already and you know, spreads remain historically tight,
so for the market overall, you know, that's a that's
a bit of a tight market to issue into when
(03:59):
spreads are as tight as they are. But we are
we continue to look at this market and have seen that.
You know, isfuence remains pretty strong. You know, Green Issuance
is the largest contributor, but it's down seven percent through
the first half. We think it's going to be down
year over year, but still remains the largest contributor. You know,
as I mentioned, a large part of that is just
a waiting clarity on terrace and litigation risks. So there's
(04:23):
a lot of issuers that are just waiting on the sidelines,
trying to digest what's happening in the market and wait
for some more clarity. Social bond diffluence has been an
area where there's been a lot of growth and we
continue to expect this to keep growing at a record pace.
A large part of this is through support from agencies
(04:45):
and supernational offerings that we've seen. Jenny May is the
largest single issuer and they continue to be a large
component of the market when we when we think about
this market overall, you know, there are some other drivers
in systemable debt that were not necessarily capturing, and I
just wanted to touch on briefly, and that's kind of
(05:07):
the further expansion of some of the other areas of
the market, like debt for nature swaps, blue bonds and
catastrophe bonds are some of the ones we highlight so different.
Nature swaps is where you know, countries are getting debt
relief in order to reduce their cost of borrowing, but
then they put a certain amount of funds aside to
(05:27):
fund biodiversity and environmental conservation. Blue bonds. You know, when
I speak to blue bonds, a lot of times blue
bonds in the cleanest sense is just debta stenders that
are only focused on marine conservation or marine projects. But
a lot of times when I'm looking at this, I'm
considering just green bonds that are now including marine conservation.
(05:50):
So we went from a market that only had like
five instances of green bonds including urine conservation in twenty
twenty three to two h and ten in twenty twenty four,
and we're already at two nine through June thirtieth of
this year. So we've seen a lot more uptick in
in you know, marine conservation and kind of these blue initiatives,
(06:12):
and then capons is somethingthing that we've seen a lot
of growth inituans as well. We're insurers are trying to
transfer the risk to investors for some kind of predefined
disaster such as you know, an earthquake, hurricane, wildfire, some
kind of a huge dorm you know, flooding event that
(06:32):
where they could kind of pass on the risk to investors.
This market has grown. It was seventeen pointy five billion
inituants in twenty twenty four to bring the total market
size over fifty billion. And you know, we've already seen
seventeen point two billion through June thirtieth in new issuanes
this year. So that's another area where we continue to
see growth in kind of sustainable financing. Super interesting, and
(06:56):
you've highlighted that government and supernational issuance has remained resilient
and is the main driver of issuance so far in
twenty twenty five. Can you expand on why corporate issuance
has been so light this year? Yeah, I mean I
touched on it briefly, when I mentioned kind of issuers
waiting on the sideline, that's really the corporate market has
(07:17):
just been in a wait and see mode.
Speaker 3 (07:19):
You know.
Speaker 2 (07:20):
Green hushing is kind of a buzzword that is around
the market now, and a lot of these companies, while
still funding sustainability efforts, haven't necessarily been doing it through
the labeled bond market, through the sustainable bond market or
the debt markets. We have seen some large issuance from
companies doing sustainabil ability link loans, but still a lot
(07:44):
of a lot of corporates are waiting on the sideline
because there is some litigation risks that they're worried about.
They're worried if they kind of come out and start
doing these large financing through these use of proceeds markets
that you know, some policy changes could result and some
kind of litigation against the companies. So there has been
a lot of names that are that are waiting on
(08:07):
the sideline. Now we're not seeing this across all markets.
The main UH market that has been impacted as the
America's regions corporate bond market in terms of sustainable debt
issuments we've seen, you know, Europe is also down but
not as much. And then you know, Asia Pacific, we've
seen a little bit of growth in the market as
(08:29):
governments have come out in support of environmental you know,
financing sustainability efforts, transition to you know, a circular economy,
things of that nature. We've seen the market in Asia
kind of tick up, and we've seen growth in corporateation.
So we're just in a wait and see approach moment
(08:51):
of the market. We don't necessarily see the market kind
of crashing and dying are going away, but there's definitely
is you know, a down trend right now in corporatedations
as they wait for clarity as I mentioned, not early
on terrorists, but on potential litigation risk.
