Daily ESG Briefing: Investors accuse SEC of withholding key analysis on rule changes

The latest developments in sustainable finance

The heads of a slew of investor bodies have penned a letter accusing the US Securities and Exchange Commission (SEC) of withholding analysis that could bring into question its efforts to change rules around proxy voting in the country. A memo from the SEC’s Division of Economic and Risk Analysis, published last month, estimated a dramatic reduction in the ability and rights to file proposals if the changes were introduced. The letter, signed by Amy Borrus, Sanford Lewis, Mindy Lubber, Fiona Reynolds, Brandon Rees, Lisa Woll and Josh Zinner, said a reduction in shareholder proposals could impact value for institutional investors, “but the SEC’s economic analysis failed to account for it, either qualitatively or quantitatively”. The investors call for a new public comment period on the proposals, to allow respondents to account for the new information.

Analysts at HSBC Global Research say they “believe that some oil majors' efforts in low-carbon energy in coming years could be completely negated by planned upstream growth”. In a note, the team asks whether “oil companies deserve a place in 'net zero' investor portfolios” and compares the approaches taken by BP and Total. “For BP, the challenge is partly one of providing the market with confidence around the new financial framework that accompanies its bold corporate (and climate) ambitions,” the findings state. “For Total, we see its CMD aimed at enhancing its 2050 plans' credibility while offering a balanced investment case, possibly with a view that changing less may be better for now. We also note that Total has outperformed BP by 30% since mid-March, giving some initial insight into market receptiveness to material climate-linked corporate changes.”

The International Organization of Securities Commissions, known as IOSCO, has announced plans to wade into the debate around standardising ESG disclosure by setting up a taskforce to translate different standards into “a more cohesive, more transparent and [ . . .] more standardised” form. It said it will identify “commonalities” among existing frameworks to make it easier to compare company information.

Johann Ple, a Portfolio Manager at AXA Investment Managers, has said that a win for Joe Biden in the upcoming US elections would be a turning point for the country’s green bond market. “If Biden was to win in November and pursue his clean energy agenda – including his pledge to sign the US back up to the Paris Agreement on day one – we would expect to see not just growth of the green bonds market globally but also a rebalancing between the US market and its Euro counterpart,” he said, adding that it would spur on large US corporates to secure funding for green transitions. 

SICO BSC, an asset manager focused on the Middle East and North Africa, will begin embedding IdealRatings’ ESG data into its research platform, in a move it claims is one of the first times ESG performance will be assessed in company reports in the region. The data set by IdealRatings provides performance summaries, constituent rankings highlighting best-in-class and bottom performers.

FinnCap has released materials to help small companies improve their ESG credentials in the eyes of investors. The financial services firm has created a 15-point scorecard based on data from 102 small- and mid-cap companies and a survey of small-cap-focused fund managers. Recommendations include: obtaining key environmental data points; applying policies on the environment, discrimination, community outreach and ethical practices; and promoting board equality.