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Daily Update: November 21, 2023

Flash PMIs signal jobs decline as economic malaise drifts into fourth month

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S&P GlobalPEG Engineering and Construction Cost Index (ECCI) | S&P Global

Daily Update: November 21, 2023

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

Management of Nature-Related Risks, Opportunities Picking Up Steam

The year 2030 — the deadline for the Kunming-Montreal Global Biodiversity Framework, a recently signed global biodiversity commitment — is fast approaching, yet disclosures around nature-related risks and opportunities are still massively underreported and corporate commitments to nature and biodiversity remain limited, according to S&P Global Sustainable1.

Why is this a concern?

The Kunming-Montreal Global Biodiversity Framework is anchored in a “30x30” target, which calls for the conservation and management of at least 30% of the planet's lands, inland waters, coastal areas and oceans by 2030. To meet this goal, government and nongovernmental organizations must work hand in hand with corporates and financial institutions.

Plenty of research and data indicate that nature underpins the global economy. An analysis PwC released earlier this year found that 55% of global GDP, or about $58 trillion, is moderately or highly dependent on nature. S&P Global Sustainable1 research, meanwhile, shows that among the companies in the S&P Global 1200 — an index that covers the 1,200 largest companies across the Americas, Europe and Asia-Pacific — 85% have a significant dependency on nature across their direct operations. Of the companies in the S&P Global Broad Market Index, which includes about 14,000 companies across developed and emerging markets, 68% have a similar dependency.

Despite this, protecting nature is a nascent priority for many companies, and most have no biodiversity or nature-related commitment of any kind. A study of 3,753 companies assessed in the 2022 S&P Global Corporate Sustainability Assessment showed there is no industry where more than half of the companies have such pledges.

But there are reasons to be hopeful.

"I think the appetite and attention to nature and biodiversity risk right now is certainly increasing," Sonia Kim, global head of product for S&P Global Sustainable1, said during an October webinar, "From Data to Decision: A Nature-Driven Corporate Transition."

Investors want to understand how companies are managing nature-related risks, according to Kim. "How is the board and executive accountable for the company's impacts and dependencies on nature? And how are they actually measuring and monitoring their business activities and planning around resilience?" Kim said.

Kim believes there will be a step up in attention and focus from investors, with the hope that it will motivate companies to be more proactive and "take something that's voluntary now and really get on ahead of that."

For those wondering how to get started on this journey, the Taskforce on Nature-related Financial Disclosures (TNFD) offers an entry point, according to Kimberlee Glinka, a sustainability specialist at S&P Global Market Intelligence.

In the webinar, Glinka described the TNFD as "a market-led risk management and disclosure framework that's helping organizations report and start to act on evolving nature-related risks and opportunities." The TNFD published its final recommendations for nature-related risk management and disclosure in September, stating that these are meant to serve as a "starting point for companies to begin identifying, assessing and disclosing the nature-related issues in their own time, and subject to their own strategy, materiality, cost and capability considerations."

S&P Global Sustainable1, in partnership with the UN Environment Programme World Conservation Monitoring Centre, developed the Nature & Biodiversity Risk dataset, which assesses nature-related impacts and dependencies resulting from a company's direct operations. The dataset is designed to help businesses and financial institutions identify risks using an approach closely aligned with the TNFD, according to Kim.

In addition, S&P Global Sustainable1 and the World Conservation Monitoring Centre collaborated on the Framing the Future for Nature pilot program, which Glinka said is meant to help accelerate the shift of capital toward nature-positive outcomes using the lens of the TNFD.

Today is Tuesday, November 21, 2023, and here is today’s essential intelligence.

Written by Jasmine Castroverde.


New Zealand Local Government Outlook 2024: Bridge Over Troubled Waters

Picture a country beset by burst sewers, "boil water" warnings, surging municipal debt and discord on how to tackle these problems. Chances are you're not thinking of New Zealand. The antipodean island nation of waterways and mountains vaunts a clean, green image. But a years-long program to reshape the governance of water infrastructure in New Zealand now looks like a sinking ship.

—Read the report from S&P Global Ratings

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Capital Markets

Q3 2023 US Bank Outlook Survey

S&P Global Market Intelligence surveyed 159 US financial institution clients on various topics including expected loan and deposit growth, projected interest rates and liquidity trends. Of the 159 participants, 119 worked for commercial banks or thrifts, 36 for credit unions and four for other US institutions.

—Read the article from S&P Global Market Intelligence

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Global Trade

Impending African Quota Cuts To Test OPEC Unity Amid Volatility, Falling Prices

A fresh row is brewing within OPEC+ as African members baulk at the prospect of investment-sapping quota reductions, with the producing alliance preparing to meet on Nov. 26 at a time of extreme market volatility and armed conflict in Europe and the Middle East. After six hours of tense discussions in June's ministerial meeting in Vienna, most of OPEC+'s sub-Saharan African contingent, which includes Nigeria, Angola, Equatorial Guinea, Republic of Congo, Gabon, Sudan and South Sudan, agreed that their 2024 quotas would fall unless they could demonstrate higher production capacity before November.

—Read the article from S&P Global Commodity Insights

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Listen: Intersection Of Gender And Climate In Focus Ahead Of COP28

The 2023 UN Climate Change Conference, also known as COP28, gets underway at the end of November and includes a thematic program focusing on key topics on different days of the event. One of those themes is a day devoted to gender equality, and discussions will focus on topics such as why climate policy should consider gender equality and why women can be disproportionately impacted by climate change. This episode of the ESG Insider podcast delves into the intersection of gender equality and climate ahead of the event.

—Listen and subscribe to ESG Inisder, a podcast from S&P Global Sustainable1

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Energy & Commodities

North American Regulated Utilities Industry Highlights

These are slides covering industry highlights for the investor-owned North American regulated utilities sector. The presentation was originally given to investors attending the annual Edison Electric Institute Financial Conference in Phoenix, Arizona.

—Read the article from S&P Global Ratings

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Technology & Media

Listen: Next In Tech Episode 141: Fintech Trends, Futures And Money 20/20

There’s been rapid expansion in financial technologies and its adoption. Research director Jordan McKee joins host Eric Hanselman to look at trends and highlights from the Money 20/20 conference. Where cryptocurrencies played an outsized role in previous years, practical uses of blockchain capabilities have taken their place. Concerns about generative AI’s negative impacts on fraud overshadowed benefits. Open banking initiatives stand to create new opportunities, as well as a few risks.

—Listen and subscribe to Next in Tech, a podcast from S&P Global Market Intelligence

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