Speaker 1 (09:08):
Awesome, Chris, Thanks so much for taking the time to chat. Conrad,
You've been looking into efforts to decarbonize airlines and marine
shipping over the last couple of months. Looking ahead into
the second half of twenty twenty five and beyond, do
you see momentum on greenhouse gas emissions regulations slowing given
(09:29):
the rollback of various climate initiatives and the backlash we've
seen against the est More broadly.
Speaker 4 (09:34):
Thanks Eric. I would say that despite the very real
pressure that we're seeing on climate and why the ESG initiatives.
There are still important multilateral efforts in progress to reduce
greenhouse gas emissions globally, including regulations already in todays that
are becoming strict by design, and the first is a
new net zero framework recently agreed for international shipping, so
(09:58):
from twenty twenty eight, ships will have to use cleaner
funds or pay as much as three hundred and eighty
dollars per ton for excess emissions to meet new targets
set by the International Maritime Organization. These draft regulations were
approved by a majority vote in April and they are
set to be formally adopted by the IMO in October
(10:18):
before entering the fours in twenty twenty seven. The IMO
targets for shipping emissions reflect various political compromises, and the
overall framework is less ambitious than what some had hoped for,
but it does send a clear signal to ship owners
that conventional bunker fuel will need to be phased out
over the next decade in favor of cleaner marine fuels
such as ammonia. Otherwise, companies face heavy penalties on emissions
(10:43):
and in aviation Almost all airlines globally will face charges
for carbon emissions for the first time in October under
the UN's Carbon Offsetting and Reduction Scheme for International Aviation
or COURSEA. October is when the UNICAO agency publishes sector
growth factor that measures how much international aviation emissions have
(11:03):
grown versus the pre pandemic baseline. This is the multiplier
applied to each airline's emissions to determine its offsetting requirements,
and that's turning positive for the first time this year.
The key uncertainties are how high it will be and
how much airlines will have to pay for carbon offsets,
but the pressure is clearly on airlines to reduce emissions
(11:23):
or start paying for them.
Speaker 1 (11:25):
Great So interview. What are some of the wider implications
of these multilateral efforts to limit emissions growth for companies
and industries.
Speaker 4 (11:35):
Sure, well, there are clear financial impacts, since the rules
are meant to make companies internalize the environmental and social
costs of greenhouse gas emissions, and they're also designed it
to become stricter over time. Shipping an aviation, including air freight,
of course, also underpin global trade supply chains and downstream
distribution networks of many industries globally, so higher costs there
(11:57):
could also flow through to many other industreet, and beyond
increased costs, new opportunities could emerge from the reshaping of
global shipping and aviation. For example, early analysis suggests that
the IMO net zero framework for shipping could increase demand
for some types of low emissions fuel more than others,
and this is a topic we aim to explore with
(12:18):
industry experts in future episodes of this podcast. In aviation,
big airlines are already trying to limit emissions growth by
switching to cleaner fuel, but there simply isn't enough of it.
Total production of sustainable aviation fuel in twenty twenty four
was just zero point three percent of global jet fuel production,
and what's available is expensive, averaging three times the price
(12:41):
of conventional jet fuel. Our teams bi carbon analysis of
the top emitting companies globally suggests many will have to
rely on carbon offsets to get to and stay on
science based decrbonization pathway, and this adds a new dimension
to the transition risks companies face, as they would have
an apate a complex regulatory and policy landscape for carbon
(13:03):
offsets and face the market based cobon price that's followed
top if good offer opportunities for other companies to develop
new cobon crediting projects, but they are key gaps that
need to be addressed before credits generated by such projects
can effectively attack global airline demand for CORSA. Offsetting that
includes the interaction of COURSA with countries's obligations under the
(13:24):
Paris Agreement. We've explored this in detail in our published research,
so listeners working to no more can certainly find this
on any Bluebook terminal or reach out to our team
for more information.
Speaker 1 (13:34):
Excellent Conra, thanks so much for taking the time to chat. Gil.
You focus on integration and always have your finger on
the ESG pulse, so curious to hear from you. With
the change in US administration, the first half seems to
have been dominated by stories of ESG pushback and rollbacks.
What do you expect for the second half and beyond well.
Speaker 5 (13:55):
While the policy support support is clearly important, there are
tangible reality which companies and investors can't escape and which
will probably continue to drive corporate behavior. Physical risks, including
extreme heat and flooding, continue unobated and will require response
and affect business activity and decisions. Or taking example of
data centers as they look to grow to service growing
(14:19):
generative AI demand, these sites will need power and water,
and these resource demands are undergoing increased scrutiny and the
companies are being forced to accept increased financial responsibility. Ohio
recently set rules ensuring large data centers, not consumers, bear
the infrastructure costs for the power the power supply that's
(14:44):
going to be needed.
