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Daily ESG Briefing: EOS will advise investors to vote against heads of Paris-misaligned firms in 2021

The latest developments in sustainable finance

Proxy and stewardship advisor EOS at Federated Hermes has written to 124 listed UK companies laying out its new Corporate Governance Principles for 2021, which will guide voting recommendations for the £938bn of assets it advises. EOS will now recommend voting against the chairs of FTSE 100 companies with less than 20% female representation across the executive committee, and against the chair of the board of any FTSE 100 company without a director from an ethnic minority background or a credible plan to rapidly secure one. “For the first time, a vote against the chair of the board or responsible directors of companies will be recommended where a company’s strategy is materially misaligned with the goals of the Paris Agreement,” it said in a statement. “A vote against would also be recommended where companies do not demonstrate sufficient management of climate-related risks, such as those below a Level 4 management rating from the Transition Pathway Initiative.” On pay, EOS wants companies to be able to justify executive remuneration, particularly if they have furloughed or cut staff under COVID. 

S&P Global has agreed today to buy IHS Markit for approximately $44bn, including debt, according to reports. The move is the latest in a long line of acquisitions by big firms wishing to position themselves as leaders in the provision of data to investors.  

Singaporean sovereign wealth fund GIC (formerly the Government of Singapore Investment Corporation) has become the latest addition to the investor-led engagement initiative Climate Action 100+. Alongside this, GIC has joined the Asia Investor Group on Climate Change. 

Amundi has warned the State Bank of India it will ditch one of the lender’s green bonds from its Amundi Planet Emerging Green One fund if it follows through with its plan to provide finance to Adani’s controversial Carmichael coal mine in Australia. As well as being a buyer of the bank’s green bonds, Amundi has a partnership with the State Bank of India called SBI Funds, which leads a number of engagement efforts for Climate Action 100+. 

The Institute for Energy Economics and Financial Analysis (IEEFA) has claimed Korea Electric Power Corp’s recent green bond failed to attract leading sustainable investors, despite being 10 times oversubscribed. In a new report, titled KEPCO's Green Bond Failed the ESG Market Test, IEEFA Bonds Analyst Christina Ng said the issuer’s management of ESG issues and its ongoing investment in overseas fossil fuel projects were red flags for many ESG investors. 

The European Central Bank will ask banks to self-assess their climate risk in coming months, ahead of a 2022 supervisory climate stress test. The announcement comes alongside a report which found that banks are providing insufficient climate-related and environmental risk disclosures. Following the self-assessment, the ECB identify key gaps in information and consult with the banks.

The International Accounting Standards Board has launched a public consultation on possible new accounting requirements for mergers and acquisitions involving companies within the same group. The deadline for comments is 1 September 2021.

Chilean pension funds will have to disclose how they incorporate ESG risks into their investment process under new rules from the Superintendencia de Pensiones, effective May 3rd 2021. Alongside this, plan executives must also incorporate metrics to measure the impact of climate change on their portfolios.