Daily ESG Briefing: UK’s Brunel awards ‘climate transition’ mandate to Neuberger Berman

The latest developments in sustainable finance

UK local government pension pool Brunel has awarded a £1.3bn ‘climate transition’ mandate to Neuberger Berman. The multi-asset credit strategy will focus on sub-investment grade debt and is aligned with the goals of the Paris Agreement, with interim emissions reduction targets for 2025. It seeks to outperform the cash rate by 4-5%. 

Japan’s Financial Services Agency has urged investors to “develop considerable insight regarding sustainable development” in draft guidelines for the country’s social bond market. The guidelines, released this week in English, are out for public consultation. 

AXA’s green investments rose by €4.4bn in 2020, reaching €16.1bn, according to its latest climate report. Half of the increase came from green bond investments. AXA is targeting €25bn of investment in green bonds, infrastructure debt and equity, impact investments and ‘energy-optimised’ real estate loans by 2023. 

RPMI Railpen, the £32bn UK pension scheme for the railways sector, has published its net-zero portfolio plan, which it says is aligned with the UK’s decarbonisation policy and the Intergovernmental Panel on Climate Change’s Special Report on Global Warming of 1.5°C. The plan covers RPMI’s listed equities and corporate and sovereign bond holdings, which make up around 65% of its portfolio. It targets a 25-30% decrease in financed emissions by 2025, with a 50% reduction by 2030.

Almost three quarters of FTSE 350 firms mention ESG reporting initiatives such as the Global Reporting Initiative or Sustainability Accounting Standards Board in their strategic reports, but only 23% mention climate change in their financial statements, according to PwC’s annual reporting review. Half of firms reported against the recommendations of the Taskforce on Climate-related Financial Disclosures, with a further 31% disclosing plans to do so in future – likely spurred on by regulatory moves to make reporting mandatory for large listed issuers. However, of the 63% of companies which made a carbon reduction commitment in their reporting, just 6% referred to it in their financial statements.

The combined emissions of 100 oil and gas companies will account for nearly 80% of the global carbon budget, with the sector burning through its own carbon budget by 2037, according to the World Benchmarking Alliance’s Climate and Energy Benchmark. The assessment of oil and gas firms’ emissions reduction targets and performance against their 1.5℃ pathways concluded that the 10 highest performers were all European companies, with Neste receiving the highest score at 57.4 out of 100, followed by Engie at 56.9 and Naturgy Energy at 44.8. The worst performer was US petroleum refiner PBF Energy, which received a score of 0.  

The UK’s Financial Conduct Authority has been urged to investigate the London Stock Exchange’s decision to list Belarusian sovereign bonds, amid claims that proceeds from the bonds may have financed arms to support the controversial regime. The Belarusian Coordination Council, an opposition group established in the aftermath of last year’s presidential election in Belarus, claims that the Lukashenka regime had already begun repressing protestors and arresting independent presidential candidates by the time the bonds were listed on the London Stock Exchange.