Speaker 6 (14:45):
And they're far from alone.
Speaker 5 (14:47):
So if AI power forecast hold, companies are going to
have to turn to all available available power sources, including
renewables and even nuclear, as well as find ways to
drive consumption efficiencies.
Speaker 1 (14:59):
Super interesting, and what about on the social side and
the context of the pushback on the E and I.
Speaker 5 (15:07):
Well, at the start, there's been a lot of news
of companies walking away from diversity, equity inclusion commitments, but
it's worth noting that while they changed how they're talking
about these initiatives, and a lot of cases, they're not
really changing what they're doing or nowhere near as dramatically
as how they're talking about it. So how it might
appear on the surface, but to some degree the pushback
(15:29):
may force companies to evaluate their program's goals promises, and
I would expect that the final sustained outcomes will be
less marketing and promotional in nature and maybe more tuned
to the actual business needs thinking about both their stakeholders,
both internally and externally, and that would be good for business,
(15:50):
but also would not preclude having some positive impacts.
Speaker 1 (15:54):
Very interesting, Gil, Thanks so much for taking the time
to chat. Andy. Climate continues to be front and center
of the issue conversation, and there's been a lot of
policy developments relating to climate here in the US in
recent weeks. Can you tell us how President Trump's reconciliation
bill is expected to impact renewable growth and maybe give
examples of how will impact the utility sector.
Speaker 7 (16:18):
Sure, Eric, So, the Pub's administration passed its reconciliation bill
earlier this month, the July fourth, and in that build
there were very strict provisions on how long the subsidies
for renewables would persist. So originally these renewable subsidies were
expected to go out to twenty thirty four, and they've
been rained into basically a year from now July of
(16:40):
twenty twenty six. You can still build beyond that, but
you need to have had some foundations put in place
for you to actually get the subsidies, which, to remind
the reviewers or listeners, is about thirty percent of the
total project costs. So with this change pretty aggressive change
in how long those subsidies will persist. The market itself
(17:03):
is expecting renewables to have a pretty poor showing for
the next ten years or so, cutting the amount of
total capacity at roughly in half by about three hundred
and fifty gigawatts and really raining in total power production
by anywhere between seven hundred and fifty eight hundred and
fifty tarrawat hours in the year twenty thirty five. So
(17:24):
this would require the gas industry to absorb about fifty
six percent or increase rather their power production of about
fifty six percent to offset this lack loss of renewables,
and obviously with AI and other electrify everything projects underway,
it does bring concern to how we can actually meet
(17:46):
these growing power needs with the cut so that we
are seeing in terms of the subsidies. If you want
to give examples of this, there are two companies I
think really highlight how this new policy is going to
affect their kind of future fortunes as it were. Excel Energy,
which has really been in the business of cleaning up
(18:08):
their act for about a decade now, they've been you know,
they went from really one of the heaviest polluters from
an emission standpoint to now one of the cleanest and
on their way still through twenty thirty to basically a
net zero target. That seems still very credible because they
really did most of their investment over the past several years,
with the Kapex for renewables winding down really in twenty
(18:31):
twenty seven. So if you think about how they are situated,
they're pretty well positioned to do two things to fully
execute their renewable plan, and they are expected to see
about five percent power growth from AI, so every electron
that goes on the grid will be more valuable. So
they have kind of a growth story and it's not
(18:53):
interfered with, particularly by the Trump administration's new policies next era.
Of course, the biggest renewable player in the world world,
and obviously the biggest one of the United States, has
a kind of a different situation where they are heavily
dependent on renewables as a growth story. Both at FP
(19:15):
and l which is their Florida Power and Light, which
is their you know, Florida utility that is looking to
basically take their growth forecasts. They want to use solar
to basically cover all of it, so that covers, you know,
through the next ten years. You're looking at subsidies for
the first couple of years for those projects, but thereafter
(19:37):
it's going to be very difficult for them to do
what they plan to do without seeing their margins compress.
Also with next their energy, the company has a huge
renewable arm, and the renewable arm is really really hit
by this. In the outer years. Again, we think twenty
six twenty seven, the capex is probably okay, but just
(20:00):
twenty eight and twenty nine you're looking at forty three
billion dollars of expected wind and solar investment that is
at least at risk of margin compressions. So overall we
see you know, kind of different stories across different companies.
