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ESG roundup: LSE buys analytics provider Beyond Ratings

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London Stock Exchange Group (LSEG) has acquired Beyond Ratings, a Paris-based provider of environmental, social and governance (ESG) analytics for fixed income.

LSEG said Beyond Ratings would sit within its information services division, which includes benchmark provider FTSE Russell.

The acquisition is the latest in a series of transactions involving ESG service providers. Earlier this year Moody’s Investors Services took a majority stake in Vigeo Eiris, another French provider of ESG research, data and assessments. Last week Solactive, a German index provider, announced a strategic investment in Minerva Analytics, a UK shareholder voting research and data firm.

Beyond Ratings was part of this consolidation trend before the acquisition by LSEG: last year it merged with compatriot Grizzly RI, an ESG and climate change scenario analysis provider.

Earlier this year, Beyond Ratings became a registered credit rating agency, authorised to provide ratings of public issuers.

Waqas Samad, group director of information services at LSEG, said: “The acquisition of Beyond Ratings will accelerate LSEG’s ability to deliver research-driven multi-asset solutions in sustainable finance investing to our global client base. Beyond Ratings has a number of highly regarded ESG data models developed by a strong team of ESG specialists.”

Swiss sustainability investing surge

The volume of “sustainable investments” in Switzerland increased by 83% in 2018 to reach CHF717bn (€641bn), according to a survey carried out by Swiss Sustainable Finance (SSF).

It attributed this to the survey’s greater market coverage – 77 entities responded compared with 66 the previous year – and wider adoption of sustainable investment approaches, in particular “ESG integration” by large asset managers across a broad share of their products.

However, the sustainable investment approach with the highest growth rate in 2018 was exclusions (166%), followed closely by ESG integration (160%). There was an 82% increase in the assets reported as being managed under an ESG engagement approach.

In the 2018 survey asset owners reported CHF445bn of sustainable investments, representing around a third of total assets managed by Swiss pension funds and insurance companies. In the previous year, asset owner respondents reported CHF238bn of sustainable investments.

The full report can be found here

EIOPA gears up for ‘opinion’ on sustainability in Solvency II

The EU insurance and pension funds supervisor has launched a consultation on its draft “opinion” on integrating sustainability within Solvency II, the EU insurance directive.

It was asked to provide an opinion on this topic by the European Commission in August last year, and aims to report to the Commission and the other EU institutions by the end of September.

The draft opinion takes into account information that EIOPA collected about how insurers integrate sustainability risks in investment and underwriting practices, in particular with regard to climate change.

According to EIOPA, “evidence provided by life insurers confirms that health/life insurers are not considering climate change in their valuation of liabilities and underwriting practices”.

“EIOPA is of the opinion that the most pressing need is for insurers to develop and embed long-term scenario analysis in their risk management, governance and ORSA [own risk and solvency assessment],” it said.

It has asked for views about incorporating a standardised set of quantitative scenarios in the ORSA.

EIOPA will also issue supervisory opinions on ESG risks and governance documents for occupational pension funds.

Pensions minister addresses schemes over climate change

Pension schemes should be thinking about investing in assets that help drive investment in important sectors of the economy, the UK pensions minister told delegates at a conference of the Association of British Insurers (ABI) today.

Guy Opperman said small and medium-sized firms, housing, green energy projects and other infrastructure delivered “the sustainable employment, communities and environments which all of us wish to enjoy”.

According to a press statement, the minister also said that the financial risks from climate change were “too important to ignore”.

“Many pension schemes are doing the right thing by tilting portfolios towards renewables or away from fossil fuels, and by engaging much more forcefully with investment firms who fail to take environmental and social issues seriously,” he said.

In a comment on Twitter, Huw Evans, director general of the ABI, welcomed Opperman’s comments but said the insurance sector also needed help from regulators in the UK and abroad.

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