This morning European Central Bank President Christine Lagarde warned that there is not enough green finance, and finance that claims to be green may not be green enough. https://emergingrisks.co.uk/insurers-need-to-prove-green-credentials/
Lagarde was typically blunt: “In the absence of a common shared definition and compulsory disclosure by companies we lack granular information assess whether something is green.”
Well, one can certainly see where she’s coming from. One of the supposed great leaps forward from the torturous and convoluted road to capital reform that was Solvency II was supposedly to be a greater degree of granularity and disclosure from insurance companies.
However, as someone who has written up more quarterly financial results than I care to remember, I can’t really recall a major Damascene conversion here. It seems to me that company results are as varied an opaque as they have ever been, with the real off-balance-sheet nasties tucked nicely away as ever, waiting to be found by only the canniest of inspectors.
But I digress. There probably isn’t enough granular information when it comes to green finance but I’m not sure so the re/insurance market are laggards in this respect.
Only this week, for example, Legal & General (L&G), Britain’s biggest asset manager, said it plans to increase the number of companies it assesses and engages with over climate change to help to accelerate global efforts to move to a low-carbon economy.m8
Legal & General Investment Management (LGIM), part of L&G, said it would increase the number of companies covered by its Climate Impact Pledge – a targeted engagement plan – to 1,000 from 100.
The group, which manages more than £1.2 trillion in assets, said it would also make its climate ratings for companies available on its website.
And as my colleague Jon Guy noted in his column last week, total green bond issuance topped $1 trillion in the past fortnight, joining ESG-focused funds that have a similar amount in assets under management.