Outside of that, there are companies like Fluence and Plug Power. Fluence,
(20:22):
you know, looking at storage and plug Power on the
hydrogen side, both of which are still see their subseas intact.
Maybe slightly different growth stories, but at least those policies
at least they can operate with those policies in mind.
Speaker 1 (20:38):
Really interesting and so maybe a follow up question. Obviously
you went through a lot, but is there anything else
in the Reconciliation Bill that concerns you on the climate front?
Speaker 7 (20:49):
Just the entire makeup of the because we are seeing
higher dependence on renewables, is definitely a concern. So the
analysis that has been done to date is we're looking
at probably a five hundred million ton increase in CO
two output through twenty thirty five relative to the base case,
which was kind of a revised base case. Understanding the
(21:13):
President Trump is in office. This is not the more
aggressive program under the President Biden that was looking to
zero out emissions. So it is definitely a concern, and
it covers obviously the transportation sector. Now with the EV rollback,
as we mentioned power, you know, the gas is really
going to play a front and center role. Coal plants themselves,
(21:36):
especially in light of the fact that the EPA is
working to kind of roll back any greenhouse gas admissions
rules for the coal industry will obviously probably excuse me,
will extend a few coal plants a few years further.
So there's a number of things, but they all kind
of sum up to a big number, which is half
(21:57):
a gig a ton of CO two says output from
the US, which obviously, given what's going on with the climate,
the less we can do on that front the better.
Speaker 1 (22:07):
Absolutely, Andy, thank you so much for taking the times
chat Homazon. Japan seems to be resilient to the overall
ESG backlash that we're saying. Curious to hear from you.
What is the outlook for Japan ESG investing and assets
under management?
Speaker 8 (22:24):
Thanks Eric. I know there has been a lot of
speculation around whether the bank clash against the ESG in
the US might spill over into Japan, but honestly, I
don't see strong evidence of a similar retreat happening here.
Let me give you a few reasons. When I looked
at ESG index performance, especially the ones adopted by Japan's
(22:47):
largest asset on a gpif the results were actually not
disastrously the common efficient gender diversity industes both rather outperformed
the topics. In the first half of this year. We
are also seeing solid the funder flows into ESG products.
In fact, es G ETFs located in Japan attracted about
(23:10):
four hundred million US dollars over the last six months.
That's not a sign of riage read and importantly gpif
recently we are farmed, it's commitment to ESG in March
stating they plan to go deeper into susample investing. Plus,
more public and private pension funds are joining the newly
(23:31):
established asset Owner Principles which emphasize sussample investment. So overall
the outlook for ESG investing in Japan feels quite stable
or rather possibly even poisoned for growth.
Speaker 1 (23:44):
Really interesting, and Japan did a House of Counselors election
in July. Can you tell me and our listeners about
any implications towards ESG investment in Japan?
Speaker 8 (23:56):
Great question, Thank you. The ruling coalition LD and the
Cometal last nineteen seats in the last election, bringing them
blowing the halfway mark in the chumber. That said, they
still hold the largest share of all. What's interesting, though,
is the rise of smaller parties like the Democratic Party
(24:18):
for the People a DPFP and sun Sato, which are
starting to have more influence over policy. A DPFP, for example,
supports building new nuclear power plants as necessary for Japan
to meet its net zero goals. Sun Sato, on the
other hand, is more skeptical of climate change and the
(24:38):
push toward carbon neutrality, but they advocate for next generation
nuclear as well as biomass, hydrogen and the geo thermal
energy sources mainly from the perspective of energy security. So
while their motivations differ, there is still a share to
focus on stable alternative energy sources. That leads me to
(25:01):
believe that from an ESG and asastability, at some point,
especially in the energy sector, we are likely to see
policy continuity and the relatively stable environment going forward.
Speaker 1 (25:13):
Super interesting, Homozan, thank you so much for taking the
time to chat.
Speaker 8 (25:16):
Thank you so much, Marco.
Speaker 1 (25:19):
You've recently initiated coverage of compliance based carbon markets. Curious
to hear from you how the major carbon markets have
performed this year so far and what we can expect
through the rest of the year.
