Daily ESG Briefing: ICMA launches Sustainability-Linked Bond Principles

The latest developments in sustainable finance

The Green & Social Bond Principles, the body run by the International Capital Markets Association to set expectations for use-of-proceeds bonds, has expanded its reach to sustainability-linked products. At its AGM yesterday, it launched the Sustainability-Linked Bond Principles, which outline what is required for bonds that assess the sustainability performance and trajectory of an issuer, rather than the projects identified to receive funding from a bond. Sustainability-linked bonds and loans often include more favourable interest rates to borrowers that meet targets on ESG over the lifetime of the debt. The Green & Social Bond Principles also updated the Social Bond Principles in light of the boom in issuance as a result of the COVID-19 crisis.  

Norges Bank Investment Management has launched a “practical guidance tool” for companies on integrating child rights into their sourcing policies and practices. The guidance has been developed in partnership with global charity UNICEF and a number of big apparel and footwear companies, as part of an initiative set up in 2017. “The tool also contains metrics that companies can use to monitor and report on their own processes and on outcomes at factory level,” NBIM said in a statement. 

Asset manager CANDRIAM and LSE’s Grantham Research Institute have announced a new three-year partnership to support research on a sustainable and inclusive climate recovery. Research from the Sustainability, Investment, Inclusion and Impact Initiative will focus on how investors can accelerate climate action alongside positive social impact and place the ‘Just Transition’ at the heart of the global recovery from COVID-19. 

One of eight pooled Local Government Pension Scheme funds, the Brunel Pension Partnership, has published its first Responsible Investment and Stewardship Outcomes Report. The report reiterates a commitment to contribute to a “more sustainable and resilient financial system” and highlights the fund’s success in achieving its target of reducing carbon intensity of active portfolios by 7%.

New research from KnowTheChain has revealed that major tech companies are failing to prevent forced labour in supply chains. The research found that 76% of the world’s 49 largest ICT companies scored below 50/100 on their anti-forced labour efforts. No company was able to show it protects trade union rights. Hewlett Packard Enterprise came top in the benchmark with 70/100, followed by HP (69) and Samsung (69). At the other end of the scale were Panasonic (13), Broadcom (10) and Xiaomi Corp (0). The research also detailed how the pandemic is exacerbating abusive conditions, including cramped accommodation for workers which increases risk of infection and migrant workers not covered by government protections. 

Newton Investment Management has published a new study which finds that nearly a third of US investors, led predominantly by millennials, would prefer to actively engage with management of unsustainable companies than to only invest in sustainable companies. The research also found that more than half of investors choose a sustainable-investing retirement option when they are made aware of it. The study demonstrated a significant divergence between millennials and older Americans on the subject of sustainable investing, with 86% of adults aged 39 or younger interested in sustainable investing, compared with 70% of older Americans (50+).

According to the Institute for Energy Economics and Financial Analysis (IEEFA), renewable energy continues to break records despite the impact of the COVID-19 pandemic. As renewable and battery costs continue to decline, the IEEFA is predicting an increase in stranded thermal asset risks.