Daily ESG Briefing: AXA to launch ‘coastal risk index’ at COP26

The latest developments in sustainable finance

The US insurance arm of Axa is preparing to launch a “Coastal Risk Index” at COP26, which will calculate the risks posed to coastal assets by rising sea levels. The tool will use various ‘flooding scenarios’, up to 2050, and will assess social and fiscal risks caused by depleting coastal ecosystems – “allowing policymakers and investors to direct financial flows more effectively and catalyse behavioural change towards proactive coastal ecosystem management”. It is being developed in collaboration with the Ocean Risk and Resilience Action Alliance, whose Co-chair, Karen Sack, spoke on a webinar on the topic earlier this week. As well as the new index, she said the alliance was working with unnamed fund managers to “explore and test the concept of $1bn ocean financing architecture that can truly drive systemic change by investing in blue resilience, impact and hedging against risk through insurance products that invest in marine and coastal natural capital”.

The Institutional Investor Group on Climate Change has teamed up with non-profit law firm Client Earth to publish “a guide for institutional investors to the law on climate-related shareholder resolutions”. It covers 13 countries in Europe, and “explains the division of powers between shareholders and the Board under the local law of each jurisdiction, how climate-related resolutions should be framed, and the various ‘process’ elements to filing”.   

The UK’s Department for Work and Pensions is consulting on planned changes to the Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021, which would require trustees to use a portfolio alignment metric to illustrate the extent to which their investments are aligned with 1.5 degrees Celsius. The consultation also seeks views on draft guidance explaining best practice in relation to climate change and stewardship in the Statement of Investment Principles and Implementation Statement.  

Meanwhile, a cross-party parliamentary group in the UK has called for the social issues to be better factored into the Net Zero plans of local authority pension schemes. As part of an inquiry into ‘responsible investment for a just transition’, the group recommended that “investors and their asset managers should set out their expectations of companies on a just transition”.  

Allianz has updated its procurement rules to give at least 10% weighting to ESG factors in future tender assessments. The insurer said the change will enable it to prioritise suppliers that have adopted sustainable and ethical practices, and that it will partner with, support and educate suppliers on the nature of the materials, products and services they offer.