Speaker 6 (25:32):
Thanks Eric. I really want to talk about three of
the largest carbon markets, namely the EU ETS, the China
National ETS, and REGGIE, which is the carbon market of
the US Northeast. These markets together cover roughly twenty percent
of global GHG emissions, just a lot overall. All three
(25:56):
of these markets are undergoing some regulatory updates which could
apply some upward price pressure throughout the rest of this year,
despite a slightly muted start to the year. So I'll
start with the EU ETS prices have really helped study
for the first half of this year around sixty five
euros a ton, but we're currently at above seventy euros,
(26:19):
so that has increased a bit and we could expect
to see that rise further throughout the year with the
phase out of free allowances starting next year. Moving on
to the China national ETS prices have actually fallen about
twenty eight percent throughout this year if we compare to
the end of last year, and that could be likely
(26:40):
due to liquidity constraints as a result of the compliance
is The compliance market is compliance only participants, so there
are no speculative participants in that market. However, the market
is expanding to cover cement, feel and aluminum, which will
increase coverage and potential regular tightening and improved emissions disclosure
(27:03):
could enhance that price recovery. Moving to Reggie, Reggie prices
have been pretty stable throughout the year, which could seem
like a barrassed signal. However, demand remains pretty strong with
the entire cost containment reserve depleted at the first auction
of this year, and Virginia actually withdrew from REGGIE, and
(27:25):
there hasn't been such a large price ball that has
indicated that making the case that demand may actually be rising.
So we could see that early CCR depletion drive a
price spike towards the later auctions of this year, which
is what happened last year as well. So overall we
could see some upward price pressure, but we'll have to
(27:46):
see how some of these regulatory changes pan out.
Speaker 1 (27:50):
Very interesting and you mentioned, of course regulatory changes. So
with the passage of Trump's Reconciliation Bill, which repealed many
federal clean energy tax credits, what do investors need to
know about the impacts on the US compliance schemes.
Speaker 6 (28:06):
I can talk about REGGIE, so perhaps focused on the
US Northeast, but we think that reggie's role here and
in some of the broader carbon markets becomes even more
critical with the repeal of federal tax incentives under the
Big Beautiful Bill AX, as clean energy build out responsibility
shifts to the state level. REGGIE states have historically used
(28:30):
nine billion dollars in auction revenues to fund renewable energy
efficiency programs, consumer benefit programs, and the tightening cap and
continued demand could amplify amplify the price signal for the
second half of the year, creating stronger incentives for clean
energy investment. So overall, we may say we may see
a great state level policy divergence where some states are
(28:54):
doubling down on climate initiatives and others are not.
Speaker 1 (28:58):
Very interesting Marco, thank you so much for the regulation
is top of mind for everyone in these days and
a key part of your focus. Curious to hear from you.
What regulatory changes have we seen in the early days
of the new administration and what do we expect going forward.
Speaker 9 (29:15):
Well, the changes have really come fast and furious since
the inauguration in January. For purposes of this discussion, I'm
going to set aside the one big beautiful bill, which
we know is going to slow a lot of decarbonization
investments through rollbacks on clean energy credits. I really just
want to focus on changes that may impact town investors
are able to actually integrate ESG analysis into the process.
(29:36):
So this really starts with disclosures. The current SEC leadership
withdrew support for previously issued climate disclosure rules which required
companies to disclose both the financial impacts and the greenhouse gasomations.
So without required disclosures, US investors basically have to rely
on voluntary disclosures, and those tend to be both inconsistent
(29:58):
and complete, especially when you look at other develop markets
like Europe. Similarly, President Trump's executive order targeting illegal discrimination
as pressuring companies to end DEI programs under threat of
prosecution or at least reframe how they're discussed, which can
also leave investors in the dark. And this is not
(30:19):
just in the US. We've also seen the EU start
to streamline and sustainability of reporting rules amid pushback from
some of the companies over there. And then the other
major change was how they sec trade shareholder proposals, particularly
environmental and social proposals. The number of shareholder proposals in
the recently completed proxy season, for example, fell to around
(30:41):
five hundred, which is actually down twenty four percent from
last year, and for contexts, those numbers have actually been
going up quite significantly in the previous four years. Moreover,
we've seen average support for environmental and social proposals go
down from about sixteen percent in the twenty twenty four
proxy season or around twelve percent this year. So what
(31:03):
was behind that big shift? For one, the SEC in
February put in place significant changes on what it viewed
as eligible shareholder proposals. Also issued new guidance on how
certain large shareholders should be engaging with companies on ESG issues.
And then in addition to that, you have a number
of moves at both the state level and in the courts.
It's also led to quite a chill in investment stewardship.
