Is ESG investing still hot despite cooling regulations and standards?
The Good News Round Up #5
Sustainability and ESG professionals are suffering from whiplash. Just last year, governments and NGOs were doubling down on ESG regulations designed to accelerate the finance sector’s alignment with a 1.5-degree future and sharpen ESG risk management.
I’m following the shifts in global sustainability regulations and voluntary frameworks and the trend is governments and standard setters walking back and/or slowing down their implementation. A high profile example is the Net Zero Banking Alliance which dropped the requirement to align financing with 1.5°C last month.
Despite these about-faces, recent news suggests ESG investing and carbon markets may not be cooling:
In April, the New York State pension fund committed to $2.4 billion in climate investment strategies. State Comptroller Thomas P. DiNapoli, cited the fund is mitigating climate-related risks and capitalizing on climate solutions.
China issued its first sovereign green bonds raising USD $824 million for projects related to climate mitigation, climate adaptation and biodiversity. In addition to being China’s first green bond, it is the first to be listed on an international market, the London Stock Exchange. The bond framework includes Clean Transportation, Sustainable Water and Wastewater Management, Environmentally Sustainable Management and Restoration of Living Natural Resources and Land Use, Marine Ecosystem Protection and Restoration, Pollution Prevention and Control, and Resource Utilization and Recycling.
In May, the U.S. Securities and Exchange Commission approved the U.S.’ first sustainability-focused stock exchange called the Green Impact Exchange (GIX). GIX expects to begin trading on the new platform in early 2026, according to a Monday press release. Public companies will be able to list themselves on GIX, alongside other stock exchanges, given they agree to adopt the exchange’s sustainability standards.
Climate risk is business risk. It’s that simple. U.S. investors and companies are continuing to pursue sustainability because it makes financial and competitive sense. Public markets like GIX have a pivotal role to play in connecting sustainable investors with companies that understand that." —GIX President and co-founder Charles Dolan
The voluntary carbon market continues to see investment. Microsoft signed the largest-ever permanent carbon removal purchase agreement, The project is a bio-energy plant in Louisiana which would capture 6.75 million metric tons of carbon dioxide over 15 years, which is the world's biggest permanent carbon removal project to date.
J.P. Morgan Asset Management raised $1.5 billion for sustainable forestry fund focused on forest and climate solutions. The fund currently holds approximately 212,000 acres of timberland properties managed in alignment with sustainable forestry standards, according to the April 8 release.
Apollo Global Management, Inc. commits $400 million to new solar development in several East coast and Midwest states. Apollo launched a sustainable investing platform in 2023, focused on financing and investing in the energy transition and decarbonization of industry, with the firm setting a goal to deploy $50 billion in clean energy and climate capital over five years, and seeing the opportunity to deploy over $100 billion by 2030.
Is this my confirmation bias in action or a trend? Let me know if you find some analysis that offers a broader perspective and kindly leave it in the comments!