Daily ESG Briefing: Temasek takes stake in impact investor LeapFrog as part of $500m deal

The latest developments in sustainable finance

Singapore-based asset manager Temasek has made what is described as “the largest ever single commitment to an impact investor” in a $500m deal with Australia’s LeapFrog Investments, which also sees it take a minority stake in the firm. LeapFrog specialises in impact investments in Asia and Africa and runs four private equity funds. It claims the companies in those funds have grown at an average of 30% per year, and it has so far sold its stakes on to Prudential, Allianz, Swiss Re and Standard Chartered. The new strategic partnership involves Temasek putting money into LeapFrog’s funds, taking an interest in the company, and providing growth capital to finance its expansion. Temasek will take a non-executive seat on LeapFrog’s board, but other personnel remain the same. Amit Bouri, CEO and Co-Founder of the Global Impact Investing Network, said the deal “reflects a new level of scale for the global impact investing industry”. 

Wells Fargo has become the last of the six biggest US banks to commit to aligning its financing with Net Zero, following pressure from investors. Goldman Sachs, Citigroup and Bank of America have all made similar commitments in recent weeks. Wells Fargo said it will publish interim targets for carbon intensive sectors by the end of 2022.

Japanese trading house Sojitz has announced plans to withdraw from oil and coal as part of its new sustainability strategy. It will halve its investments in thermal coal by 2025, with an aim of completely divesting from both thermal coal and oil by 2030, it said. 

UK-based educational charity Ufi VocTech Trust has pledged to align its £50m endowment with the Sustainable Development Goals. The trust, which provides adults with access to technology that can help them with vocational training and education, has appointed Credit Suisse to develop its impact-aligned approach. 

The OECD’s human rights grievance system has been criticised for its decision on a complaint made against UBS over its exposure to controversial surveillance firm HikVision. The Swiss OECD National Contact Point (NCP) said UBS was liable under OECD guidelines for investment products it sold that included HikVision, but not for investments in HikVision made on behalf of clients. BankTrack and OECD Watch have called the latter decision “deeply problematic” creating a “massive, easy escape route for investors to avoid application of OECD guidelines”. They have called for the Swiss NCP to reconsider its position. 

FactSet subsidiary Truvalue Labs has launched an ‘SDG monitor’  – a free tool to provide investors with information on how 21,000 companies align with the UN’s Sustainable Development Goals. US financial services firm Cowen has also agreed to include ESG ratings based on Truevalue data in its equity research reports.

Due diligence systems in sectors that extract oil, gas, metals and minerals “tend to focus more on the identification of ESG risks than on the assessment and management of these risks”, according to a new report by the Responsible Mining Foundation. Based on due diligence and transparency practices at 25 commodity trading and production companies, the research found a lack of transparency on many basic issues, limited ESG due diligence and poor implementation of ESG commitments. It recommended greater disclosure and take up of global standards.

The ESG market is set to double in size in 2021, according to research by UK-based asset manager OnePlanetCapital. Three quarters of the more than 2,000 UK retail investors surveyed said that investing in businesses with a positive environmental impact was important to them, with 12% planning to move investments to ESG funds in the coming year and a further 17% planning to move investments in 2022 or later.