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ESG Briefing, February 26th: JP Morgan ramps up sustainability efforts

The latest developments in sustainable finance

SynTao Green Finance, the Chinese ESG research house part-owned by Moody’s, has rated companies in China on their response to Coronavirus, saying the epidemic’s economic and social impact on the country acts “like an extreme stress test for listed companies”. It has created an ‘ESG Epidemic Control Valuation model’ looking at the measures taken against the Coronavirus epidemic, “more convincing facts on values, governance ability and relationship with stakeholders of listed companies can be recognised in a different scenario,” it said in a report. “Therefore, the ESG evaluation of companies under emergences such as the Coronavirus epidemic can be a good supplementary of the overall ESG assessment.”

JP Morgan has committed to “facilitate” $200bn in financing this year “for transactions that support the objectives of the SDGs”. In a statement, the bank did not elaborate on what constituted ‘facilitation’, but said it would focus on areas including “increasing access to housing, education and healthcare” and “advancing infrastructure, innovation and growth”, as well as dedicating $50bn to green initiatives aligned with the clean financing target it set itself in 2017. It has also become a member of Climate Action 100+; committed to creating ESG fixed-income indices; launched an institution focused on scaling up finance for developing countries; set up a group to advise clients on ESG and another to advise corporates on M&A transactions “that support their carbon optimisation objectives”; and will begin publishing ESG research and “investing in ESG expertise”.

Campari Group, the Italian spirits listed firms, transferred its registered office to the Netherlands. So far, there are at least seven Italian firms which have moved to the Netherlands, claiming they want to benefit from the country’s corporate laws, which allow companies to grant loyalty shares, and therefore enhanced voting rights, to long-term shareholders – often controlling ones. Very few Europe countries allow such arrangements (perceived as a breach of the ‘one share, one vote’ principle for equity investors), although Spain is the latest to seriously consider its introduction.

CalPERS has said that its holdings in a Chinese firm blacklisted over human rights violations resulted from a passive allocation to FTSE and MSCI benchmarks – over which it has no control. The Californian public pension scheme was responding to criticism from Congressman Jim Banks over its investment in Hangzhou Hikvision, a Shenzhen-listed surveillance company which is banned from doing business with US companies due to its role in a state-led crackdown on Muslim minorities in Western China. According to CalPERS CEO Marcie Frost, the fund’s “global investment portfolio is necessary to meet its 7% investment return target”.

A4S, the sustainable accounting non-profit set up by Prince Charles, has released a joint statement with Chief Executives from 13 accountancy bodies calling on the profession to do more to help organisations address climate change. This includes “providing relevant financial and strategic analysis, disclosure, scenario analysis and assurance”, and supporting policy development  consistent with net zero emissions and adaptation.

The Institutional Limited Partners Association (ILPA), the global membership organisation for private equity firms, has published a roadmap on best practices to advance diversity and inclusion internally and within the industry. The resource is open-source and is open to external submissions.