ESG & Shariah Blake Goud ESG & Shariah Blake Goud

Resetting expectations for ESG

Following the onset of Covid-19, ESG became a hot topic as the ‘next big thing’. With that growth, it attracted both pretenders and detractors. The change in the tone of reporting about ESG has led to some hand-wringing about its future. A UK-based portfolio manager broke down the issue into two parts: “When it comes to “the three-letter acronym ‘ESG’ — people don’t want to talk about it as much because of the news flow from the US. But from an investment perspective and what we do internally, it has never been more important.”

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ESG & Shariah Blake Goud ESG & Shariah Blake Goud

Shari’ah screens complement ESG integration by investors in Emerging Markets

In a new report released with Refinitiv, the RFI Foundation has extended analysis done earlier with INCEIF to investigate the impact of combining Shariah and ESG screens. The new research applies the same methodology and data source with more recent figures covering the period immediately prior to the start of the COVID-19 pandemic through late 2022, focusing only on companies located in Emerging Markets. The new results show a convergence in the general trends similar to that identified for developed markets in the earlier sample.

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FinTechs Blake Goud FinTechs Blake Goud

FinTech Startups Adopting Responsible Finance & ESG Integration in MENAT: Lessons from the GVI Hub’s 5th Cohort 

The RFI Foundation has successfully concluded our 5th GVI Hub Responsible Finance FinTech Program (RFTP) for the MENAT region. During the program, FinTech participants engaged in collaborative sessions to share their insights and experiences in integrating responsible finance and sustainability in their operations.

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Policies & Regulations Blake Goud Policies & Regulations Blake Goud

Financial Institutions May Be Lulled Into Complacency By Climate Stress Test Results

  • The UK’s Institute & Faculty of Actuaries (IFoA) says users of climate risk models may put too much weight on the results of scenarios selected for regulatory stress tests

  • Financial institutions should use a diversity of climate scenarios, both quantitative and qualitative, to ensure that the outputs are consistent with the economic implications of physical climate impacts in a ‘hot house’ world

  • Many models using traditional economic modeling applied to climate change scenarios produce overly benign results that significantly understate the true risk that financial institutions face

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Financial Institutions Blake Goud Financial Institutions Blake Goud

Is It Possible To Define Criteria For Net Zero Credibility For Financial Institutions?

  • SBTi’s document is the latest step in the process of creating a financial institution Net Zero (FINZ) standard to be released in 2024

  • The criteria outlined are ambitious in their coverage of financed and facilitated emissions, which are defined as “Category 15+”, referring to the GHG Protocol’s substantially narrower definition of financed emissions

  • It will remain challenging to develop a consistent framework for forward-looking Net Zero plans that incentivize investment in transition activities while avoiding easier but less meaningful ‘portfolio decarbonization’

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Policies & Regulations Blake Goud Policies & Regulations Blake Goud

As Regulators Take Stock On Transition Plans, Financial Institutions Should Begin Their Own Planning

  • The NGFS released a Phase 1 stock take of the use of transition plans for micro-prudential supervision and laying out next steps

  • Transition plans for non-financial companies are substantially different than what financial institutions will prepare, and most of the finance industry is underprepared as regulators begin to probe ways to use them

  • Regulators and supervisors will place particular emphasis on making sure less resourced financial institutions in emerging & developing markets are able to effectively plan their role in transition

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