Governor Gavin Newsom said he’d sign both the state’s global-leading climate risk and emissions disclosure bills and the Treasury Department announced new Principles for Net-Zero Financing and Investment.
Welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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BFD week for climate regs
It was a big fricking deal week for climate finance after Governor Gavin Newsom said he’d sign both the state’s global-leading climate risk and emissions disclosure bills and the Treasury Department announced new Principles for Net-Zero Financing and Investment. The nine principles laid out by the Treasury made it clear that financial institutions must start taking measurable steps to align with a 1.5C world. But advocacy groups noted that more studies and voluntary commitments don’t supplant action.
Speaking of action, the impacts of California’s legislation are already having ripple effects. SEC Chair Gary Gensler acknowledged that it could help clear the runway for the agency’s pending disclosure rule because ‘it may change some of the economic baseline.’ Between California and the EU, few large companies will be able to circumvent disclosing their climate-related financial risks and emissions, including Scope 3, which means lower reporting compliance costs across the board.
Reach out if you are looking for experts to comment. And for a recap of international news around Climate Week, do check out our new biweekly briefing.
ESG highs, Saudi ties
ESG took the W this week, but the fine print still casts a shadow of doubt. Société Générale started last week strong by announcing it would stop financing new oil and gas fields. The bank goes further than its French peers by treating gas the same as oil, but said it will still fund companies that are mainly state-owned, such as Saudi Aramco—the world’s biggest fossil-fuel producer.
On the regulatory front, last Wednesday the SEC approved the Investment Company Names Rule aimed at combating greenwashing in fund titles. It’s an important first step, but a key provision was omitted: investment firms can still use ESG-related terminology for funds that merely consult ESG metrics.
And on Thursday, a federal judge in Texas dismissed a legal challenge from 26 Republican-led states attempting to overturn a Biden Administration rule that allows retirement plans to take ESG factors into account. While Trump-appointed Judge Matthew Kacsmaryk’s decision signifies that legal challenges against investor freedom lack merit, Republicans are likely to appeal the ruling.
Insurability on thin ice
Skyrocketing property insurance premiums burden Americans across the country, yet a new report says premiums aren’t rising fast enough to accurately reflect climate risk. An estimated 39 million US homes are insured at suppressed prices compared to actual climate risk, and nearly 6.8 million of those are covered by state-backed “insurer of last resort” policies, according to First Street Foundation. Just a day after the report was released, California Insurance Commissioner Ricardo Lara announced a new rule allowing insurers to consider future climate change risks when setting prices.
While the report acknowledges that climate change is causing insurers to stop writing policies across the country, it fails to mention that US insurers invest $536 billion in fossil fuel companies. Until insurance companies stop propping up the fossil fuel industry, no kind of rate reform will fix our uninsurability crisis.
Overheard at Climate Week
“Fashion week? Yeah, yeah I know! Oh sorry, what week?”
“I just tested positive for Covid.”
“There are so many people at Bryant Park having conversations about the UN and environmental policies.”
“Take your Chase card and cut it.” – Jane Fonda
“Deputy Secretary Beaudreau, you are a climate criminal, you signed the Willow Project into law.” – protestors disrupting a panel with Beaudreau at the Hub.
“There’s no transition without transmission.”
Land acknowledgements at Climate Group’s Hub event
September 26: AFREF hosts a virtual conversation on housing displacement and climate change. RSVP here.
September 27: Financial Services Committee Hearing: Oversight of the Securities and Exchange Commission. Watch here at 10 am.
September 28: Federal Reserve Town Hall with Educators. Deadline to sign on to a letter calling on Federal Reserve Chair Jerome Powell to address climate financial risks and how they impact students and teachers is September 27th.