Daily ESG Briefing: APG completes coal and tar sands exit

€613bn Dutch asset manager APG has announced that it has completed its divestment of coal and tar sands companies, selling a €400m of investments in 14 firms since the start of the year. APG's largest client, the government pension fund ABP said at the end of October that it would ditch all of its fossil fuel holdings, while construction industry fund bpfBOUW and housing corporation fund SPW also recently introduced exclusions policies. APG has a 30% revenue threshold for coal mining and a 20% threshold for tar sands. 

The first set of climate rules under the EU Taxonomy  have cleared their last legislative hurdle after being adopted by the Council, and will enter into force from 1 January 2022. As RI reported earlier this week, member states opposing the rules did not secure a blocking majority for the Delegated Act on sustainable activities for climate change adaptation and mitigation. No formal Council vote took place, but member states’ scrutiny period of the act expired yesterday, meaning the rules – which were adopted by the Commission in April and cleared Parliament in October – will automatically be adopted. The list of climate-aligned activities covers sectors including forestry, manufacturing, energy, transport and construction, while the Commission has left out some controversial sectors such as nuclear and gas to cover these in a separate act expected to be published later this month.  

Norges Bank Investment Management (NBIM), the manager of Norway’s sovereign wealth fund, has announced plans to do more to tackle corruption. In an article in local financial daily Dagens Naeringsliv, NBIM’s chief governance and compliance officer Carine Smith Ihenacho said about a third of the companies it evaluated in 2020 lacked reporting on anti-corruption and are now calling on cooperation and transparency. The fund has joined an initiative led by Transparency International UK aiming to identify how companies can develop a culture where it is encouraged and expected to report on corruption.  

An Independent Investment Management Initiative (IIMI) survey has  found 88% of its members believe that greenwashing is a problem in the fund management industry. Almost two thirds are positive towards the UK FCA’s guiding principles on ESG and sustainable funds as a step to help combat greenwashing. A majority were positive to the FCA’s proposals on Task Force on Climate-Related Financial Disclosures (TCFD), but 46% said they risked creating further complexity.   

More than three quarters of CFOs and financial controllers back consistent standards for ESG reporting and 74% think they should be mandatory, according to an EY assurance survey. Some 74% of the more than 1,000 respondents said that they believed the drive towards improved non-financial reporting is picking up,  quoting Covid-19 as a key factor. The challenges respondents said they face in providing useful ESG reporting include a disconnect between ESG and mainstream financial reporting as well as a lack of focus on material issues and information on long-term value.   

Only 3% of 4,000 companies assessed by Moody’s ESG Solutions have set emissions targets aligned with Net Zero by 2050. Moody’s said the company targets were difficult to quantify, compare and assess due to a lack of disclosure of current emissions and idiosyncratic intensity targets, but the average implied temperature rise across the companies assessed was 2.9°C. The electric and gas utilities sector had one of the best average alignment levels at 2.1°C. The oil and gas sector was the worst performer with an average increase of 3°C and just 6% of universe companies in the sector have set targets covering Scope 3 emissions.   

African countries have joined Scandinavian countries in the latest Top 20 ESG index published annually by abrdn’s Research Institute’s (ARI). Liberia, Malawi, Niger and the Democratic Republic of Congo are the African top-scoring countries. The UK has ranked 10th, the same position it held 10 years ago, attributed to political and governance indicators worsening. The US was ranked 25th, a drop of four places since 2012, with the researchers saying the previous Trump administration has contributed to a decline in political and governance scores with soaring levels of income inequality. China scored well on social indicators like gender equality and life expectancy, but poorly on political and governance indicators and CO2 emissions. Carbon emission intensity was the most improved indicator for many of the top-performing economies.