Daily ESG Briefing: Engine No.1 planning ‘socially conscious’ ETF

The latest developments in sustainable finance

Engine No. 1 is planning to launch an exchange-traded fund that will focus on socially conscious investing, according to an SEC filing. The Engine No. 1 Transform 500 ETF will seek to “encourage transformational change at the public companies within its portfolio through the application of proxy voting guidelines […] that are based on a commitment to protecting and enhancing the value of its clients' assets and to aligning shareholder and stakeholder interests through favoring actions that encourage companies to invest in their employees, communities, customers and the environment”. Last week the investment firm’s campaign to ‘refresh’ the board of Exxon resulted in at least two of the activist fund’s four nominees winning board positions at the US oil giant.

The SEC has said it will not enforce Trump-era rules on proxy advisors. SEC Head Gary Gensler said in a statement that he has asked the Commission’s staff to revisit restrictions brought in in July 2020, which required proxy advisors to show their voting recommendations to public companies before or at the same time as showing them to clients.

Nasdaq has acquired a majority stake in carbon removal marketplace Puro.earth for an undisclosed sum. The marketplace claims to be the world’s first to offer verifiable and tradeable industrial carbon removal instruments, with customers including Microsoft and SEB. Energy firm Fortum will retain its minority stake in the company.

The Governor of the Bank of England has said that there is no case yet for making banks and insurers set aside more capital to deal with climate risk. Speaking at the Reuters Responsible Business 2021 conference, Andrew Bailey said that: “any incorporation of climate change into regulatory capital requirements would need to be grounded in robust data and be designed to support safety and soundness while avoiding unintended consequences. In my view, the case for this has yet to be clearly established and possibly may never be”.

The Australian Securities and Investments Commission warned five fossil fuel firms that they risked breaking the law over non-disclosure of climate risks in 2020, according to documents obtained by the Australian Financial Review under freedom of information laws. The regulator wrote to Strike Energy, Carnarvon Petroleum, Pancontinental Oil and Gas and Leigh Creek energy, as well as their auditors, warning that their 2019 annual reports were “inconsistent and out of step” with other energy firms “without any clearly discernible explanation as to why this might be the case”. The regulator had not conducted a detailed review of the non-disclosures, it said, but would be monitoring disclosures in 2020 financial reports.

The Australian Capital Territory Parliament has become the first state level government to vote in favour of the Fossil Fuel Non-Proliferation Treaty Initiative. The Australian Capital Territory is the second Australian city to do so, following the lead of Vancouver, Barcelona and Los Angeles in signing the treaty, which aims to stop expansion of oil, gas and coal production.

RPMI Railpen voted against management in 13.5% of its voting in the 2020 AGM season, according to its 2020 stewardship report. The £32bn fund engaged with 33 companies over governance and conduct, adding six to its exclusions list, as well as engaging with 36 companies on climate, and adding another company to its exclusions list over cluster munitions and landmines.