Daily ESG Briefing: Swiss pension funds sign tobacco-free pledge

The latest developments in sustainable finance

Swiss pension funds Abendrot and Nest Sammelstiftung have become the latest signatories to the Tobacco-Free Finance Pledge. They signed up at a roundtable conducted by the network which was chaired by Pavan Sukhdev, the environmental economist who is President of WWF International. The Tobacco-Free Finance Pledge highlights financial institutions that have implemented tobacco-free finance policies; currently 152 organisations have signed up, representing $11trn total assets under management. This announcement follows Triodos Bank also signing the pledge last week.

Util, a new ESG data firm, has launched proprietary ESG analytics which measure the alignment of 50,000 listed companies with the UN Sustainable Development Goals and other sustainability themes. The platform uses AI-driven processes to capture insights from peer-reviewed academic journals, which then feeds into assessments of company product revenues. Util was a part of the Investment Association’s inaugural fintech accelerator programme, and has advised the Impact Investing Initiative and the Impact Management Project.

The Principles for Responsible Investment has released new guidelines for manager selection, appointment and monitoring aimed at embedding ESG considerations in asset owner-manager relationships. The guides include 12 clauses that can be used when writing and agreeing contractual agreements with managers and a set of questions or disclosures that can be used by asset owners during the monitoring process.

US sustainable finance network US SIF has released an eight-point set of policy recommendations for the next US administration to “support sustainable investment and encourage the development of a stakeholder-centric approach to managing companies”. This includes the creation of a “White House Office of Sustainable Finance and Business” and the appointment of Securities and Exchange Commission and the Department of Labor leadership with sustainable finance experience.

 An unnamed $10trn investor group will call on the world's largest mining companies to disclose their policies on “management of cultural heritage" later this week on the back of a scandal at Rio Tinto which saw the departure of chief executive Jean-Sebastien Jacques and two other executives. According to a report by Sky News, the campaign is backed by more than 60 institutional investors including the Church of England Pensions Board, Legal & General Investment Management, M&G Investments, Schroders and the Universities Superannuation Scheme.

The UK social impact investment market is now worth £5.1bn – this is a six-fold increase from eight years – according to figures released by Big Society Capital. The social impact investor’s annual market estimate also found that social property funds, which did not exist previously, now account for the largest segment of the market; these funds use investors’ capital to create positive social impact, for example, providing specialist, supported housing for people with learning disabilities.

Investment in UK green and ethical funds has grown significantly from £25.3bn in 2019 to £33.5bn in 2020, according to figures compiled by the EIRIS Foundation. The charity, focused on responsible investment, concluded this reflects a growing demand for investment products that incorporate consumer concerns for environmental and social issues.  

The Intercontinental Exchange has announced that its ICE Data Services will be integrating ESG risk data from RepRisk into its ESG Reference Data service. “As ESG continues to gain prominence, investors are increasingly looking for granular, timely and accurate data to help uncover ESG related risks and opportunities in financial markets,” said Lynn Martin, President of Fixed Income and Data Services at ICE.

Industry commitments to net zero deforestation in the consumer goods sector are unlikely to be met, unless commodity producers in the supply chain rapidly improve their management of deforestation risks and opportunities, according to research by the CDP. The non-profit’s Zeroing-in on Deforestation particularly highlighted that out of cattle, soy, palm oil, and timber companies, the first two, which include the likes of Glencore Agriculture, Minerva Foods, and JBS fare “very poorly” when it comes to employing practices to prevent ongoing deforestation.

The European Commission has issued its first ever social bond under the EU SURE programme; the €17bn instrument was 13 times oversubscribed, with demands exceeding €233bn. The bond will be used to safeguard jobs and fight the rising unemployment in European countries stemming from the COVID-19 pandemic and the resulting economic crisis. It consists of two tranches – a €10bn tranche with a 10-year maturity and a €7bn tranche with a 20-year maturity – and will be listed on the Luxembourg Stock Exchange.