US ESG Backlash Steps Up as EU Strengthens Standards
May 15, 2024
auto_awesome
Maia Godemer, senior associate at BloombergNEF, discusses the rise of sustainable finance policies in 2024, EU's CSR Directive, US anti-ESG laws, and challenges for sustainability reporting standards. The podcast delves into conflicts between fiduciary duty and ESG, impacts on financial institutions, state-level debt, and navigating the ESG investment landscape amidst evolving guidelines.
US is experiencing backlash against ESG policies while EU strengthens sustainability standards.
Transition from voluntary to mandatory reporting frameworks poses challenges for companies aligning with global standards.
Deep dives
Overview of Sustainable Finance Policy Activity in Q1 2024
The first quarter of 2024 witnessed a surge in sustainable finance policy initiatives globally, especially focusing on mandatory reporting rules and addressing anti-ESG sentiment, notably in the United States. Amid this rapidly evolving landscape, navigating the plethora of global policy updates poses a formidable challenge. Reflecting these developments, B&E F introduced its inaugural Sustainable Finance Policy Quarterly Report, shedding light on notable policy advancements across G20 markets and beyond.
Discussion on Climate Policy and Corporate Reporting Initiatives
The podcast episode delved into the evolving climate policy landscape, highlighting key milestones such as the US Securities and Exchange Commission's tentative climate reporting regulations and the European Union's policy advancements emphasizing corporate sustainability disclosure and integration of sustainability aspects. Furthermore, it explored the emergence of conflicting reporting standards like the ISSB frameworks, underscoring the complexity faced by companies in aligning with diverse global reporting requirements.
Shift from Voluntary to Mandatory Reporting Frameworks
Discussions revolved around the transition from voluntary to mandatory reporting frameworks, exemplified by the contrasting nature of the CSRD and ISSB standards. While the CSRD mandates a comprehensive reporting approach encompassing social, environmental, and governance dimensions, the ISSB framework, though voluntary, gains traction in various jurisdictions as a standardized reporting tool, simplifying reporting tasks for sustainability professionals.
Impact on Market Participants and Global Standardization Efforts
The podcast highlighted the evolving impact of these policy measures on market participants, with a growing emphasis on investors, banks, and corporations embracing ESG integration into their decision-making processes. Furthermore, the narrative shifted towards exploring how sustainability regulations influence investment shifts towards climate-resilient solutions and advance the energy transition. Noteworthy trends also included targeted policy interventions towards credit rating agencies, exchanges, and data providers.
The first quarter of 2024 has seen a flurry of sustainable finance policy activity and a wave of mandatory reporting rules. Yet on the flip side, anti-ESG policies are gaining traction in the US. On today’s show, Dana is joined by Maia Godemer, senior associate for green and sustainable finance at BloombergNEF, to discuss this rapidly changing environment. Together, they consider BNEF’s new Sustainable Finance Policy Quarterly, touching on the new EU Corporate Sustainability Reporting Directive (CSRD) and how it differs from the International Sustainability Standards Board (ISSB).
Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal or on bnef.com