(31:27):
Now going forward, a major change we're looking for later
this year are rules around ESG investment products. The Department
of Labor, which as you may know, regulates private retirement plans,
is once again looking to restrict the use of ESG
analysis and these funds. The first Trump administration put out
a rule that put high hurdles on plans seeking to
incorporate so called non pecuniary factors meant to basically target ESG.
(31:52):
This was ultimately reversed by the Biden team, but the
DL has indicated they'll flip once again. This may impact
and estimated one hundred and fifty thousand funds that incorporate
ESG analysis, so it's a bit of a big deal.
The rules could also pressure these plans to abstain from
or even vote against all ESG shareholder proposal.
Speaker 1 (32:11):
Very interesting so to hear maybe how companies are responding
to these changes.
Speaker 9 (32:18):
Yeah, that's really the interesting thing, you know. I think
the biggest pain point for the corporates is the instability,
you know, having to build processes in places to accommodate
new rules, only to see them change every four years. Now,
most companies build long term plans meant to last well
more than four years, So how they're dealing with this
is not necessarily changing their long term strategies wholesale, but
(32:39):
rather reframing how they communicate them. So take DEI. Most
companies still see the value of diverse workforces, but instead
of maybe setting definitive or even aspirational quotas for underrepresented
groups in the workforce, they'll reframe these as more vague
goals to improve representation. Diversity goes from more women and
(33:00):
minorities to a variety of experiences and backgrounds. Equity inclusion
gets relabeled as belonging. But ultimately, what we're finding is
that companies that link ees and g issues to actual
business fundamentals were able to write out the turbulence, so
companies that were maybe using it more as a marketing
exercise are seeing probably the most uncertainty.
Speaker 1 (33:21):
Very very interesting, Rob, thank you so much for taking
the time to chet race. You look after banks and
sustainable finance more broadly, so following the wave of exits
from the Net Zero Banking Alliance earlier this year, have
fossil fuel financing patterns shifted and should investors rethink how
they assess interim financed emissions targets.
Speaker 10 (33:45):
Yeah, I think it's pretty interesting. Our analysis of the
seventeen banks that exited the alliance and that was prior
to HSBC exiting, found that financing two gas clients actually
fell by no bridge of eighteen percent in the first
half of this year versus the volumes we saw in
the first half of twenty twenty four. And I think
(34:07):
one thing that's particularly interesting is that we saw that
to an extent, it's the Japanese banks that ext to
the Alliance that have been plugging this gap. For example,
Sumatomo Mitsui Financial Group saw a one hundred and forty
nine percent increase in financing volumes to the sector. They
also sort of doubling in their number of deals, and
(34:29):
we're seeing Japanese banks play key roles in areas such
as financing LERG in the US, and to an extent,
they appear to be financing where other banks seem to
be kind of drawing the line. I think one example
of that is the midst of the Shi Financial Group.
They replaced Credit Agricole as the financial advisor for the
Pappula LNG project after twelve other banks indicated they went funder.
(34:54):
So there's kind of some interesting regional dynamics between the banks.
But I would say with the exception of Wells Fargo,
we have seen most banks keep their enterm financial emissions targets. However,
where we've seen the NZBA loosening requirements to well blow
two degrees and banks such as HSBC citing things like
(35:14):
policy uncertainty lack of technological advancements consume uptake limitations in
them meeting these targets, so we may see some banks
dilute their twenty thirty financed emissions targets slightly. Going forward,
we've seen kind of some of the banks come out
and placing more emphasis on their role in financing high
carbon sectors to enable them to transition. And while this
(35:38):
is at odds with the kind of recent SBTi net
Seria standard for financial institutions that has just come out,
I think overall we're likely to see a short term
up to and financed emissions despite the banks confirming and
reasserrating their commitments to nets aera twenty fifty.
Speaker 1 (35:58):
Super interesting. With sustainable finance commitments largely intact posts that
serial banking alliance, where are the real growth levers in
their opinion?
Speaker 10 (36:10):
Yeah, I think with the exception perhaps of RBC bank
sustainable finance targets have largely remained intact. We actually see
four of the exiting US banks are in the top
ten banks in terms of volume of global sustainable CHMER
aligned bonds financed year to date. And then this JP
Morgan generated sixty six million dollars in revenue and banks
(36:33):
are continuing to allocate capital to green and sustainable clients
because of this as a revenue generator for them. And
I think another interesting thing we saw recently with HSBC's
exit that it saw some of its sustainable clients announced
intentions to move their business to all turn to banks
such as Lloyd's Bank, and at a scale, of course,
(36:55):
that could have implications for sustainable finance targets looking ahead,
particularly with things like g fans mobilizing and de risking
private finance in emerging markets, We're actually seeing an increase
from banks and asset managers in launching things like sustainable
emerging market products. We saw in June Goldman Sachs launched
(37:18):
their twenty nine million dollar Emerging Markets Green and Social
Bond Active ETF. This includes sustainability bonds from Serbia, social
bonds from Columbia, and green bonds from dep World based
in the UAE. So we're seeing in I guess, emergents
in banks engaging in emerging markets and sustainability space, also
(37:39):
through other products like things like debt for nature swats.
