Alliance Notes: Physical Climate Risk, Ukraine brief, Alt Proteins

Monday, January 25, 2021

Alliance Events, 01/25/21

 
 
Research
1. Physical Climate Risk in EM: Issue Brief
2. Ukraine Fiscal Governance Brief
 
Upcoming Events
3. Alternative Proteins (Jan 29, 9am EST)
 
Recaps of Recent Events
4. ESG Initiative featuring Michael Ridley of HSBC on Green Bonds (Jan 12)
5. Launch of Climate Transition Initiative with webinar on Physical Climate Risk
 
Volunteer Opportunities
6. Relationship Manager

 

Research

 

1. Issue Brief: Physical Climate Risk in EM

In parallel with the launch of our Transition Initiative webinar series, we have published an Issue Brief on Physical Climate Risk, addressing these risks from the perspective of emerging markets investors.

Climate change affects many countries. However emerging markets are both more vulnerable to climate-related hazards and less prepared to cope with their effects. The risks associated with climate change do not appear to be reflected in valuations of most financial markets.

Climate risk indices suggest that Nigeria, Pakistan, India and Philippines are particularly vulnerable to physical climate risk, among the major EM and frontier markets. Poland, Chile, Brazil and Russia appear relatively less vulnerable.

We review different types of climate risks, the degree to which these appear priced into financial markets, institutions available to help investors assess climate risks and key reference materials on the topic.

Access the full Issue Brief here.

 

2. Ukraine Fiscal Governance Brief

Ukraine is a strong reporter of public financial data and has demonstrated its commitment to improving fiscal governance in recent years by implementing a range of meaningful reforms. With technical assistance from international financial institutions and collaboration with various policy organizations, Ukraine has adopted, or is in the process of adopting, best practices in public procurement, medium-term budgeting, and resource revenue management, among other initiatives.

Reforming the state-owned enterprise sector is now fiscal authorities’ main priority. Improving the management of fiscal risks at SOEs will require more rigorous standardization and oversight of financial reports; while the success of ongoing privatization efforts will hinge upon the state’s capacity to transparently auction large-scale assets.

Please see the summary page of the brief here: Ukraine Fiscal Governance Brief. Alliance members have access to the full brief. If you are interested in learning more about membership, please send an email to Claire Meier Underhill at cmeier@eminvestorsalliance.org.

 

3. Webinar: Alternative Proteins (January 29, 9am EST)

Webinar: Alternative Proteins (January 29)
On Friday, January 29 (9 am EST), the Agriculture Program will host the Good Food Institute (GFI) and the GFI Consultancy (GFIC) for the first webinar in our series on Alternative Proteins. We will be joined by Caroline Bushnell, Director-Corporate Engagement, GFI-USA; Felipe Krelling-Coordinator, Corporate Engagement, GFI-Brazil; and Doris Lee, General Manager GFIC-China. Our speakers will provide an overview of the alternative protein landscape (plant-based, cultivated, and fermented alternatives), how the market has developed in the US, and how it is developing in Brazil and China. Register for the webinar here.

 

Recaps of Recent Events

 

4. Webinar: ESG Initiative featuring Michael Ridley of HSBC on Green Bonds

On January 12, the ESG Initiative hosted Dr. Michael Ridley, Senior Responsible Investment Specialist at HSBC Global Asset Management, to discuss HSBC’s approach to ESG. In 2020, HSBC Global Asset Management launched a $450 million EM Corporate Fund, the Real Economy Green Investment Opportunity Fund (Regio), dedicated to investing in corporate green bonds in emerging markets. The focus on corporate green bonds is partly due to the relatively strong adherence of corporates to green bond disclosure standards. This adherence increases the probability that the funds will be used to forward sustainability goals.

HSBC determines eligible issuers by assessing both issuers and issues via its Green Impact Investment Guidelines. Regio Fund Managers incorporate these responsible investment guidelines by explicitly including ESG material factors in their investment decision-making. This involves a two-pronged analysis approach that emphasizes green outcomes via ESG integration and ESG credit quality. In this way, the fund ensures that the returns reflect both parameters: impact and performance. The Regio Fund’s upcoming first annual report will assess the fund’s holdings against International Capital Market Association (ICMA) green bond standards; the SDG goal alignment; and issuer performance against front-end commitments. HSBC’s overarching theme is to promote engagement to encourage green bond issuance, and to develop the capital markets, both of which are building blocks to help improve liquidity in the green bond market. - Ruchi Malhotra

 

5. Launch of Climate Transition Initiative with webinar on Physical Climate Risk (Jan 21)

On January 21, the Alliance launched its Carbon Transition Initiative (CTI) -- a series of webinars and publications produced by the Emerging Markets Investors Alliance led by Corporate Research Andrew Howell, a 20-year emerging markets veteran. Through a series of webinars and briefs, the CTI will educate investors on the risks/opportunities with climate change and decarbonization in emerging markets, engage with companies and governments, and advocate for best practices in reducing carbon footprint and managing carbon risk. More details on this initiative here.

Last week, the Alliance hosted the first webinar in the series, focusing on Physical Climate Risk. Presenters included Marc Lehmann, Director, Climate Risk & Decarbonisation Strategy at KPMG UK (presentation); Felix Suntheim, Financial Sector Expert in the Global Financial Stability Analysis Division of the IMF’s Monetary and Capital Markets Department (presentation); and Stacy Swann, CEO and Founding Partner of Climate Finance Advisors (presentation). The panelists discussed frameworks for understanding physical climate risks, the extent to which these are priced into asset prices and recommendations for EM policymakers for enhancing climate preparedness. Let us know if you would like to see a full transcript of the fascinating discussion. As noted above, we have also published an Issue Brief on this topic.

 

Volunteer Opportunity

 

6. Relationship Manager

The Alliance seeks a volunteer Relationship Manager to engage asset managers in the Alliance’s programs to advance ESG outcomes in emerging markets. The ideal candidate will have a passion for ESG or international development, exceptional interpersonal skills, and a strong buy-side network. Those with experience in emerging market debt or equity sales will be viewed favorably. Candidates may be based anywhere and may work virtually.

Please send an email including your resume and/or Linkedin profile mentioning “Volunteer Relationship Manager” in the subject to applicants@eminvestorsalliance.org.

 

 

The Emerging Markets Investors Alliance is a 501(c)(3) non-profit organization
that enables institutional emerging market investors to support good governance, promote sustainable development, and improve investment performance in the
governments and companies in which they invest.

www.eminvestorsalliance.org