Daily ESG Briefing: Irvine becomes second US city to approve divestment programme in a week

The latest developments in sustainable finance

The City of Irvine in the US will begin divesting from companies that aren’t aligned with its “social and environmental values” following a council vote this week. Through a 3-2 vote on its investment policy for 2022, the US city agreed to ditch firms involved in fossil fuels, the military and weapons, and private prisons, as well as those with ‘anti-LGBTQ’ policies. Earlier this week, Boston's public pension funds were ordered to divest from fossil fuels, tobacco and private prisons by the end of 2025. 

Nearly half of all Japanese listed companies and investors responsible for more than 64% of the country’s domestic equities have taken part in a governance survey by Sumitomo Mitsui Trust Bank. The results show, while 72% of investors would like companies to use a ‘double materiality’ approach to sustainability – explaining how their business activities impact the environment and society as well as what ESG risks they face – only 13% of firms currently do so. 16% of prime companies have reported in line with the Taskforce on Climate-related Financial Disclosures, and 13% disclose their diversity policies for management. The study was overseen by academics at Japan’s Hitotsubashi University.

The European Commission published its plans for a European Single Access Point to host corporate sustainability information yesterday. The document, which was presented as part of the Capital Markets Union Package for 2021, contributes to the EU’s plans to “improve the ability of companies to raise capital across the EU and ensure that Europeans get the best deals for their savings and investments”.

The diverging approaches being taken by the International Sustainability Standards Board and the EU to developing sustainability reporting rules is “setting up a needless power struggle” and could accomplish nothing, according to Blackstone’s incoming ESG chief, Jean Rogers. Rogers, who set up the Sustainability Accounting Standards Board in 2011, said the ISSB was “another voluntary standards setter with no enforcement capabilities”, while the EU standards “actually have teeth” in an interview with Climate & Capital.  “So far, ISSB is just blah, blah, blah,” she added in a nod to recent criticism of governments' climate action by Greta Thunberg. 

Almost half of boards have a dedicated sustainability committee, according to a survey of 250 investor relations officers by Citigate Dewe Rogerson. While 46% said they had such a committee – up from 37% last year – most (81%) said that less than a tenth of management pay packages are linked to ESG metrics. A PwC report also launched this week claimed that more than half of FTSE100 companies tie executive pay to ESG measures. The Citigate Dewe Rogerson survey, which focused on large companies globally, also found that 72% of boards don’t include social or environmental issues as a standing agenda item at meetings.