Daily ESG Briefing: State Street to push big emitters on climate transition plans

The latest developments in sustainable finance

State Street will in the coming year “launch a targeted engagement campaign with the most significant emitters in our portfolio” to encourage disclosure aligned with its expectations for climate transition plans, the investment giant said in an annual letter to companies. It added it will in 2023 hold companies and directors accountable for failing to meet these expectations. The letter added the investor expects portfolio companies in the US, Canada, UK, Europe and Australia disclose in line with the TCFD, highlighting that one-third of companies in the S&P 500 do not do so. On diversity, State Street said that from 2023 it will expect companies in major indices in the US, Canada, Europe and Australia to have at least 30% women directors and will expect all portfolio companies worldwide to have at least one woman on their boards, expanding a policy previously focused on developed markets.  

Half of FTSE 100 companies disclosed data in 2021 on workforce practices to investors through the Workforce Disclosure Initiative (WDI) hosted by ShareAction, the NGO said today – an increase from 39 such companies doing so in 2018. Overall, a record of 173 publicly listed companies also took part in the initiative backed by 62 investors with $8.6trn in assets under management. The WDI provides investors with in-depth disclosures of companies’ treatment of workers on topics ranging from pay and job security to diversity and harassment practices. However, the majority of listed firms have not yet taken up the WDI’s call to disclose workforce information, with some engaging in discussion with the NGO to do so shortly, including Amazon, while others such as Alphabet, Boohoo Group and Starbucks, have yet to “meaningfully engage” with the initiative, ShareAction said.   

The UK government is being sued over its Net Zero strategy by ClientEarth .  Current policies, the NGO says, will not reduce emissions enough to meet the UK’s legally binding carbon budgets – targets which limit the total amount of greenhouse gases that the UK can emit over five year periods on the road to net zero.  A UK government spokesperson said: “The Net Zero strategy sets out specific, detailed measures we will take to transition to a low carbon economy, including helping businesses and consumers to move to clean and more secure, home-grown power, supporting hundreds of thousands of well-paid jobs and leveraging up to £90bn of private investment by 2030.” 

MSCI has announced a partnership with impact data and analytics company GIST. The latter uses scientific and economic modelling to provide a quantitative measure of the actual impacts of a company’s business operations on the UN Sustainable Development Goals in economic terms.   

The Investment Integration Project, an applied research and consulting firm focused on systemic risk and sustainable investing, has published a guide for investors to address income inequality. The guide outlines how investors can integrate systemic considerations into the investment process to address income inequality. It also provides step-by-step processes for action on labour and workers’ rights, CEO compensation and taxes.