Research highlights from Scope ESG, Scope Ratings and Scope Analysis

Supply chains explain around 40% of corporate ESG impacts - Scope ESG interview

“In our analysis of the 1,600 component stocks in the MSCI World index, food-sector supply chains have the heaviest ESG impacts as a proportion of a company’s overall impact, with an average of 78%. Considering just environmental impacts, the sector’s supply-chain share reaches 88%,” said Diane Menville, head of ESG at Scope Group.

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Increasing supervisory focus pushes climate risk onto bank credit agenda

“Disclosures should demonstrate that a bank is aware of the financial risks related to climate change and is taking action to manage them,” said Pauline Lambert, analyst at Scope Ratings. Banks must develop their capabilities in this area as supervisory expectations are becoming increasingly demanding. Industry moves to develop best practices and mainstream reporting on ESG indicators will help.

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US, Italy, Japan population trends show divergent long-term growth in advanced economies: interview

“Our analysis shows very different prospects across the seven countries in the study,” said Alvise Lennkh, analyst at Scope Ratings. “The most adversely affected countries are Japan and Italy, which face unfavourable demographic dynamics leading to large decreases in their working-age populations. To offset this drag on economic growth, governments will have to try to help engineer important gains in productivity and/or employment rates.”

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Electric vehicles: subsidies spark boom in Europe as lower incentives put brake on China, US demand

“In Europe, we expect that EV sales will rise by more than 50% this year, having jumped by around 57% in the first half compared with the same period in 2019,” said Werner Stäblein, analyst at Scope Ratings.

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The world of ESG – new developments

The European Parliament has voted to include CO2 emissions from the marine shipping sector in the EU Emissions Trading System, which might lead to complications in relations with the EU’s trading partners.

Norges Bank Investment Management Chief Executive Nicolai Tangen told the Financial Times that the world’s largest sovereign wealth fund should “use risk in a more clever way,” particularly by increasing the number of divestments for ESG reasons.

China will be “carbon neutral” by 2060, President Xi Jinping told the UN General Assembly. If achieved, the reduction could curb likely global warming by 0.2-0.3 Celsius this century, according to research consortium Climate Action Tracker.

Spain is the latest European country to commit more funds to develop its hydrogen sector, planning to build 4 gigawatts of green hydrogen electricity-generating capacity by 2030. France is seeking 6.5 GW and Germany 5 GW by the same deadline.

Royal Dutch Shell plans to axe up to 9,000 jobs in a cost-cutting drive as it seeks to adapt to a world of lower oil prices and growing reliance on cleaner fuels.
 

All Scope Group’s latest rating actions, commentary and analysis are available at www.scoperatings.com and scopeexplorer.com.