Daily ESG Briefing: Major Malaysian pension fund pledges to decarbonise

The latest developments in sustainable finance

Malaysia's €189bn EPF public pension fund is aiming to fully decarbonise its investments by 2050, according to remarks made at a recent event. The fund has recently launched a sustainable investment policy and has said that it plans to have a "fully ESG-compliant portfolio" by 2030.

The UK's Investment Association (IA) has declared that it will flag companies which do not report on climate-related risks in its proxy advice, according to a report in the FT. Companies which operate in "high risk sectors" and fail to provide reports aligned to the recommendations of the Task Force on Climate-related Financial Disclosures, will be given 'amber tops' by the IA to alert shareholders to the issue.

Governance mechanisms in Europe lack corporate accountability and the protection of shareholder rights, according to a position paper by the influential CFA Institute. The paper, titled Corporate Governance and ESG Disclosure in the EU, also highlights inconsistencies and contrasting language between the EU’s Sustainable Finance Disclosure Regulation, the Non-Financial Reporting Directive and the green taxonomy. Findings are based on a series of roundtables with investors and the report provides a series of recommendations, including for investors to be “more involved in the process of development of better corporate governance practices.”

Trinity College, part of Cambridge University, says its endowment will exit all fossil fuel holdings. The £1.3bn fund has £9.1m directly invested in companies involved in oil and gas production, extraction and exploration. All direct investments will be divested by the end of 2021, and indirect investments within five to 10 years.

The UK’s Supreme Court has ruled that Uber must classify its drivers as workers rather than self-employed, meaning tens of thousands of Uber drivers are entitled to minimum wage and holiday pay. Experts say the binding decision could leave Uber facing a hefty compensation bill, and may have wider consequences for the gig economy. Meanwhile, a Siberian court has fined russian mining giant Nornickel $2bn over its role in the largest Arctic oil spill ever, which saw 20,000 tonnes of diesel flood the waterways around the city of Norilsk. The company has said that it will not appeal against the fine.

The Bank of England’s Securities Lending Committee has raised a number of concerns over ESG in the Securities Lending Market. At a committee meeting last week, members of the committee noted that short selling of a green company could “create negative press for the securities lending industry on its ESG credentials”. The issue of divergent views on ESG in the US and Europe was also raised – it was noted that in the US, ESG concerns are tied to better risk management, whereas in Europe, considerations are targeted at changing behaviours.

Financial services provider Apex Group has been appointed by private equity fund Elysian Capital to provide it with ESG ratings, advisory services and ‘gap analysis’.