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Daily ESG Briefing: Varma’s sustainability chief calls for price on nature

The latest developments in sustainable finance

Hanna Kaskela, Director of Responsible Investment at Finnish insurer Varma, has called for the creation of prices and metrics for natural capital assets to allow investors to account for the contribution of biodiversity in their portfolios. According to a blog by Kaskela, investors are still “light years” away from being able to factor in biodiversity in equity analysis despite data showing that “more than half of the global gross domestic product is either partly or largely dependent on nature”.  She referred to expectations that such metrics could be launched at the next UN Biodiversity Conference in October. 

The Reserve Bank of Australia has warned that the country’s coal mines are at risk of becoming ‘stranded’, based on climate scenarios developed by green central banking group the Network for Greening the Financial System. “As global appetite for coal tapers off from 2030… Australian coal-related investments are at risk of becoming ‘stranded assets’ as lower export volumes and prices weigh on firm profitability,” it said in a report released yesterday. According to government figures, Australia was the world’s largest exporter of metallurgical coal and the second largest exporter of thermal coal in 2020.

Norges Bank Investment Management (NBIM), the manager of Norway’s $1.4trn sovereign wealth fund has called for more clarity on the application of the OECD Guidelines for Multinational Enterprises, which sets out international rules on responsible business conduct. According to a recent submission, NBIM said “additional attention from the OECD … in situations where an entity may be directly linked to a potential norm violation through a business relationship, but not itself causing or contributing to a potential violation, would be beneficial”. NBIM has itself been reported multiple times for alleged violations of the guidelines over human rights abuses carried out by companies in which it holds minority shareholdings. 

The Ontario Teachers’ Pension Plan Board (OTPP) will seek to reduce portfolio carbon emissions intensity by 45% by 2025 and 67% by 2030, compared to its 2019 baseline. The announcement of the $160bn pension fund’s interim emissions targets comes after it pledged to completely phase out its portfolio emissions by 2050, earlier this year. OTPP said that it will “actively reduce its portfolio carbon emissions, while concurrently contributing to building the net-zero economy” by issuing green bonds, investing in clean energy and pushing its portfolio companies to decarbonise. 

A US congressional committee has launched an investigation on the role of the fossil fuel industry in spreading “disinformation about the role of fossil fuels in causing global warming”. “We are deeply concerned that the fossil fuel industry has reaped massive profits for decades while contributing to climate change that is devastating American communities, costing taxpayers billions of dollars, and ravaging the natural world,” said the committee in letters sent to ExxonMobil, BP, Chevron, Shell, the American Petroleum Institute and the US Chamber of Commerce. Executives of the organisations have been asked to testify at a hearing on October 28. 

New South Wales courts have rejected an appeal from Korean utility KEPCO over its proposal to build a coal mine in north-west Sydney. Planning permission for the mine had been refused two years ago by the state’s Independent Planning Commission after it found that the mine did not have plans to minimise its Scope 1, 2 and 3 emissions to the extent required under state law, and would have “unacceptable” impacts on the area’s groundwater.

New Jersey is set to become the second US state to divest Unilever over the decision of its subsidiary, Ben & Jerry’s, to cease operating in Palestine’s occupied West Bank at the end of 2022. The state’s Division of Investment said that it made a preliminary determination, in conjunction with ISS, that maintaining its investment in Unilever would be a breach of a state law barring it from investing in companies boycotting Israel. Unilever has been given 90 days to respond. Earlier this month, Arizona state Treasurer Kimberly Yee said it would divest Unilever holdings for similar reasons. A spokesperson for Unilever previously said to RI: “Unilever has a strong and longstanding commitment to our business in Israel. Ben & Jerry’s has also made it clear that although the brand will not be present in the West Bank from 2023, it will remain in Israel through a different business arrangement.” Israeli settlements in occupied Palestinian territory are considered illegal under international law.