I think JP Morgan structured one billion dollar deal for
El Salvador, So definitely, I think we're going to see
continued growth and sustainability sustainable volumes globally, and I think
we're seeing this interesting kind of uptick to emerging markets,
evolving product areas like nature, and of course different regional dynamics.
(38:04):
Again in the US, I think we likely see kind
of an aggressive capital deployment renewables in the short term
up to kind of twenty twenty seven, before you know
they lose that investment tax credit benefit. So definitely regional nuances,
but I think we will continue to see momentum in
the sustainable finance space despite exits.
Speaker 1 (38:24):
Wonderful. I appreciate the bit of optimism there, Chris, thank
you so much for taking the time to chat. Melanie.
You've done a lot of work looking at the physical
impacts of climate in recent months, including co leading the
work on our water deep dive. Curious to hear what
trends are emerging as companies adapt to rising water stress
(38:48):
in twenty twenty five and beyond.
Speaker 11 (38:51):
Sure, so you know, just focusing in on the physical risk,
I mean looking at what current events. We're seeing a
lot of water related extremes escalate across the globe. Just
to give examples. In the last month, Iran began restricting
water supply after experiencing one of its worst droughts on record.
(39:13):
But heat is intensifying across southern Europe, so we're seeing
countries like Portugal, Turkey, Greece and Albania battling wildfires, and
on the other end of the spectrum. China has seen
deadly flooding following excessive rainfall. So this is all underscoring.
You know, how a fiscal risk can cut both ways,
(39:34):
and for US, our research is focusing on how this
translates to corporate and asset level exposure. And so we
found that nearly one point one terra watts or thirty
seven percent of global power capacity is located in areas
that are projected to face high or extreme water stress
by twenty thirty under the wri's business as usual scenario.
(39:59):
And so these include water dependent thermal and hydro assets
in countries like China, like India, South Africa and Italy.
But beyond power, industries like mining and steel with large
waterfootprints are also facing elevated risk. Some global miners, for example,
have up to seventy five percent of their asset base
(40:21):
in high stress zones, which could influence permitting efficiency or
long term project viability. And so with growing demand for
that forward looking risk assessment, we do expect this to
become a core lens in the analysis.
Speaker 1 (40:36):
Super interesting and what kind of companies do you think
are ultimately positioned to benefit as water becomes a more
constrained resource Yeah.
Speaker 11 (40:46):
We're seeing opportunity emerge in companies that help others manage
water more efficiently, so whether through infrastructure, through services, or technology.
In the oil and gas sector, for example, firms like
Select Water Solutions and Ariswater Solutions are managing the growing
volumes of produced water tied to shell production, and that
(41:08):
includes transportation, it includes treatment, reuse, so services that become
more critical as water stress intensifies, and disposal capacity titans
you know. In power companies that are expanding solar and
wind in aired regions are also worth watching. So our
data shows that operators like Acwa Power and China Detained Corp.
(41:31):
Have deployed gigawatts of low water intensity renewables in high
stress regions, so reducing their operational exposure. And these sighting
strategies could offer long term resilience advantages as heat and
drought become more severe and as physcal water risk continues
(41:52):
to rise, we do expect attention to shift toward companies
whose business models or capital planning align with the future
constrained water access.
Speaker 1 (42:02):
Very interesting, Melanie, Thank you so much for taking the
time to chat. Thanks for having me Sahen. Your ESG
Alpha research focuses on the link between ESG and financial performance.
So curious to hear from you as ESG faces headwinds.
The link to performance is becoming increasingly important. What do
(42:23):
we see here and how does it link back to
material issues?
Speaker 3 (42:26):
I would say the link to performance is not only
becoming increasingly important but also fair. So we back tested
our Bloomberg ESG scores, which focus on material issues, over
more than six and a half years, you know what
you mentioned as our ESG alpha product, and we found
some interesting things. So I'll give you a couple of examples.
