In our Expert Views, our staff members give their views on current topics related to Profundo’s work
Expert View: Sustainable finance taxonomies: actual trends and desired outcomes
In recent years, many sustainable finance taxonomies have sprung up at both national and regional levels, and many more are still to come. How is this emerging universe going to develop? What trends are already visible, and how can they help to make green and social financial products more accessible for a wider range of companies, and even entirely new sectors, and ultimately help with the environmental and social transformation of our societies?
Since German prosecutors raided the DWS-offices last year because the subsidiary of the Deutsche Bank was greenwashing investment funds, the appeal of the ESG-concept embraced in the past 15 years by the financial sector is rapidly vanishing. Nothing to feel sorry about, as this opens the way for the financial sector to take decisive steps to play a leading role in the sustainable transformation of the global economy.
Expert View: How to achieve a Just Energy Transition in Asia?
Fossil fuels will continue to dominate energy consumption in Asia in the coming decade. This creates a huge challenge for the region to align with the Paris Agreement: the global consensus to limit the global temperature rise to 1.5 ºC at max. While wind, solar, and geothermal energy production are growing in some countries, the production of fossil fuel power is still increasing as well. How can Asia overcome the barriers for a Just Energy Transition?
Expert View: EU corporate sustainability due diligence rules should fully apply to the financial sector
The proposed EU Directive on Corporate Sustainability Due Diligence (CSDD) places obligations on companies to identify, prevent and remedy adverse human rights and environmental impacts in value chains. It could set a precedent in implementing strong provisions on responsible and sustainable business conduct. However, the current draft has some crucial loopholes, among which the exemption of financial institutions from the due diligence requirement.
Expert View: Insurance companies financing animal cruelty in the fur and exotic leather business
Millions of exotic animals are still hunted, caged, bred, and brutally killed only to have their skin or fur used in the luxury fashion industry. Despite public protests and government bans, insurance companies active in the Netherlands continue to invest billions in fashion houses that lack proper animal welfare policies, new research revealed.
Expert View: Dutch broadcasters push their pension fund towards sustainability
As in many other countries, Dutch employees cannot choose the pension fund which invests their pension premiums on their behalf. Depending on which employer they work for, they are stuck to a specific fund. But what to do if your fund is not investing responsibly? Dutch broadcasters push their pension fund PNO Media towards more sustainability. But is the pension fund that believes more in engagement with companies than in exclusion of companies, willing to engage itself with its members?
Expert View: Can we stop the funding of more plastics?
Despite the climate and biodiversity plans of financial institutions and companies, the role of plastics is consistently neglected in their policies and practices. Understanding the financing of the plastics boom is key to turning the tide in what can be considered one of the earth’s biggest threats.
Expert View: Can art bolster climate justice advocacy?
The devastating effects of climate change and the steps needed for mitigation and adaptation are increasingly recognised, but the ways to communicate this complex message are less studied. This expert view explores the power of art and artivism for climate justice advocacy. Can art do for climate justice what jargon and statistics cannot do?
Expert View: The business case for a quicker transition to electric cars
In this Expert View we argue that, as the affordability of EVs increases, producing fossil fuel cars will progressively lose pricing power and profit margins. Thus, the business case can be made for quicker EV adoption to sell the higher margin product for longer to maximize long term cash flow generation in the automotive sector, which will help to limit climate change.
Expert View: Who profits most in the supply chain?
This expert view shows how a profit chain analysis offers insights for civil society and other stakeholders about which participants in the supply chain benefit most and who therefore should contribute most to the solution of sustainability issues. The knowledge generated by this methodology, which can be applied by Profundo, can support NGOs in campaigning for a fair contribution of every participant in the supply chain.
Expert View: Will more transparency green the financial markets?
The European Union now promotes sustainability reporting with several directives, as it hopes that investors will act as agents of change. But more transparency requirements alone will not sufficiently stimulate companies and investors to collaborate on drastically needed sustainability transitions.
The war in Ukraine is met with firm responses by European governments and companies alike, willing to stand up in defense of human lives. While this is encouraging, this Expert View shows that the political and investment decisions of European governments, companies, banks and investors have played a crucial role in building up Putin’s economic and military power.
Expert View: Qatar links show that new Dutch coalition should speed up its promises
The screening of investments on risks of human rights’ violations is the responsibility of companies and pension funds, says the new Dutch Minister in her answers to parliamentary questions after Profundo research on Dutch links with Qatar. Is she revoking Dutch promises?
About 70 billion animals are being slaughtered annually to feed 7 billion humans. The meat sector is responsible for more than 14% of the world’s greenhouse gas emissions - more than the whole transport sector. The livestock industry also is the single largest driver of habitat loss worldwide, which impacts biodiversity and the livelihood of local communities.
Voluntary standards are insufficient to stop soy-related deforestation
Deforestation in the Brazilian Amazon and Cerrado is surging, with the increasing acreage needed for soy cultivation as one of the key drivers. A significant share of all soy is exported to feed livestock in Europe, China and other overseas markets, to satisfy the growing demand for meat and dairy.
EU member states disagree on whether Saudi Arabia, the leader of a coalition responsible for fighting a devastating war in Yemen, should be eligible for buying European arms. The Saudi-led coalition is involved in severe human rights violations and violations of international humanitarian law, through the starving of the Yemeni people. But the France Defence Minister buried her head in the sand when she confirmed early May that France will send a new arms shipment to Saudi Arabia..
Ten years after a majority of all countries in the world banned production of cluster munitions in the 2008 Convention on Cluster Munitions, investors and banks are still exposed to cluster bombs. These weapons contain multiple explosive submunitions, “which can saturate an area up to the size of several football fields. Anybody within the strike area of the cluster munition, be they military or civilian, is very likely to be killed or seriously injured.
