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Daily ESG Briefing: S&P ESG index has outperformed benchmark since inception

The latest developments in sustainable finance

The S&P Dow Jones ESG Indices has outperformed its mainstream parent index by 2.21% since inception last January, according to the latest figures. “It is difficult to attribute a specific reason to ESG outperformance,” said S&P in a statement, “But it is welcome to see that a rules-based selection criteria driven by ESG principles has led to the selection and removal of companies that has driven outperformance”.

The European Investment Bank (EIB) and the European University Institute (EUI) have launched a new Chair to connect their respective work on climate change. The EIB Chair on Climate Change Policy and International Carbon Markets – ‘EIB Climate Chair’ for short – will link EUI researchers with the EIB and engage with policy-makers in Europe and beyond over the next five years on key issues such as carbon pricing and sustainable finance. 

The Cost Transparency Initiative (CTI), a UK market-led campaign to encourage transparency in the billing of investment charges, has launched additional tools for private equity and real estate investments. A year ago, CTI released a standardised framework to allow the comparison of investment costs and charges by pension schemes and investors. CTI is a partnership between trade bodies the Pensions and Lifetime Savings Association, the Investment Association and the Local Government Pension Scheme Advisory Board, a statutory body.

Speculative buying prompted EU carbon credit prices to spike by 8% to €24.52 on Thursday last week – a four-month high. The news came off the back of investors anticipating tightening supply in coming years as rules are ramped up, as broader markets were buoyed from positive Coronavirus developments in China. On Twitter, Redshaw Advisors said the growing influence of longer-term speculators may lead to further gains, despite the weak fundamentals.

The Reconciliation and Responsible Investment Initiative, a Canadian organisation focused on indigenous communities and responsible investment, has launched a guide to aligning portfolios with indigenous stewardship protocols and traditions. The paper, called Investing for Today, Tomorrow, and Future Generations, is aimed at indigenous trustees and other investors.

Several Rio Tinto shareholders have expressed concern over possible reputational damage to the miner after it blew up two sacred Aboriginal sites in Western Australia last month, according to an article in the FT, which does not name the dissenting investors. The article said one shareholder worried about "the  serious long-term ramifications for the business in Australia, which is fundamentally dependent upon social and legal licenses to expand mining operations", while analysts signalled the backlash from the explosions could result in tougher heritage legislation. Meanwhile, UK-based investment manager EdenTree has written directly to the company to ask if it had downgraded community, cultural and land rights.