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Daily ESG Briefing: Biden drafts executive order on climate disclosure

The latest developments in sustainable finance

President Biden is preparing to issue an executive order instructing a number of federal agencies to take action on climate-related financial risk. The draft order, leaked to Politico, contains provisions asking the Labor Department to rescind Trump-era rules restricting the ability of pension fund managers to vote on shareholder proposals, as well instructing the Federal Insurance Office to assess climate-related issues in its oversight of insurers, examining the potential for disruptions of private insurance coverage in regions vulnerable to climate change. In addition, the departments of Housing and Agriculture will be asked to consider integrating climate-related financial risk into their underwriting standards and loan conditions.

The Global Unions’ Committee on Workers Capital is encouraging Amazon shareholders to engage with the company over what it describes as its “anti-union” activities and has called on its network of trustees to encourage asset manager engagement with the retailer. Workers at Amazon’s warehouse in Bessemer, Alabama voted against forming a union by a two-to-one margin after aggressive anti-union campaigning by their employer, the Committee says. 

Barclays has come under fire from investors after agreeing to underwrite a bond offering by CoreCivic to fund the construction of two private prisons in the US, despite a pledge two years ago not to finance private prison companies. A group of 30 activists and investors, including managers at AllianceBernstein and Pax World Funds, wrote to the bank warning that the bond sale brings reputational and financial risk to those involved, and that the arrangement was “in direct conflict” with its commitment. Barclays told the FT that its commitment “remains in place”, and that the prisons “will be leased and operated by the Alabama Department of Corrections for the entire term of the financing”.

More than 40% of global investors take no action to combat climate risk in their investment process, according to a new study by PGIM, formerly known as Prudential Investment Management. The study, which polled 101 capital allocators across Europe, North America and APAC, found that only 58% had formally incorporated climate change into their investment processes, despite 89% believing it to be an important issue for their organisations, and 59% believing climate change had already started impacting their portfolios.

Almost half of wealthy investors in Hong Kong, China, Singapore and the UK say that their portfolios will be entirely composed of sustainable investments within five years. A study of 1,000 affluent and high net worth investors by HSBC Asset Management found that 82% rated sustainable, environmental and ethical issues as important, and more than two thirds wanted to use their investments to support ‘build back better’ Covid recovery efforts.