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Daily ESG Briefing: CoE Pensions Board to vote against chairs of mining companies failing to meet global safety standards

The latest developments in sustainable finance

The £3.5bn ($4.7bn) Church of England Pensions Board has announced it will vote against mining company chairs that have not confirmed their intention to meet the Global Industry Standard of Tailings Management. The pension fund encouraged other investors to consider following suit to drive compliance with the Standard.  Making the announcement on the third anniversary of the Brumadinho disaster, which killed 270 people when a mine waste facility (tailings dam) collapsed at a Vale mine site in Brazil, Adam Matthews, Chief Responsible Investment Officer for the Church of England Pensions Board and Chair of the global investor Mining and Tailings Safety initiative, said:  ”We are encouraged by the number of companies that have confirmed they will adopt the Global Industry Standard or are assessing alignment. However, any company that sets itself against the Standard will face considerable scrutiny from investors.  As a first step we will vote against the chair of those companies and are considering shareholder resolutions.  If the chair of a board does not see this as a major risk that requires the highest standards of operation, then they themselves pose a risk to us as a shareholder in that company.”

The European Banking Authority (EBA) has published draft ESG disclosure technical standards for EU banks. Under the final draft Implementing Technical Standards (ITS), which need to be approved by the Commission before being implemented, banks will have to make a number of disclosures, such as their exposure to carbon intensive activities and assets that might be exposed to physical climate risks, from 2023. From 2024, they will need to disclose their Green Asset Ratio –their ‘green assets as a proportion of total assets – and also report on their financing of environmentally sustainable activities, as defined by the EU Taxonomy regulation.  

The sustainable debt market could reach $15trn by 2025 if it keeps up the current pace of growth, according to new projections from Bloomberg Intelligence. While Europe is expected to be the main driver of this growth, the six-fold increase in green bond issuance in emerging markets over the past four years signal ample room for growth elsewhere, with green bonds appearing “unstoppable”. The report also found that funds in ESG ETFs have been growing for 38 months straight, with Bloomberg Intelligence projecting that ESG ETFs could see $1.3trn of inflows by 2025 in a best-case scenario. While ESG ETF assets represent just 4% of global ETF assets, more than 10% of ETF flows in 2021 were into ESG funds.  

The UK’s pension regulator has warned that too few schemes are integrating climate change into their decision making – and that it wants to see this change – as it sets out its 2022 priorities. The Pensions Regulator said that it would be monitoring decision making “to ensure it stands up to scrutiny”, and that trustees required to produce TCFD reports should do so without the need for enforcement action.  

The Taskforce on Nature-related Financial Disclosures (TNFD) has selected the Global Reporting Initiative (GRI), SASB Standards Research Team, Science Based Targets Network (SBTN), CDP, and Cambridge Institute for Sustainability Leadership (CISL) as the initiative’s initial ‘knowledge partners.’  Moving forward, the multi-disciplinary group will support the TNFD’s task of developing an integrated risk management and disclosure framework for nature-related risks.