ESG Briefing: AllianzGI sees 560% growth in sustainable assets

Allianz Global Investors increased sustainable investments to €165bn by the end of 2019 – amounting to growth of 560% in three years. The firm has introduced 28 sustainability or impact strategies, through a combination of new products and updates to existing strategies.

Harvard University has announced it intends its endowment fund to achieve net-zero greenhouse emissions by 2050, claiming to be the first university to commit to Paris alignment. Harvard already has a five-year transition plan, The Path Forward, and is part of Climate Action 100+. McGill University has also made commitments recently regarding its endowment, pledging to axe carbon-intensive companies, and invest more than $75m into sectors including renewables, cleantech, energy efficiency, pollution prevention and sustainable water. 

MP Pension has boosted the value of its portfolio by $40m after divesting $100m in fossil fuel stocks in September, it has revealed, and is now urging other investors to follow suit in light of the current downturn. The $20bn Danish fund, which invests on behalf of academics and educators in the country, initially sold out of ExxonMobil, BP, Chevron, PetroChina, Rosneft, Royal Dutch Shell, Sinopec, Total, Petrobras and Equinor, and has continued exit. CIO Anders Schelde said: “We see the oil price dropping even further over the coming months, as the economic downturn continues to unfold” although there might be a rebound in three to six months that he says “might be tempting to jump on” for some, but “oil companies won’t be a good long-term investment.”

Lothian Pension Fund, the local authority pension scheme for the city of Edinburgh, plans to measure the carbon intensity of its equities portfolio within the next three years.  The Fund, which is Scotland’s second largest local authority pensions scheme with assets of £7.8bn (€9bn), made the announcement in its recently published 2020-21 Operating Plan.

Ping An Insurance has become the first Chinese company to sign up to the UN Principles for Sustainable Insurance (PSI), which launched in 2012. More than 140 institutions have signed up, including insurers representing more than 25% of total premiums globally. Ping An was also the first Chinese asset owner to sign up to both Climate Action 100+ and the PRI.

New York City Comptroller, Scott Stringer, has urged three major insurance providers to sever ties with the coal industry in letters sent to executives. AIG, Berkshire Hathaway and Liberty Mutual were the target of the campaign, which calls for an end to underwriting coal projects and companies, as well as full divestment of “any holdings in companies that extract or distribute coal”. The New York City Pension Funds, overseen by Comptroller Stringer, have significant holdings in all three insurance companies.  

The PRI has published a new report detailing the key learnings from a three-year collaborative engagement on cyber governance. The World Economic Forum Global Risks Report has, for a number of years, ranked cyber security as one of the top 10 risks that the world will face in the next 10 years. Representing over $12trn in assets, 55 institutional investors engaged 53 portfolio companies from five different sectors to understand how they are preparing for cyber-related risks, using governance as a proxy for resilience. Read the report here.

The amount raised by ESG-linked loans – those that are tied to an issuer’s ESG performance – more than doubled in the 2019 financial year compared with the previous year, according to research by MSCI. The findings also highlight other recent innovations, including transition bonds that fund a move away from “brown” projects, and target-linked bonds, which have a coupon linked to the achievement environmental or social targets.

US private prison Corecivic has had its credit rating downgraded again with weakened access to capital because of ESG concerns cited as a “primary factor”. RI reported in the summer that US ratings agency Fitch had downgraded Corecivic from BB+ to BB following a number of big US banks exiting the sector over ESG concerns. That rating has now been revised down further to BB-.

Credit rating agency DBRS Morningstar has stressed the importance of P&C insurance companies including ESG risk factors in their risk profiles, as well as the need for reporting to be mandatory and standardised, it its commentary entitled ‘P&C Insurance: Regulatory Oversight Essential for Broad Adoption of ESG Reporting Principles’.