The election of the ex-military far-right politician Jair Bolsonaro as Brazil’s next president puts the country’s economy on the path to heavy deregulation. Bolsonaro’s campaign promises include backing off from the Paris climate agreement, the abolishment of the Brazilian ministry of environment, stripping indigenous peoples’ land rights and opening the Amazon to mining and agriculture.
The Green Bonds market already offers many fixed income options to responsible investors to invest in sustainable companies and projects. But Green Bonds generally have a maturity of 3 to 25 years. A responsible alternative for short-term fixed income investments, such as Commercial Paper, would be a welcome addition.
Tobacco financiers face increasing reputational and investment risks
Smoking tobacco comes with a high price. Annually more than 7 million people die prematurely from tobacco consumption, with about US$ 2 trillion in healthcare costs and lost productivity. The industry still engages millions of children in child labour and accounts for a significant portion of global deforestation. With such societal damage, the tobacco companies and their financiers are faced with significant reputational and investment risks.
Greenpeace leaving FSC: what next for commodity roundtables?
Recently, Greenpeace International announced that it is leaving the Forest Stewardship Council (FSC). Since its establishment in 1994, Greenpeace has been advocating FSC as setting more stringent standards than competing certification systems, such as PEFC. But Greenpeace has lost confidence ...
Water scarcity is a risk for populations, companies and investors alike. If the existing climate change scenario becomes a reality, almost half the world’s population will be living in areas of high water stress by 2030. Water scarcity is likely to be an important factor threatening stability in fragile regions.
The International Campaign to Abolish Nuclear Weapons (ICAN) has been awarded the Nobel Peace Prize 2017, "for its work to draw attention to the catastrophic humanitarian consequences of any use of nuclear weapons and for its ground-breaking efforts to achieve a treaty-based prohibition of such weapons".
As tobacco products pose many risks, foremost health-related, responsible investors need to consider the best strategy towards this sector. The life expectancy of a long-term smoker, on average, is about 10 years less than a non-smoker. According to the WHO, half of the people who smoke will die from smoking-related diseases - cancer, respiratory problems or vascular diseases.
Amid increased nuclear weapons budgets and serious nuclear tension between the US and North Korea, 7 July 2017 could surprisingly become a landmark date in global nuclear disarmament. From 15 June until 7 July, the General Assembly of the United Nations holds its second ‘Conference to Negotiate a Legally Binding Instrument to Prohibit Nuclear Weapons, Leading Towards their Total Elimination’.
More compensation budgets needed for Groningen gas
Profundo recently published a report commissioned by Friends of the Earth Netherlands (Milieudefensie), in which the costs from earthquake-related damages caused by gas extraction in Groningen province (in the north of the Netherlands) were estimated. This report found that annual costs could potentially rise in the coming decade to over 1 billion euros.
Monday, April 24, 2017, is proclaimed as “National Garment Workers’ Mourning Day” in Bangladesh. On that date four years earlier, 1,136 people were killed and more than 2,500 injured in the collapse of the Rana Plaza garment factory, near Dhaka, supplier of a large number of international garment brands.
Civil society organisations (CSOs) campaigning on issues of financial sector regulation broadly have two campaign agendas, namely ‘sustainable finance’ and ‘patient finance’. Both agendas have remained mostly disconnected while in fact, patient finance is more sustainable finance.The voice of CSOs could be more powerful if they recognised this and joined forces to explore and harness the overlaps between the two campaign agendas.
KraftHeinz’s failed bid on Unilever: A crucial wake-up call for Investors
KraftHeinz (KHC)’s failed bid on Unilever should undoubtedly be a wake-up call for equity investors. Had the bid been successful, there would have been less transparency in accountability and sustainability reporting and a reduction in Unilever’s long-term value creation agenda
The road forward for Responsible Investors – After Trump’s triumph
The election of Donald Trump for president of the United States has led to mixed reactions in the responsible investment community. Prior to the elections, his candidacy was regarded ‘a worst nightmare’ by financial analysts.
Changing regulatory landscape is a welcome push for Dutch Pension Funds
The introduction of the revised EU Directive ‘IORP II’ is a welcome push for pension funds in the Netherlands to adopt Socially Responsible Investment (SRI) policies and strategies more rapidly. But especially the small and medium sized pension funds need to apply an integrated approach towards ESG investing strategies in order to keep up with the biggest pension funds, for which applying SRI policies is already a regular activity.
Can banks make the difficult choices society demands?
The Dakota Access Pipeline (DAPL) controversy illustrates how financial institutions are increasingly being criticised if their responsible investment policies conflict with their actual investments. The DAPL is a proposed USD 3.78 billion pipeline of 1,886 km being built in the United States by Dakota Access, LLC, which is a subsidiary of Energy Transfer Partners (ETP). It will be built to transport oil from the Bakken oil fields in northwest North Dakota to an oil tank farm in Illinois.
Facilitators rather than regulators: EU’s new role with respect to fisheries
In November, Profundo was invited to the EU Commission’s Committee on Fisheries to present the conclusions of a scoping study on possible measures at the EU-level to promote equity and social justice in the EU seafood industry. A key conclusion of the study was that facilitation measures such as EU-level online platforms are more appropriate for the fisheries sector than regulatory measures.
Textron stops producing cluster munitions. The US company announced in August 2016 that it will “discontinue production of
its sensor-fuzed weapon product”. What Textron calls a ‘sensor-fuzed weapon’, falls within the definition of ‘cluster munitions and explosive submunitions’ as declared by the international Convention on Cluster Munitions.