Gilmartin ESG Newsletter | February 2024

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Welcome to the latest edition of Gilmartin Group’s ESG newsletter. With a special focus on the healthcare sector, this newsletter sheds light on the latest trends in the rapidly evolving ESG space, covering developments with companies, investors, regulators, and policymakers.

In The Spotlight

In early February, European lawmakers finalized a set of rules that aim to regulate ESG ratings providers, with the goal of combatting conflicts of interest and the exaggeration of a company’s sustainability performance, or “greenwashing.”

Going forward, ESG ratings providers in the EU will be supervised by the European Securities and Markets Authority (ESMA). Raters outside of the EU must have their ratings endorsed by a ratings firm regulated in the EU. Moreover, a company’s alignment with the Paris agreement will need to be disclosed under their environment score.

These new regulations in the EU come as investors are facing increasing criticism for relying too heavily on ESG ratings, specifically because many of these firms lack policies to prevent conflicts of interest. If implemented effectively, these new accountability structures should help to increase the credibility of ESG scores across the landscape.

The Healthcare View

The Joint Commission, a non-profit that evaluates and accredits thousands of healthcare organizations and programs in the US, launched a voluntary certification program to help hospitals advance their sustainability initiatives. The certification is designed to offer a roadmap for hospitals and health systems that are just starting their sustainability journeys. Dr. Jonathan Perlin, CEO of the Joint Commission, said that the program was fueled by growing demand from clinicians to address the impact that healthcare systems have on climate change. Perlin also noted that interest in the program has been strong since applications opened earlier this year.

A Note on ESG in the Private Markets

Earlier this month, MSCI launched MSCI Private Company Data Connect, a new platform that will centralize private market sustainability and climate disclosures for investors and other stakeholders. MSCI states that the platform will enable GPs to “execute due diligence and risk management processes, respond to client and regulatory sustainability reporting requirements, and develop sustainable value creation strategies, such as engagement and target-setting for their portfolio companies.” Companies will also “retain ownership of their self-reported data and can approve or decline data requests from GPs and lenders directly on the platform.”

In the Weeds

In January, the Global Reporting Initiative (GRI) and the IFRS Foundation published a new resource highlighting the interoperability between the GRI and ISSB standards. In particular, the document points to areas of overlap between the GRI and ISSB standards that a company should consider when disclosing Scope 1, Scope 2, and Scope 3 greenhouse gas emissions. Both standards already derive most of their structure from the GHG Protocol, and the IFRS Foundation and GRI are actively collaborating on other areas to support more streamlined reporting for companies using both standards.

To learn more about how Gilmartin strategically partners with our clients, please contact our team today.

Authored by: Patrick Smith, ESG, Gilmartin Group & Tamsin Stringer, ESG, Gilmartin Group

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