Daily ESG Briefing: Most ESG investments perform in line or worse than conventional allocations, says survey

The latest developments in sustainable finance

More than half of investors have said that their ESG investments have performed in line or worse than non-ESG investments, in a Deutsche Bank survey of more than 500 issuers and investors across Europe and the US. It also found that the vast majority of investors that do not already consider ESG factors have no plans to do so within the next two years. 

Boston’s public pension funds have been ordered to divest from fossil fuels, tobacco and private prisons by the end of 2025. Earlier this week the city’s mayor, Michelle Wu, signed an ordinance banning public money from being invested in companies generating more than 15% of their revenues from such activities. This includes the combustion, distribution, extraction, manufacture or sale of coal, oil, gas; fossil fuel products; and utilities with corporate affiliates that derive revenues from fossil fuels. The Boston Retirement System runs around $8bn for beneficiaries.  

Glass Lewis and software firm Diligent have launched a certificate programme designed to help corporate directors be better equipped to oversee climate risk and strategy for their companies. 

The Asian Development Bank’s partnership with HSBC to shut down Asian coal plants is to make its first investment in the next 12 months, according to Australian media. The Energy Transition Mechanism, which is also backed by the Rockefeller Foundation, the IKEA Foundation and the Bezos Foundation, will buy up and prematurely retire coal-fired power stations in the region. The project was created earlier this year to deal with the mismatch between short-term climate targets and the lengthy remaining lifespans of many Asian coal assets. Because ADB and its partners can raise capital more cheaply than many power station owners, it believes it can repay debt obligations faster in order to shut the plants down earlier.     

Minimum capital requirements for fossil fuel financiers is the “silver bullet” for dealing with climate-related financial risks, according to research from non-profit Finance Watch. A new paper published today explores the different prudential tools available to manage climate risks. “The change would force banks and insurance firms to seek out and address [financial climate risk] and build up more capital to absorb inevitable losses brought by events stemming from those risks,” it argues.  A-Silver-Bullet-Against-Green-Swans-capital-requirements-climate-risk.pdf (finance-watch.org)