ESG Newsletter June 2026

VOICE - Framework for ESG Engagement

• Defines and accounts for ESG engagement by establishing a clear, standardised definition of what constitutes an engagement, distinguishing it from routine dialogue and creating a consistent basis for counting and assessing engagement activity.
• Measures engagement influence through a structured assessment framework and five-level scale that evaluates the likelihood that investor actions contributed to company change, using evidence-based indicators rather than activity volume alone.
• Standardises engagement reporting by providing a common approach for disclosing engagement objectives, activities, outcomes and evidence of influence, improving transparency, reducing the risk of "engagement-washing" and enhancing comparability across managers.
• Strengthens engagement quality and consistency by identifying the resources, expertise, governance and commitment required for effective stewardship, while supporting asset owners in evaluating managers using a more consistent and comparable framework.

ESG News Monitoring 

• Space Exploration Technologies Corp. (Telecommunication Services | US) – SpaceX shares declined in premarket trading after MSCI assigned the company a CCC ESG rating (its lowest level), citing high ESG risk exposure and weak risk management, particularly in governance and controversies. The rating coincides with share price volatility following its recent market debut and comes as SpaceX is reportedly considering a $20 billion bond issuance to fund investments in artificial intelligence and space operations. Quartz
• Bayer AG (Pharmaceuticals | DE) – The U.S. Supreme Court ruled in favor of Bayer, limiting litigation related to its Roundup weedkiller by blocking state-level “failure-to-warn” claims. Bayer’s shares rose 16% following the decision. However, the company still faces around 65,000 claims, including allegations of negligence, misleading marketing, and product defects. While the ruling strengthens Bayer’s legal position, it leaves meaningful residual liability. It also does not affect the proposed $7.25bn settlement, which remains subject to final approval. Reuters

Sovereign 

• World – A study finds markets are underestimating the economic risks of biodiversity loss, potentially mispricing up to $83 trillion in global assets. Disruptions to key ecosystems could raise annual sovereign debt interest by $162 billion and cut global GDP by about $2 trillion. Countries like India and China could face major credit rating downgrades, increasing borrowing costs and default risk, with added annual debt servicing of $50 billion and $70 billion respectively. Reuters
• EU – The European Banking Authority has published draft methodology and templates for the 2027 EU-wide stress test, marking the first inclusion of climate risks in the exercise. The climate module will assess transition and physical risks, requiring banks to model impacts from policy driven transition shocks, including carbon pricing and energy price changes, as well as physical risks. The exercise will involve 63 banks, covering ca.75% of the EU banking sector, as the EBA continues efforts to embed ESG risks into supervisory practices. ESG Today

Regulation 

• Carbon Border Adjustment Mechanism (CBAM) – EU member states agreed a negotiating position to strengthen the CBAM by expanding its scope to selected downstream products, targeting gaps where carbon-intensive imports could avoid the levy. The proposal also includes stronger anti-circumvention measures, expanded Commission powers, and regular reviews to further extend coverage, ahead of negotiations with the European Parliament. ESG News
• Sustainable Finance Disclosure Regulation (SFDR) – EU member states agreed a Council position on revisions to the SFDR, including allowing some fossil fuel companies into the “Transition” category if they meet criteria such as ≥20% capex aligned with EU Taxonomy and time-bound emissions reduction plans. The proposal also introduces rules for including certain public sector issuances within the 70% positive contribution requirement for specific product categories. The Council position forms the basis for upcoming negotiations with the European Parliament. European Council

External Reports

• LSEG – Green equities have delivered strong returns despite volatile markets, pushing the green economy’s market value above $10 trillion for the first time. The FTSE EOAS Index outperformed the broader market by 12.4% over the past year, with renewables leading gains. If considered as a standalone industry, the green economy would now be the world’s third largest, surpassing Health Care, only behind Technology and Industrials. Green revenues grew 5.3% in 2025, the fastest since 2022, across a broad range of sectors, driven by electrification, AI-related power demand, energy efficiency, and clean transport. Electric vehicles and advanced batteries were standout contributors, adding $62 billion in revenue. Investing in the green economy 2026