Daily ESG Briefing: OTPP and Wellington partner on physical climate risk

The latest developments in sustainable finance

Ontario Teachers’ Pension Plan and Wellington Management have paired up to work on physical climate risk. The two have a longstanding partnership more broadly, but have brought in think-tank Woods Hole Research Centre on the new initiative, which “will provide deep insights to Ontario Teachers’ investment teams on the medium- and long-term financial implications of physical climate-related risks”. OTPP CIO Ziad Hindo said that physical climate risk posed a particular threat to real assets.

Pension giants Alecta and PGGM have signed a co-investment agreement for credit risk sharing to “support societies in challenging times by financing part of the banks’ credit risk”. The deal will involve banks transfer part of the credit risk of a loan book to investors, freeing up capital and giving the two pension funds “exposure to unique credit risk that is not otherwise available”.

The responsible investment arm of Institutional Shareholder Services (ISS) has launched the ISS ESG SDG Impact Rating. It assesses how companies are managing negative externalities in their operations, minimising negative impacts, and making use of existing and new opportunities in their products and services to contribute to the achievement of the SDGs. 

Operation Noah, the Christian climate change charity, has published a new report calling on UK churches to divest from fossil fuels, highlighting the gap between the business plans of major oil companies and the Paris Agreement. The report shows that Shell and BP plan to spend $149bn and $71bn respectively on exploration and extraction of new reserves between now and 2030. Several UK Churches have already divested from fossil fuels and the report calls on remaining churches to join them. 

DZ BANK has signed up to the UN Principles for Responsible Banking, making a commitment to step up sustainability and transparency. The voluntary initiative offers signatories guidance on integrating sustainability into their most important business areas. 

Global Witness is leading a coalition of organisations on human rights, that has published “practical guidance for investors” on the topic and warning that “the role of companies and their investors in safeguarding human rights is coming under increasing scrutiny” in light of COVID-19. Other members of the coalition include The Business & Human Rights Resource Centre.