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Daily ESG Briefing: NZ Super says carbon exclusion policy cuts risk and adds return

The latest developments in sustainable finance

The New Zealand Super Fund’s carbon exclusion policy under its Climate Change Investment Strategy has outperformed the unadjusted index by about 60 basis points per annum since it was announced in 2016, according to an end of year message from NZ Super CEO Matt Whineray. “So not only has this approach reduced what we considered to be an insufficiently rewarded risk, it has also added return,” Whineray wrote. More broadly, due to the Strategy meeting its 2020 targets of reducing the fund’s emissions intensity by 20% and its ownership of fossil fuel reserves by 40%, it now aims, by 2025, to reduce the emissions intensity of its portfolio by 40% and fossil fuel reserves by 80%. 

The Rockefeller Foundation and U.S. International Development Finance Corporation (DFC) have signed a Memorandum of Understanding (MOU) with the aim to end energy poverty by promoting investment in Distributed Renewable Energy around the world. The DFC will invest up to $2bn in distributed renewable energy and the Foundation will provide up to $50m to de-risk DFC investments. And they will co-develop a multi-partner global platform to mobilise additional investment.

The coronavirus pandemic and a slew of natural disasters in 2020 have helped to increase the awareness of ESG investing amongst investors in the Asia Pacific though overall retail demand in the region remains lukewarm, according to Cerulli Associates. The research and consultancy firm pointed to strong growth in ESG exchange-traded fund assets, which have grown from $1.3bn in 2018 to $4.4bn in June 2020.

The Renewables Infrastructure Group (TRIG), the London-listed renewable energy investor, has exchanged contracts to invest in Phoenix SAS, a holding company which owns a portfolio of operational wind and solar renewable energy assets in France. 

The Asean Capital Markets Forum (ACMF) will conduct a study on the development of a common green, sustainable, and transitional taxonomy to foster the region's sustainable finance network, as part of its next five-year action plan. More broadly, the network of capital market regulators for the ten Asean jurisdictions has committed to improving levels of transparency and disclosure, continuing regulatory harmonisation, intensifying capacity building, amplifying communication and awareness, and strengthening cooperation and coordination.  

A group of institutional investors, led by SRI firm Green Century Capital Management, has filed resolutions at the Archer-Daniels-Midland Company and Bunge Limited over concerns about their contributions to deforestation and native vegetation clearance in Latin America, particularly Brazil. The coalition claims that although many grain traders, including ADM and Bunge, have commitments to eliminate deforestation from their supply chains, their operations and supply chains continue to have substantial exposure to deforestation and native vegetation conversion. 

Purpose Investments, the investment arm of Purpose Financial which has an ‘ESG always motto’, has announced that its assets under management have surpassed $10bn; as part of this milestone accomplishment, it will donate $100,000 to Second Harvest, Canada’s largest food rescue charity. In addition, the team is committing to contribute at least 1,000 hours of volunteer time to different charities and organizations in our communities.

MEP Markus Ferber has asked the European Central Bank (ECB) whether it sees any risks to financial stability, as well as its mandate, if it integrates sustainability considerations into its operations, as part of its monetary policy review. In addition, Ferber – from the centre-right European People's Party grouping –  inquired whether the ECB would need to abandon its principle of market neutrality if its focus were to shift towards sustainability.