Daily ESG Briefing: KLP adds 14 firms to exclusion list

The latest developments in sustainable finance

KLP, Norway’s largest pension fund, has blacklisted 14 major weapons makers and their suppliers which include Elbit Systems, Raytheon and Rolls Royce. The move was made after the $80bn fund broadened its controversial weaponry divestment criteria to include the “key components” which would be included in such weapons, in addition to the manufacture of entire weapons. The criteria will apply mainly to nucleur weapons, cluster munitions and anti-personnel mines.

The Institute for Energy Economics and Financial Analysis (IEEFA) has warned that a move by the South Korean government that could see gas in its draft green taxonomy would “hurt [its] green finance credentials”. According to IEEFA this would “likely lock South Korea into a high-emitting future” and “risk deterring serious ESG investors”. The draft taxonomy – known locally as the K-Taxonomy – is expected to be finalised by the end of 2021.

The Powering Past Coal Alliance (PPCA), a group of countries, cities and companies which commit to exiting coal, have announced 28 new members which include NatWest, HSBC, Lloyds Bank, Fidelity International, Impax Asset Management, Generation Investment Management, Ethos Foundation and SCOR Global Investments. In total, 11 financial institutions have joined the PPCA, bringing the total number of finance members to 33.  

PwC and the World Economic Forum have found that the introduction of global carbon pricing could help limit the rise in temperatures to 2° C above pre-industrial levels and raise revenues which could offset any adverse economic effects. The conclusions were made in a joint report published yesterday by the two organisations. The report also called for low-income countries to be included in the scheme via a lower carbon price floor compared to high-income countries and financial assistance from a global fund financed by carbon pricing revenues.  

The Partnership for Carbon Accounting Financials (PCAF), a global initiative developing ways to assess the climate impact of lending books and investments, has announced a collaboration which would help banks in developing countries fill in data gaps on corporate emissions. The move would see the independent Joint Impact Model (JIM), a free tool which calculates greenhouse gas emissions, align with PCAF standards to allow financial institutions to report on their financed emissions from 2022. The JIM has access to a wider dataset for developing countries.

Candriam, an ESG boutique owned by US insurance major New York Life, has welcomed a move by Facebook to shut down its facial recognition system and delete one billion ‘faceprints’ from its photo tagging service. Benjamin Chekroun, Candiram Stewardship Analyst, said: “It is a welcome development and is line with [our] Investor Statement on Facial Recognition, launched earlier this year, and which more than 50 investors have already signed.” 

New research from research and shareholder body the Australasian Centre for Corporate Responsibility (ACCR) has found that sexual harassment is a material financial risk for companies on the back of scandals at AMP Capital, QBE, Fortescue Metals Group, BHP and Rio Tinto. According to the ACCR, incidents of harassment “reveal significant future problems for companies in terms of profitability, labour costs, and stock performance”. 

There is limited consideration of climate-related risks in “areas of traditional actuarial work” such as valuation, reserving and capital work, according to a new report from the Institute and Faculty of Actuaries (IFoA). It is the first information-gathering exercise from the IFoA which looks at the involvement of actuaries in climate-related risk. According to feedback received by the Institute, organisations believed that actuaries should speak up when products and services did not stand up to claims made on climate-related risks.