Daily ESG Briefing: FTSE 350 DC schemes increasingly offer ESG-focused default option

The latest developments in sustainable finance

Almost a third of FTSE 350 defined contribution schemes have an ESG focus in their default investment strategy – up from 17% in 2020 – with a further third offering an ESG-focused self select option, according to a new survey by Willis Towers Watson. The consultancy’s annual report found that just under half of schemes planned to integrate an ESG focus into their default strategy in the future, with 72% of schemes citing consistency with corporate ESG policies and 57% compliance with new regulation as their reasons for doing so. Some schemes also said that adding an ESG focus had the potential to increase member engagement, with 37% of respondents citing the opportunity for long-term performance. 

First Super has awarded an A$125m (€85m) ESG fixed-income mandate to Cameron Hume. The investment in Cameron Hume’s Global Fixed Income ESG Fund takes the fixed-income specialist’s AUM past the $1bn mark.

Some of the largest shareholders in Norwegian telecommunications firm Telenor have welcomed its decision to pull out of Myanmar after a Danwatch report accused it of facilitating the repression of protestors by the military government. APG said that it encouraged “this step, as well as any other steps taken by investee companies that may contribute to reinstatement of civil liberties and human rights protection in Myanmar”. Kamil Zabielski, Head of Sustainable investment at Storebrand Asset Management, said that “Telenor’s departure will send a strong signal to the regime that it is not good business when serious actors see no option but to pull out. Others may follow suit. Our impression is that Telenor has addressed the situation seriously and evaluated the situation continuously based on various scenarios and developments on the ground. To pull out was most likely the last resort”. Other major investors including Folketrygdfondet, CDPQ and Vanguard declined to comment.

AXA has become the first major insurance broker to commit to not providing insurance services to the East Africa Crude Oil Pipeline. Seven banks, including BNP Paribas, Credit Agricole and Société Générale have said they will not finance the 1,500 km pipeline, and NGOs have written to another 10 insurance brokers asking them to commit to not insure the pipeline.

Canada’s newly established University Pension Plan has appointed SHARE as an engagement provider, and will join the University Network for Investor Engagement as well as taking part in SHARE’s broader engagement programme. The University Pension Plan is a new joint defined benefit scheme which launched at the start of July with assets of CAD$10.5bn (€7bn), and will consolidate the plans of four Canadian universities in January 2022.

Eight of the world’s largest insurers have banded together to launch the Net Zero Insurance Alliance. AXA – which will chair the group – Allianz, Aviva, Generali, Munich Re, SCOR, Swiss Re and Zurich Insurance Group, made the announcement at the G20 climate summit in Venice. Members of the alliance will set science-based targets for five year intervals, and commit to publicly reporting on their progress against targets. 

FE fundinfo and MSCI have signed an agreement which will allow FE fundinfo to include MSCI’s ESG fund ratings and data across its products. Users will be given access to a wide range of data including fund carbon intensity, UN global compact violations and green and brown revenue generation.

A third of central banks and sovereign wealth funds have increased their focus on ESG in the past year, new research by Invesco has found. Invesco’s annual survey of sovereign asset managers found a consistent increase in central banks and sovereign wealth funds with a specific ESG policy, rising from 11% of central banks in 2017 to 38% in 2021. Improved returns were cited as a major reason for responsible investing. While only 37% of respondents said that their original motivation was improving returns, 52% said that it had become their current motivation.