Daily ESG Briefing: UKSIF, CA100+, hedge funds and more

The latest developments in sustainable finance

UKSIF, the UK’s sustainable investment network, has found that two thirds of UK pension funds trustees have fallen foul of a government deadline to disclose their approach to ESG factors including climate change. Consequently, the body has called on regulators to address the “thin and non-committal” approach by funds by establishing a central registry for disclosures and providing additional guidance to address the knowledge gap among trustees with regards to managing ESG risks. Read UKSIF’s analysis here.

La Financière de l’Échiquier (LFDE), a Paris-based asset manager with €8.6bn worth of assets under management, is the latest member of climate-focused investor coalition Climate Action 100+. LFDE brings the group’s membership to 410 investors, representing $41trn worth of assets.

A survey by KPMG, the Alternative Investment Management Association, Chartered Alternative Investment Analyst Association and CREATE-Research has found that 45% of institutional investors have awarded ESG-linked mandates to hedge fund managers “on the view that they offer opportunities to generate alpha”. However, ESG integration among hedge funds is still inconsistent, with 15% of managers categorising themselves as being at the ‘mature’ stage, while 44% and 10% view themselves as being ‘in progress’ and at an ‘awareness raising stage’, respectively.

Great Portland Estates (GPE) has secured a £450m (€530m) ESG-linked revolving credit facility (RCF) with a consortium of five banks – the first to awarded to a UK REIT. The facility incorporates three KPIs: reducing the energy intensity of its portfolio by 40% by 2030, reducing the carbon footprint in the construction of new builds and providing urban greening measures.

Norges Bank Investment Management (NBIM), the manager of Norway’s €785bn sovereign wealth fund, has revoked an exclusion for Drax Group after determining that the British utility has reduced its coal power capacity to less than 30% of total power capacity “by a good margin”. The fund excludes companies which derives 30% or more of revenue from coal. In response, Drax CEO Will Gardiner has announced a target to be carbon negative by 2030.