Daily ESG Briefing: 65% of investors plan to switch to ESG benchmarks, claims State Street

The latest developments in sustainable finance

Nearly two-thirds of investors have told State Street Global Advisors that switching to an ESG or climate-specific benchmark will be their “preference over time for passive equities and fixed income portfolios”. The investment giant’s polling of 300 investors – including private and public pension funds, sovereign wealth funds and endowments – found that 65% said that they would prefer to move away from standard index benchmarks in the future. This position, however, was more pronounced in Europe (75%) than in North America (52%).    

The People’s Bank of China has announced a programme of re-lending for energy transition loans, offering Chinese banks cheap funding to help them lend to firms working on emissions reductions. The Bank will lend 60% of required funds at an interest rate of 1.75%, which is lower than rates for similar programmes focused on the agricultural and small business sectors. It will require public disclosure of the use of the loans, and reporting on emissions reduced by the funding. 

Russia’s state development bank has reportedly said it plans to stop lending to new projects involving the extraction of raw materials. The bank’s Deputy Chairman, Alexey Miroshnichenko, told Reuters that it cannot “completely stop financing carbon-intensive industries” – including to those that process extracted materials – but added under the bank’s new memorandum on financial policy “we do not support new projects in raw materials extraction: no coal, no oil, no mining”. Earlier this week at COP26, former US President Barack Obama criticised China and Russia for a “dangerous absence of urgency” on the climate crisis.  

Two thirds (66%) of investors have said that they “struggle” with ESG rating agencies because of the “wildly divergent ESG scores at a company level”. The survey of global professional investors, representing $935bn in assets, was conducted by London-based tech firm SigTech. Despite their concern, 30% of pension funds and institutional investors also said their use of ESG rating agencies will increase dramatically over the next three years.

A study by Russell Investment has found that 90% of asset managers claim to cover ESG topics in meetings with senior management at investee companies – up from 80% three years ago. More than a third of respondents to the survey said they covered ESG topics in every meeting – up from 21%.