Daily ESG Briefing: Swiss Re and Munich Re rule out controversial coal fund

The latest developments in sustainable finance

Swiss Re and Munich Re, the two largest reinsurers in the world, have ruled out investing in a proposed AUD$250bn mutual fund which would finance and underwrite coal projects that the private sector is unwilling to support. The fund was proposed by Australia’s National Party as a way to address the increasing number of insurers who have either exited or blacklisted coal projects. The two reinsurer’s commitments – provided to campaign group Stop Adani – comes as an insurance policy for the Adani Carmichael project is due to expire, after existing provider Apollo pledged to not renew its coverage.

KPMG has pledged to spend at least $1.5bn on “ESG initiatives” over the next three years, with a focus on “its responsibility to improve its impact on the world”. The accounting giant will develop its in-house audit technology to “enable delivery of ESG assurance with the same quality and rigor that KPMG firms apply to financial audit work”. It will also establish five hubs dedicated to regional support in the Americas, APAC and Europe, as well as two dedicated to corporate decarbonisation and ESG advisory services, it said. 

The International Monetary Fund has called on policymakers to consider providing financial incentives for sustainable investment funds, as existing capital is “too limited in size and scope” to have a major impact on climate change. In its latest Global Financial Stability Report, the institution also recommends that policymakers tighten ESG data and disclosure standards, and ensure proper regulatory oversight to prevent greenwashing.

Dutch investment manager Robeco has published an analysis of water risk, outlining where large-scale investments are needed in both emerging and developed markets to improve efficient water use, increase water supplies, ensure water quality, and mitigate scarcity in agriculture, energy and industry – as well as within urban municipalities and rural communities. 

Almost half of the 1,030 companies assessed in the latest Global Coal Exit List (GCEL) assessment are developing new coal assets, according to NGOs Reclaim Finance and urgewald. The assessment also found that less than 5% of the companies, which all operate in the thermal coal value chain, have announced a coal exit date. 

Planet Tracker has become the latest organisation to call on investors to use short-selling strategies to help create sustainable strategies. The campaign group, an affiliate of Carbon Tracker, wrote in a blog post this week that betting against certain polluting companies allows for a more efficient market, and can be used to manage risks. It added that investors could also use the approach to align their investments with their beliefs, and call out firms seen to be overstating their sustainability credentials. In September, RI reported that the Head of Responsible Investment at hedge fund AQR Capital, Christopher Palazzolo, has argued that short selling “does wonders for climate hedging”. 

Banks Standard Chartered, ANZ, NAB and Westpac are facing shareholder resolutions from campaign group Market Forces on climate change. The UK’s Standard Chartered is being asked to align its actions with its Net Zero commitment, in a proposal co-filed with asset owner Friends Provident Foundation. Australasian lenders ANZ, Westpac and NAB are being asked to stop financing new fossil fuel projects and reduce exposure to coal, oil and gas in order to align with Net Zero by 2050. 

The sovereign wealth funds of Egypt, Gabon, Nigeria and Greece have joined the One Planet Sovereign Wealth Fund Initiative this week. The group, which now hosts some 20 funds, focuses on the role of sovereign wealth investors in meeting climate change commitments.