Daily ESG Briefing: New York insurers invest up to 100% of portfolios in fossil fuels

The latest developments in sustainable finance

The portfolios of New York insurers are less-aligned with the Paris Agreement than many market benchmarks, with many portfolio companies not having Paris-aligned five-year capital plans, according to a study commissioned by major financial regulator, the New York Department of Financial Services. The report, conducted by 2 Degrees Investing Initiative, analysed the 2019 investment portfolios of 250 insurers, finding that carbon intensive sectors made up 17.2% of their equity and corporate bond holdings. One P&C insurer had its entire equity portfolio in the fossil fuel sector, while two other insurers had 40% and 50% of their corporate bond portfolios in fossil fuels.

The German parliament has adopted the government’s Supply Chain Act, requiring companies to address human rights violations in their operations and supply chains. The rules will come into force in 2023, covering companies with 3,000 or more employees. From 2024, they will apply to firms with more than 1,000 employees. The European Coalition for Corporate Justice welcomed the news, but said the Bill falls short of similar rules in the EU and France, which include civil liability clauses. 

The 11 largest Eurozone banks have accumulated a total of €532bn in fossil fuel assets, representing 95% of their total equity, according to research by the Rousseau Institute, Friends of the Earth France and Reclaim Finance. Of the banks, Santander is the least exposed proportionally, with fossil fuel assets totalling 68% of its equity, while Credit Agricole is at the top of the list at 131%. The report claims that any significant loss in the value of fossil fuel assets would weaken the financial strength of the banks, and “severely impair” their capacity to finance the ecological transition.

The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services has finalised plans for its assessment on the causes of biodiversity loss and the change required to address it. The assessment will consider different scenarios in line with the 2050 Vision for Biodiversity and 2030 Agenda for Sustainable Development, as well as seeking to identify factors behind biodiversity loss and changes in ecosystems.

Only 36% of North American firms include ESG factors in their anti-bribery and corruption compliance programmes, according to a report by Kroll. This figure rose to 64% in APAC, with 84% of respondents saying they think ESG factors should be included in programmes. Kroll said that bribery and corruption can undermine ESG initiatives by companies, and that the existence of anti-bribery and corruption programmes within a company can indicate good governance and transparency.