(42:47):
The one that really stands out to me is for
industries like mining and chemicals. It was really the occupational
health and safety issues score that stood out and here
we found that better score. So companies with better scores sorry,
so our performance of over three and a half percent
annually versus those with worse scores. Now, if you know,
(43:09):
link back to your question about materiality, this does make sense, right,
And industry is like mining, these are amongst the most dangerous,
and we think health and safety things like fatality, race,
accident rates, they can be approxy for operational risk. So
that's that's one example of you know, linking back to materiality.
(43:29):
The other one I have is maybe for an environmental topic,
and here in energy, so specifically oil and gas, we
found Greenhouse Gas management scores to see our performance. So
again these are some examples. I'll just add that, you know,
when we think about performance, many many studies out there
(43:50):
due to the index level, and I think, given how
nuanced an industry specific ESG is, going into that deeper
level is really where the value lie.
Speaker 1 (43:59):
Absolutely, I certainly agree with that last statement about the
importance of the industry specific nuance. So you mentioned an
s example. Of course with health and safety, you mentioned
an environmental example. What about governance? Are we seeing any
signals on that side?
Speaker 3 (44:16):
Yeah, So governance is more industry agnostics. So what I
looked for here is what worked across the multiple industries
and sectors. So here shareholder rights stands out as a
governance theme that had both risk and return benefits. It
had the most across all the industries and sectors we tested,
just for some context, So Shelter Rights US scores. They
(44:39):
enabled investors to understand how well company policies protect shareholders,
particularly minority shareholders, and how responsive the company is to
the needs of shareholders. So this particular theme. So in
the material sector we saw draw Dan's lower by at
least five percent across all industries. So think of raw
(44:59):
dance as a max your portfolio can lose. So lower
road aans equals less risk. So this just points to
the importance of effective oversight. On the other hand, and
other sectors we saw outperformance. So we saw this in
three of the five sectors we tested, energy, technology and materials,
So it was really shareholder rights that stood out. I'll
(45:20):
just add that what I thought was really interesting is
that board composition as a theme, the benefits were really
elusive here. We didn't find much on outperformance and I
just found that surprising given the importance of things like
board independence and diversity. So for G, it's all about
the shareholder rights similar work on performance. I'd like to
(45:41):
throw a question back to you when we think about this,
you know, link between ESG and performance. Are there other
ways in which we can answer the question that could
help investors going forward?
Speaker 1 (45:54):
Thanks Sane. It's an interesting question, and I think you know,
one of the things that we're always trying to do
here within the big team has developed impactful and rigorous
ways to kind of demonstrate the link. So I would say,
you know, recently we introduced our market Moving News research
which looks back at about nine years of data to
(46:16):
identify industry specific ESG events and analyze where there was
a corresponding impact on stock price and or credit spread.
So an oil and gas for example, what we see
is that oil spills were among the most frequent event
type and had consistently negative impacts on stock price, but
actually led to tightening of credit spreads. So I think
(46:39):
this body of research, which you know, hopefully we'll expand
to a couple dozen industries over time, really helps provide
a key piece of the overall you know, linking ESG
to financial performance puzzle.
Speaker 3 (46:51):
And again the materiality aspect, I think absolutely. So, I
think that's super interesting just to maybe a wrap up. So,
based on everything the team has discussed today, what do
you think is key for ESG in the second half.
Speaker 1 (47:06):
Of this Yeah. Yeah, it's definitely tough to distill into
a single key, but if I had to, I think
it's similar to something that I mentioned during the intro,
which is it's all about separating the signal from the noise.
I think it's really clear that the ESG pushback is
having impacts, and we discussed many of those on today's episodes,
(47:29):
including impacts on sustainable debt issue in a decline and
certain types of shareholder proposals or retreat and DNI efforts.
But that ultimately doesn't change the realities of how climate
change or other issues are impacting companies, industries and markets.
So really, in my view, the work that we're doing
(47:50):
to help investors and others understand, measure, and assess these
issues remains more critical than ever. Thank you excellent, Thank
you Shaheen, and thank you to the rest of the
team for joining today's episode. For our listeners out there,
you can find more information on all things ESG, including
(48:11):
our midyear outlook for twenty twenty five, by going to
our dashboard bispace ESG go on the Bloomberg terminal, and
as always, if you have an ESG quandary or burning
question you'd like to ask bi's expert analysts, please send
us an email at ESG Currents at Bloomberg dot net.
Thank you very much and we'll see you next time.
Host
Eric Kane
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