Daily ESG Briefing: Royal London issues greenwashing warning over UK green govvie

The latest developments in sustainable finance

The UK Government must pay close attention to how its debut green bond is structured to avoid greenwashing, Royal London Asset Management’s Head of Responsible Investment, Ashley Hamilton, has warned. Writing to the UK’s Chancellor, Rishi Sunak, the firm welcomed the recent raft of announcements around green finance, but noted “that the risk of greenwashing is high and that a lot of attention will have to be placed on how these bonds will be structured”. Hamilton added that “one common issue that we see with green bonds is that the debt is often not ring-fenced, meaning that it could be serviced by cash produced from other, less environmentally friendly activities”. 

Liontrust Investment Partners, Aberdeen Standard Investments and Canaccord Genuity Group were all buyers of shares in Impax Asset Management, sold last week by BNP Paribas Asset Management. Liontrust Investment Partners, a 100% funds subsidiary of Liontrust Asset Management, took its stake in Impax to 8.12%. Aberdeen Standard now holds 6.4% and Canaccord Genuity now holds 4.97%.

Corporate bond issuers with higher ESG ratings experience better risk-adjusted returns, according to new research by MSCI. The study, which looked at the performance of MSCI Investment Grade and High Yield Corporate Bond Indexes between 2014-2020, attributed the outperformance to “higher excess returns and lower excess risk”. The research also revealed issuers with higher ESG ratings had “significantly lower drawdowns during the downturn periods, indicating the inherent defensive characteristics of an ESG strategy”.

The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) is inviting nominations of experts from governments and other stakeholders to assist its “scoping” work on developing a methodology to assess the “impact and dependence of business on biodiversity” .

Today, 47 faith-based institutions from 21 countries have announced they will divest fossil fuels as a “practical response” to the unfolding climate emergency. The move comes as part of the dedicated Operation Noah initiative. To date, more than 400 religious institutions have committed to divest. 

US Petrochemical firm Chevron Phillips has responded to investor pressure by publishing its first climate report, articulating how it is addressing the growing threats from climate change-induced storms, flooding and sea level rise. Last year, US non-profit As You Sow filed proposals at co-owners Phillips 66 and Chevron, requesting enhanced disclosure on the risks of hazardous pollutant releases from its petrochemical plants during extreme weather events. The proposals achieved strong investor support of 54.7% at Phillips 66 and 46% at Chevron.