Daily ESG Briefing: Big investors opposed Japan’s first climate resolution despite proxy backing, show figures

The latest developments in sustainable finance

BlackRock, JPMorgan, Vanguard, Sumitomo Mitsui Trust Asset Management, Nikko Asset Management and Daiwa Securities were among investors that voted against Japan’s first climate resolution earlier this year, according to analysis just completed by resolution filer, the NGO Kiko Network. The proposal was filed at $1.8trn Japanese ‘megabank’ Mizuho in March, calling for disclosure on how it would align its investments with the climate goals of the Paris Agreement. It garnered 34.5% support, mainly from overseas investors and four Japanese asset managers: Nomura Asset Management, Norinchukin Zenkyoren Asset Management, Nissay Asset Management and Asset Management One. Glass Lewis and Institutional Shareholder Services (ISS) both recommended supporting Kiko Network’s resolution. 

UK clothing giant Boohoo was aware of unsafe conditions concluding it did “too little too late” to respond to the situation. Boohoo faced allegations of “modern slavery conditions” earlier this year when The Times newspaper accused the retailer of paying as little as £3.50 an hour for its workers making clothes, resulting in Aberdeen Standard Investment removing Boohoo from its impact and responsible investment funds in July. The review dismisses the “modern slavery” allegations, but flags life-threatening fire risks, cramped conditions and “inexcusable” oversights related to the coronavirus pandemic.

One in five countries globally are at risk of ecosystem collapse as biodiversity declines, Swiss Re has warned, in a study using the reinsurer’s newly-launched Swiss Re Institute Biodiversity and Ecosystem Services (BES) Index. The index aggregates data across water security and quality, food provision, habitat intactness, pollination and soil fertility. The Swiss Re Institute report that accompanies the launch of the index, "Biodiversity and Ecosystem Services: A business case for re/insurance", highlights several real-life cases of how BES impact economies. 

Asset managers are increasingly at risk of missing out on mandates if they cannot demonstrate that their governance and oversight measures are robust, according to warnings from independent depositary and financial oversight group INDOS Financial. In recent investment market commentary, INDOS CEO Bill Prew said governance reform from an EU level, individual EU member states and the US Securities and Exchange Commission is now a “key regulatory pressure point” that is requiring “more asset managers to enhance their internal operational processes and fund governance practices.” 

KB Financial Group has become the first South Korean bank to commit to stop financing construction of coal-fired power plants, as part of a new climate roadmap. The parent group of Kookmin Bank and KB Investment & Securities agreed not to provide underwriting or financing for new coal-fired power plants at its ESG committee meeting last week. Instead, it said, it will expand investment into greener opportunities, including electric vehicles and green infrastructure projects. Across its subsidiaries, the group will scale up current lending programs for renewable energy businesses as well as issuance of ESG bonds, officials said.

S&P Global Ratings and Platts Analytics have teamed up to release a joint commentary series about how COVID-19 has impacted the energy transition. The five papers look at COVID-19 as a pivotal moment for climate policies and energy companies, peak oil demand, the outlook for renewables, the role of gas as a bridge fuel, and Coronavirus economic recovery policies. On renewables, the series says the growth outlook remains “broadly intact, even though government stimulus plans will most likely prioritise employment and support measures for the economy over green growth – particularly in emerging markets”.