Turmoil continues in the insurance market, with California lawmakers scrambling last week to cut a deal enticing insurers to remain in the fire-prone state while not skyrocketing rates for homeowners.
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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Insurance for the 1%
Turmoil continues in the insurance market, with California lawmakers scrambling last week to cut a deal enticing insurers to remain in the fire-prone state while not skyrocketing rates for homeowners. That’s been the basic story in the insurance market over the last several months and the subject of a Senate hearing last week: how to keep the insurance industry profitable amid mounting disasters while not jacking up rates so high only the absurdly rich can afford them. Exhibit A: Recently, a (albeit rich) homeowner in Miami got an annual insurance quote of $620,000, a staggering threefold increase from the year before.
Gensler getting grilled
Securities and Exchange Commission Chair Gary Gensler heads up to the Hill for a Senate Banking Committee oversight hearing on Tuesday. Gensler faces increased scrutiny due to the commission's robust regulatory agenda, which boasts 47 proposed or finalized rules thus far. The wide-ranging oversight hearing is expected to cover everything from crypto to industry pushback and legal challenges to recent regulatory actions that seek to provide investors with more disclosure and transparency into private equity funds and stock buybacks. The long-awaited climate financial risk disclosure rule, particularly its demand for emissions disclosures backed by investors, is bound to be a focal point. With other jurisdictions advancing climate disclosure requirements, the SEC and U.S. financial sector continue to fall further behind.
Public funds lead ESG charge
During the 2022 proxy season, state and local public pension funds backed more ESG shareholder resolutions than sustainable funds or general shareholders. Public pension funds supported 88% of key ESG resolutions—those garnering over 40% backing from independent shareholders—versus 74% from sustainable funds and 56% from general shareholders. The Morningstar analysis also found that even Republican state pensions supported 10% more key ESG resolutions than general shareholders. Money managers, irrespective of party affiliations, seem to recognize that incorporating ESG is a winning strategy for their constituents. Now it’s time for financial institutions and governing bodies to follow suit.
G20 backs banking power play
The G20 Leaders’ Summit convened in New Delhi over the weekend, and despite deep divisions, a consensus declaration was approved that, among other things, highlighted a bigger role for reformed multilateral development banks. This aligns with a key demand of President Biden and Secretary Yellen, who view expanded World Bank concessional financing capacity for middle and low-income countries as pivotal to counterbalance China’s Belt and Road Initiative. While the declaration lacks specifics on timelines or scale, ahead of the summit, President Biden pitched an increase of $25 billion in lending. This ambition aligns with a rare joint statement issued by the IMF and World Bank last Thursday, where the institutions pledged greater cooperation to address climate change and debt vulnerabilities.
Fashion’s climate facade
With fashion month officially underway, we’d like to revisit this year’s UN Fashion Charter report that underscores the vast disparity between the fashion industry’s climate reporting and tangible action towards sustainability. While many signatories disclose emissions, few have verifiable reductions, and some are even withdrawing. With the Charter poised to miss its 2050 net-zero target, there's a growing demand for the sector, valued at trillions, to convert climate pledges into actionable strategies. And the pressure won’t just be on fast fashion, as new campaigns pop up scrutinizing the climate commitments of luxury fashion houses. The key takeaway: the fashion world must match its economic heft with tangible climate initiatives. Here are some NYC Climate Week events for those interested in the topic (1, 2, 3, 4, 5).
September 13: America Is All In coalition “Cash In on Clean Energy” Tour. Series of monthly, in-person events with expert-led workshops for business, government, and community leaders to learn how to utilize the Inflation Reduction Act (IRA). Register for the next event in Orlando here.