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Daily ESG Briefing: AQR Capital says super funds could start shorting big polluters

The latest developments in sustainable finance

US hedge fund giant AQR Capital Management has reportedly warned the Australian Prudential and Regulatory Authority that its clients, including a number of super funds in the country, could start shorting polluting companies listed on the Australian stock exchange, the ASX. In an email seen by local media, AQR is understood to have said: “The usual approach of security selection (e.g. divesting from firms with the highest emissions) can lead to a substantial carbon reduction but may not be enough for investors with the most ambitious reduction targets… Such investors may need other techniques to achieve their goals, for example shorting high carbon-footprint companies or trading instruments such as carbon offsets and carbon permits.”

Tobacco Free Portfolios is urging shareholders of asthma inhaler maker Vectura to reject the proposed takeover by Philip Morris International due to the business risks and moral conflicts. According to Morningstar, Vectura’s biggest shareholders include arms of Brown Capital Management, Invesco, Vanguard, Artemis and AXA. They have until September 15 to decide whether to accept cigarette company Philip Morris’ £1.1bn bid. Natixis, abrdn and BlackRock are among those reported to have sold out of Vectura on the news of its potential takeover.

ESG concerns are rapidly raising the cost of capital for oil companies as more fund mandates restrict carbon-intensive assets, according to Aegon Asset Management. Despite a rebound in oil prices in 2021, bolstering the balance sheet of oil companies, they are still finding it difficult to raise finance from banks and investors under pressure to decarbonise. 

Representatives from the Partnership for Biodiversity Accounting Financials (PBAF), CDP Europe, Fairr, the International Labour Organization (ILO), and the Nature Conservancy were amongst the 55 respondents to the European Investment Bank’s (EIB) recent consultation on its new Environmental and Social Policy and 11 Environmental and Social Standards. A spokesperson for the bank told RI its governing body will discuss the feedback in the fourth quarter and publish a draft, followed by a final version, by the end of the year. 

The pension fund trustees of UK supermarket chain Morrisons have reportedly warned that takeover bids by private equity firm Clayton, Dubilier & Rice and a consortium led by Fortress Investment Group would “materially weaken” its retirement schemes. Legislation, coming into force in October will give The Pensions Regulator new powers to intervene if it is concerned that corporate actions could put members at risk of not getting the pensions they were promised.