Our research
Access all our publications and columns. Use the filters to easily find what content you are looking for.
All publications
ESG Strategist - Do defence investments and ESG mix?
Investments in the defence sector are projected to rise in the coming years due to growing geopolitical concerns. Given that public investment alone is insufficient to meet the sector's needs, private investors are expected to ramp up their defence-related investments. However, this prompts several questions regarding which funds could participate, especially considering the social implications of this issue. Therefore, in this note, we explore which funds are currently investing in defence, assess whether legislation permits both ESG and non-ESG funds to invest in defence-related companies, and provide a comprehensive evaluation of the involvement of ESG funds, particularly Article 9 funds, in defence-related investments.
ESG Strategist - Large biodiversity investment gap
The United Nations Environment Programme (UNEP) characterizes nature-based solutions (NbS) as “initiatives designed to protect, conserve, restore, and sustainably manage ecosystems”. Examples of these solutions include ecosystem restoration, urban green spaces, and sustainable land management. In the EU, the integration of nature-based solutions across diverse landscapes is deemed crucial for fulfilling the ecosystem restoration objectives outlined in the EU Biodiversity Strategy for 2030. Additionally, NbS are considered vital for achieving climate change mitigation goals. Since the establishment of the Global Biodiversity Framework in Montreal in December 2022, there has been a slight increase in financial inflows towards nature preservation and restoration. Nevertheless, these remain substantially below the trajectory required to meet the targets set in Montreal. For the first time, the report identifies that there are USD 7 trillion of financial flows (public and private) that finance activities that have a negative impact on nature. These activities include price incentives and fiscal transfers to the agriculture sector, consumption subsidies for fossil fuels, and support for fishing capacity that exceeds the maximum sustainable yield of fish stocks. These figures could potentially be underestimated as they account only for direct impacts. Despite the substantial investment potential of NbS, the most effective measure to halt and reverse nature loss is the redirection of nature-negative financial flows. While increased public finance for NbS is crucial, more efforts would also be need to repurpose harmful subsidies if biodiversity goals are to be met. Simultaneously, governments would need to establish regulations and economic incentives to redirect private financial flows away from activities that are harmful to nature and towards nature-based solutions. In this note, we aim to explore the state of NbS, examine their financing trends over recent years, and discuss strategies to enhance investment in nature.
ESG Economist - Increasing our security could come at an environmental cost
As geopolitical fears mount, EU countries are discussing options to ramp up defence spending. Currently, there are three options: finance it with debt, raise taxes and/or cut spending elsewhere, or use EU programmes.
ESG Economist – Is there a business case for sustainability?
Sustainability and climate change seem to have lost relevance in a world marked by tariffs, wars, and inflation. This note aims to establish a business case for sustainability, despite a loosening of regulatory standards and less participation of greens in the European Parliament.
ESG Strategist – Sustainability-linked bond market at a crossroads
Back in September 2019, the Italian utility company Enel issued what would be the first ever sustainability-linked bond (SLB). In total, since 2019, EUR 257 billion was issued by 400 issuers through 823 SLBs. The SLB market reached a peak in 2021, fuelled by the entry of prominent issuers, and has been steadily declining since 2022, due to unfavourable economic conditions, rising interest rates, and heightened concerns around the credibility of the SLB market have hampered volumes since. Last year, SLBs accounted for 5% of all ESG bonds listed worldwide (i.e., green, social, sustainability, and sustainability-linked bonds).
ESG Economist - German election result to slow down but not derail climate policy
The next German coalition government will likely include the CDU/CSU and the SPD, reviving the famous GroKo (Grand Coalition), and following on the heels of what was considered as one of the most “climate ambitious governments” in the world.
ESG Strategist - Investors pricing rating downgrades for TotalEnergies
Last week, the oil and gas company TotalEnergies issued a EUR 1.3bn 20-year unsecured bond, which attracted over EUR 3bn in orders. Considering the global energy transition, it is important to examine how oil and gas companies are positioning themselves and how investors anticipate their future trajectories. An analysis of the bond curves for oil and gas companies reveals that these bonds, particularly those with longer maturities, are trading at levels comparable to those of lower-rated companies. These results may suggest that investors expect these companies to be downgraded by two to three notches in the future.
ESG Strategist - Omnibus: watering down EU’s climate ambitions
Yesterday, the European Commission (EC) published the Omnibus proposal (1). This proposal follows the recommendations of the Draghi report (2) and the EC’s promise to reduce administrative burdens by at least 25% and by at least 35% for SMEs before the end of the mandate in 2030. It aims to provide substantial simplification in the field of sustainability regulations, while squaring the EU’s ambitions towards a sustainable transition and enhancing EU companies’ competitiveness. The package released by the EC includes amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the InvestEU Regulation, and the Carbon Border Adjustment Mechanism (CBAM), which we will analyse in a later note. The package is accompanied by a draft Taxonomy Delegated Act for public consultation. In this note we will analyse the proposed changes and compare them to the previous regulations. Moreover, we conclude by making an assessment of how these changes will impact the transition and the achievement of EU’s 2050 climate targets.
ESG Strategist - Omnibus: simplifying or watering down EU’s regulations?
On November 8, 2024, the EC President Ursula von der Leyen announced that existing and upcoming EU ESG reporting requirements will be integrated into an omnibus regulation. An omnibus is a regulatory measure or set of rules that encompasses a broad range of issues or topics within a single document or framework. The EC’s goal with this approach is to streamline the growing number of requirements faced by companies, ensure consistency across related areas, and simplify processes for both regulators and those being regulated. In this overview, we will examine the three existing regulations likely to be unified under the forthcoming omnibus: the EU Taxonomy Regulation, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD). Our objective is to clarify the purpose of each regulation, explore each regulation’s flaws and discuss how the upcoming omnibus might overcome these flaws and streamline the three regulations.
ESG Strategist - Climate disasters to exacerbate European fiscal deficits
Global warming is resulting in a rising number of climate and weather-related disasters. Although annual data is volatile, the costs of these disasters as a share of GDP are on a rising trend and expected to continue increasing during the coming years, even in a favourable 1.5°C global warming climate scenario where the targets of the Paris Agreement are met. In a previous research note ‘Which EU countries will suffer the most from extreme climate disasters?’ [1] we focused on the economic impact of climate and weather-related disasters in the EU at an individual country level under various scenarios of global warming. In this note we look more in depth at the impact on the public finances for a number of EU countries, namely their debt ratio levels, the impact on sovereign yields, and, ultimately, on their sovereign ratings.