Daily ESG Briefing: BayernLB joins Principles for Responsible Banking

The latest developments in sustainable finance

Munich state-owned bank BayernLB has joined the Principles for Responsible Banking, which commits signatories to measure and reduce the negative impacts that their operations have on society, the economy and the environment – while increasing positive impacts. The bank said that it will target “a climate-neutral portfolio by 2050”, and aim to significantly increase its range of ESG products by the end of next year.

Members of the Asian Utilities Engagement Program, a shareholder initiative supported by  the Asia Investor Group on Climate Change, have announced that Hong Kong-based utility CLP Group has committed to achieving Net Zero emissions by 2050, and phasing out its coal power fleet by 2040. CLP Group, whose lead engagers are BNP Paribas and Manulife, is one of five companies that investors are engaging with directly on climate change risks and opportunities through the program.

Companies, investors and sovereign nations are increasingly being targeted for ESG-related litigation, particularly on climate change, according to a report from ISS ESG. Researchers found a notable disparity in outcomes, with ESG litigation having a strong tendency to be settled in the US but drawn out in other markets.

An analysis of 281 US sustainable funds by sustainable debt firm Util shows that while sustainable funds minimise negative impact, they have similar exposures at sector, industry and company level with conventional funds. Util found that out of 77 sustainable funds which had references to the environment in their name, only four demonstrated a positive impact across any of the environmental SDGs.

ESG analytics provider Impact Cubed has launched an automated platform which can assess ESG impact data to help asset managers “develop customised solutions aligned with client goals and show how portfolio holdings affect performance on climate, diversity and other impact measures”. The platform is aligned to the SDGs and provides coverage of all listed corporate equity and debt – including sovereign debt issuers.

Australian Treasurer Josh Frydenberg has called on local banks, super funds and insurers to not “walk away” from carbon-intensive sectors, describing them “as the very sectors of our economy that will need investment to successfully transition”. According to Frydenberg, decarbonising Australia’s economy will require a “broad based approach, which sees investment in emissions reduction strategies across all sectors, be it agriculture, mining, manufacturing, and others”.

Private equity-backed firms do not appear to be making progress towards sustainability goals despite PE firms making “highly visible commitments” on sustainability, according to an analysis by management consulting firm Russell Reynolds Associates. It claims that only 20% of executives at PE-backed firms are examining their social and environmental impact, while fewer than 5% said that they had remuneration policies which include ESG targets.