Daily ESG Briefing: Canadian pension investor creates $18bn Sustainable Energy Group

The latest developments in sustainable finance

The Canada Pension Plan Investment Board is combining its Energy & Resources and Power & Renewables groups to form an C$18bn Sustainable Energy Group (SEG). The investment body is described as owning long-term real assets within renewables, conventional power, upstream oil & gas, energy midstream, carbon capture and Liquefied Natural Gas. SEG will be led by Bruce Hogg, CPPIB’s former Head of Power & Renewables. Avik Dey, Head of the firm’s Energy & Resources unit, will spend the next six months as a Senior Advisor to CPPIB, supporting SEG and the Office of the CEO, before leaving to return to what CPPIB calls “his entrepreneurial roots”.

Korea’s National Pension Service plans to introduce tighter ESG criteria for the companies it invests in. While details have not yet been finalised, the pension fund says it will stop investing in firms that do not meet social and environmental standards. ESG has become increasingly important in Korea since the pandemic, with a fivefold growth in socially responsible investments in the country since 2019.

Randal Quarles, the Chair of the Financial Stability Board (FSB), has told G20 Finance Ministers and Central Bank Governors it will present “a coordinated, forward-looking roadmap to address climate-related financial risk” in July. The roadmap will be based on two reports: one on how to promote standardised, good quality disclosures aligned with the TCFD, and the other on the necessary data to assess financial stability risks. Quarles added that the FSB will apply for observer status in the Network for Greening the Financial System as part of plans to work more closely with the central banking body. The FSB runs three climate-related workstreams covering data, disclosures and regulatory/supervisory practices.

Major companies are calling for a moratorium on deep sea mining proposals over fears of damage to marine ecosystems. Google, Samsung, BMW and Volvo are among those to have supported a campaign by WWF, saying the risks of harvesting rocks containing rare metals from the seabed are not fully understood. However, mining companies and marine geologists told the BBC it is necessary to provide raw materials for green technology. 

More than two thirds of institutional investors are seeking more ESG investments, according to a survey by investment manager Nuveen. But while 59% believe ESG can help mitigate headline risk, only 39% agree that it drives alpha. Just over a third think ESG factors are as important as others when evaluating risk/return profiles. Nuveen said that while responsible investing can deliver competitive returns, “clearly there is a need to put more effort into validating the investment proposition along with the positive impact”. 

Blockchain-powered network Data Gumbo is joining The Open Footprint Forum, a consortium that creates open standards for environmental data. It will now help other Forum members, including Shell, Microsoft and Deloitte, tie their operational data to ESG reporting using its automated measurement tools.