While the fallout from the COVID-19 pandemic continues to dominate the financial news cycle, other work is continuing in a variety of areas, albeit under less of a spotlight. For example, the push to promote environmental, social and governance (ESG) policies is still going strong.

One of the biggest ESG programmes is the European Union’s Green Deal. The European Green Deal, which was first presented in December 2019, is the roadmap for making the EU’s economy sustainable, in line with the EU’s pledge to be carbon neutral by 2050. While Europe now has the most reported COVID-19 cases out of any continent globally, the following three signs point to the fact that the European Green Deal remains on track:

• A letter signed by 13 EU environment ministers has called for the Green Deal to be the framework to boost recovery after the pandemic.
• A European Council statement that a green transition is required to support sustainable growth following the crisis.
• Confirmation from the European Commission that their work towards EU carbon neutrality targets remain on track  

“It is reassuring that, even as we battle coronavirus, the European Commission has the foresight to press ahead with the Green Deal, which is being positioned as the framework to rebuild the economy after the pandemic,” commented Tim Mohin, chief executive of international sustainability reporting firm GRI. “With the international community coming together to address COVID-19, joint working between the public and private sectors has never been more important. And when the world emerges from this crisis, we need to continue this collaboration to advance sustainable and inclusive development. Europe’s leaders are to be commended for committing to a green transition. Now, more than ever before, this is the kind of bold leadership the world needs.”

And it is not only in Europe that ESG principles are being enacted. This week has also seen Japan’s second largest bank, Mizuho Financial Group, announce strict ESG policies in Japan.

Mizuho announced significant revisions to its policies on responsible investment and financing and adopted the strongest ESG policies of any Japanese bank yet. This announcement follows a shareholder resolution filed on Mizuho calling for a more progressive climate policy, as well as years of criticism for the bank’s financing of coal plants, pipelines, and rainforest destruction. 

Mizuho has made a commitment to strengthen board-level oversight of sustainability and climate risk management. In addition, the bank’s new policy includes the following commitments:

• Clients involved in forestry, palm oil and pulp and paper sectors will be asked to adopt best practice No Deforestation, No Peat and No Exploitation (NDPE) policies and respect the Free Prior and Informed Consent (FPIC) of local communities.
• No further financing of new coal power plants, except to projects already committed to before June 2020; or replacements of less efficient plants where it is also deemed necessary for stable energy supply in the host country. Support for development of next generation technologies to support decarbonisation will continue. Financial exposure to coal power will be reduced by 50% from 2019 by 2030, and to zero by 2050.
• No further financing of mountaintop removal.
• Clients involved in coal mining as well as oil and gas will be evaluated for their management of transition risk, and closely scrutinised for their social and environmental impacts, including conflicts with Indigenous Peoples in the case of oil and gas companies.  
• All financing will be subject to prohibitions on child labour and forced labour; negative impacts on Ramsar or UNESCO World Heritage site; and violations of CITES.
• All financing will include an assessment of the client’s risk mitigation or avoidance for activities that result in negative impacts on Indigenous Peoples or land expropriation leading to involuntary resettlement.

“With this policy, Mizuho has set a new benchmark for the Japanese banking industry,” commented said Hana Heineken, senior responsible finance campaigner with the Rainforest Alliance Network (RAN). “While some unfortunate exceptions remain on coal power, we commend the addition of NDPE policies for commodities driving deforestation, and stronger social and environmental protections for oil and gas and mining. This will hopefully propel Mizuho’s peers, Mitsubishi UFJ Financial Group (MUFG) and SMBC Group, to match and even exceed Mizuho’s policy.”

With the media saturation of COVID-19, it can sometimes be hard to remember that the climate emergency the world seemed to be finally waking up to at the start of 2020 is still very much here with us. The continued investment into ESG policies and technologies remains as essential now as ever.