ESG Briefing, August 9: Global Compact warns against cherrypicking SDGs in new guidelines

The latest ESG developments

Environmental

Businesses should report on both their positive and negative impacts on the SDGs, a new guide released by the Global Reporting Initiative (GRI) and the United Nations Global Compact has urged. The publication, Integrating the SDGs into Corporate Reporting: A Practical Guide, discourages businesses from selecting SDGs on what is easiest for them to report on, and promotes focusing on what accounts for the highest priorities and, therefore, is material for their business. Read the full report here.
Lloyds Banking Group has announced it will no longer extend finance to new coal-fired power stations or thermal coal mines. This policy extends to new clients who derive a majority of income from the fossil fuel. However, existing clients who fall under this category will remain able to secure funding to “actively support their transition to lower carbon models”, according to a statement. Lloyd’s Group Director of Commercial Banking said that the bank remains committed to support businesses which are “diversifying their business models away from fossil fuel”. Lloyds joins a growing list of banks who have announced exclusionary policies with regards to coal.
The US Securities and Exchange Commission will not enforce action against Exxon Mobil for its policy of leaving the value of its oil reserves off its balance sheet, media reports have confirmed. The decision marks the end of a year and a half long inquiry focused on the oil giant’s climate change-related accounting.
The Ontario Municipal Employees Retirement Scheme is in “advanced discussions” with Indian renewable energy producer ReNew Power to raise $300m in funds, according to media reports. The news confirms that ReNew Power is exploring fresh funding options following the delay of its Goldman Sachs-backed IPO, the proceeds of which it planned to use for redemption of green bonds, and funding acquisitions and other strategic initiatives.
The European Commission has said
Germany’s state support for electricity self-suppliers using efficient cogeneration (combined heat and power) plants is in line with EU rules and poses “minimised distortion of competition”. EU State aid rules allow support for cogeneration schemes if it is needed to trigger investment and does not lead to overcompensation. Since August 2014 the production of renewable power has been supported through the a surcharge on electricity users – including users producing their own electricity, though CHP self-suppliers are granted reductions.h6. Social

New York’s Common Retirement Fund is to purge its investments in companies that own or operate private prisons after Comptroller Thomas DiNapoli approved a new divestment policy, according to media reports. The fund’s holdings in prison operators CoreCivic and the GEO Group represent less than $10m of its $206.9bn in assets. New York City was the first major US public pension system to fully divest from prison companies last year following allegations of human rights abuses within the industry.
Investors have withdrawn a resolution aimed at bolstering opioid-related oversight following a productive engagement with major opioid distributor Cardinal Health. The resolution, filed by ten members of the Interfaith Center on Corporate Responsibility for the 2018 proxy, requested disclosure around risks posed by the US opioid crisis. Cardinal Health agreed to report to shareholders on governance measures implemented since 2012 to monitor and manage financial, legal and reputational risks related to the crisis by 30 March 2019.
A new index that scores companies on how they help consumers eat more healthily is to be launched by the Access to Nutrition Foundation (ATNF) in September. The US Access to Nutrition Spotlight Index will rate and score the ten largest food and beverage manufacturers in the US on their policies and practices to help consumers – especially those who lack access to nutritious, affordable food – make healthier choices.
The Netherlands’ Coolinvestments Group has signed up to The Better Cotton Initiative, which supports sustainable and ethical cotton production. Its membership now stands at 37 civil society organisations and 95 retailer and brand members, representing more than 350 brands.

Governance

All asset managers and investment funds will face “ongoing cost and effort” if they are to comply with the EU’s General Data Protection Regulation (GDPR), Cerulli Associates’ Europe managing director André Schnurrenberger has warned. Cerulli, a global research and consulting firm, says operating costs have increased for most organisations, with asset managers facing a particular challenge because of the tendency of the industry to work with third-party suppliers of services. These costs, Cerulli says, as of mid-2018 have been absorbed by the investment funds, the management companies, and the data processors with which they work with little impact on investor clients. The comments come alongside a Cerulli report which found GDPR advances within the investment industry inadequate despite improvements.