Gilmartin ESG Newsletter | November 9, 2023

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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.

On Friday, Gilmartin’s Head of ESG Advisory Patrick Smith will be hosting a dialogue with Green Project Technologies (the “QuickBooks of ESG Accounting”) Founder & CEO Sam Stark to discuss how SMid cap, newly-public, and private companies can prepare for climate disclosure regulation.

The webinar will take place on November 10th at 2PM ET/11AM PT. You can quickly register here.

In The Spotlight

In late October, SEC Chair Gary Gensler addressed feedback on the commission’s proposed climate disclosure rule during a fireside chat with the U.S. Chamber of Commerce.

The SEC has received more than 16,000 comments on the proposed rule, and according to Gensler, a primary area of concern was the disclosure of Scope 3 greenhouse gas (GHG) emissions, as well as the rule’s implementation timeline.

Gensler stated that the SEC is “not a climate regulator” and pointed to the fact that many public companies are already providing voluntary disclosures on this issue, with 81% of Russell 1000 companies disclosing information about climate risk in 2021. Gensler emphasized that the rule is aimed at standardizing climate-related disclosures because “investors are making investment decisions based on these disclosures” and that “the investor side, almost uniformly, wants some consistency around this disclosure.”

The Healthcare View

In an article published in the New England Journal of Medicine (NEJM)’s Catalyst journal, healthcare sustainability experts from the Yale School of Medicine, the Icahn School of Medicine at Mount Sinai, and other organizations assessed the potential impact of the proposed SEC climate disclosure rule on the U.S. healthcare sector.

According to the authors, “mandating disclosures from publicly traded [healthcare organizations] is likely to create systemic pressure – and new opportunities – for disclosure and standardization throughout the healthcare ecosystem.”

The authors encourage all healthcare organizations “regardless of tax status” to “embrace climate risk accounting with the goal of seeking every lever to improve their environmental footprint and protect their ability to provide the lifesaving care on which we all depend.” For example, Cleveland Clinic has published an annual sustainability report for over a decade, even though it is a nonprofit. 

In The Weeds

Last week, the CFA Institute, the Global Sustainable Investment Alliance (GSIA), and the Principles for Responsible Investment (PRI) announced the release of the Definitions for Responsible Investment Approaches. This document establishes definitions for five responsible investment terms: Screening, ESG Integration, Thematic Investing, Stewardship, and Impact Investing.

The initiative aims to standardize sustainable investment terminology and provide a resource for investors, regulators, policymakers, and market participants, offering harmonized definitions for responsible investment approaches that are not mutually exclusive. For example, Vanguard’s ESG investing policy lays out the firm’s own definitions for the five responsible investment terms mentioned above, and the CFA Institute’s guidance is aimed at standardizing these definitions.

A Note on ESG Reporting

Last month, both the Task Force on Climate-related Financial Disclosures’ (TCFD) and Climate Disclosure Project (CDP) released new information about the uptake of their platforms.

The TCFD 2023 Status Report highlighted an increase in both the number of companies providing TCFD-aligned disclosure and the quality of these disclosures. For fiscal year 2022, 58% of TCFD reporting companies disclosed information about at least 5 of the framework’s 11 disclosure recommendations, compared to 40% in 2021. However, only 4% of companies reported in alignment with all 11 TCFD recommendations last year.

CDP also experienced a similar increase in disclosure, with over 23,000 companies disclosing through the platform in 2023. This represents a 24% increase from last year, but only 1% of companies in 2023 reported on all three of CDP’s key disclosure areas: climate change, water security, and deforestation.

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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