Daily ESG Briefing: NGFS report explores potential for QE exclusions to support climate

The latest developments in sustainable finance

The Network of Central Banks and Supervisors for Greening the Financial System, better known as the NGFS, has identified nine options for central banks to tackle climate change in their monetary policies, including screening out the worst emitters from bond purchases. In a new report entitled Adapting central bank operations to a hotter world, the NGFS explores possibilities for central banks on lending, asset purchases, and collateral. Options include reducing the collateral value of assets with a higher carbon intensity, and introducing a variable interest rate to reflect counterparties’ climate-related lending.

Aberdeen Standard Investments and Aviva Investors have said that they will not participate in Deliveroo’s Initial Public Offering, due to concerns over workers rights. The food delivery company’s riders are classed as self-employed, meaning they are not entitled to minimum wage, holiday or sick pay. Andrew Millington, Head of UK Equities at ASI, told the BBC that “we wouldn’t be comfortable that the way in which its workforce is employed is sustainable”. Deliveroo is expected to be valued at up to £9bn when it lists its shares in April.

New Zealand Super has been criticised for being out of step with the global responsible investment community when it comes to Western Sahara. Activists recently took the fund to court, arguing its investments in companies tied to imports of phosphate rock from the disputed territory in North Africa contravened the New Zealand Superannuation and Retirement Income Act’s legislation around ethical investment and reputational risk. New Zealand’s High Court ruled in favour of NZ Super, which argued that it had a robust system in place to manage reputational risk and that the interconnectivity of global markets could make it hard to avoid undesirable practices. New Zealand remains one of the only countries in the world to import phosphate rock from the region. 

The UN has added a natural capital module to its Encore tool, which aims to allow users to understand the impact of environmental change on the economy. The tool, run by UN Environment’s World Conservation Monitoring Centre, will now provide a summary on natural capital dependencies for a certain economic activity.

The UK Government has required the Financial Conduct Authority and the Prudential Regulation Committee to consider climate change in their regulatory actions. Both regulators will now be required to take the UK’s Net Zero target into account “when considering how to advance their objectives and discharge their functions”.

Oil Search has become the latest company to adopt the requests of the Say on Climate initiative, and will offer shareholders a non-binding vote on its Climate Change Report at its 2022 AGM. Other major oil and gas firms including Santos, Royal Dutch Shell and Total have adopted similar plans this year.