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Bailey McCann, Opalesque New York:

A new report from MSCI looks at ESG trends to watch for the new year and climate risk is topping the list of key concerns. Climate risks have eclipsed both governance and social issues to lead the ESG agenda and are likely to become even more important for financial markets if policymakers continue to punt on climate policy.

Weilding influence on net-zero agendas

Companies are now beginning to influence each other when it comes to climate response, the report notes. Net-zero agendas at Amazon, Microsoft, Alphabet, and Alibaba are already pushing companies to move toward their own net-zero goals. As these tech giants look at their upstream supply chains, they are beginning to change partnership arrangements in order to cut emissions. Companies that are in this supply chain and want to maintain their contracts will have to adapt or lose significant clients. MSCI argues that this type of business-to-business engagement could be the next frontier of climate policy.

Companies aren't the only ones using net-zero goals to increase their influence over each other. Investors too are rethinking divestment as a tool in the push for net-zero in favor of putting pressure on management teams. The report notes that a years-long trend of investors cutting their stakes in coal companies and sectors that rely heavily on coal-fired power could be starting to slow. Many of the remaining coal producers worldwide are majority state-owned......................

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