ESG Briefing, June 27: New SRI body formed in Canada, UK Court overturns boycott guidelines

A round-up of the latest ESG developments

Environmental

Quebec-based network Finance Montréal (FM) will absorb the activities of the SRI-focused Finance and Sustainability Initiative (FSI), the body responsible for developing SRI strategies in the province. The move will result in the creation of the Finance and Sustainability Initiative of Finance Montréal (IFD-FM), which will “bolster FM’s efforts to foster industry cooperation in the responsible investment sector”, according to a statement. Among other initiatives, FM released the Declaration of Institutional Investors on Climate-Related Financial Risks in October 2017 which has been signed by investors representing more than $1.2trn AUM.
The China-led Asian Infrastructure Investment Bank (AIIB), which claimed at its inception two years ago to be “lean, clean and green”, is allegedly financing a coal project in Myanmar, according to a report from a group of NGOs. Bank Information Center Europe (BIC Europe) and Inclusive Development International say that the AIIB’s investment in the Emerging Asia Fund is contributing to the expansion of the Shwe Taung cement plant in Myanmar, which includes doubling the output of the coal mine that supplies it. The paper coincides with a second report, launched by BIC Europe and the Indian Centre for Financial Accountability, which says a planned $200m investment into India’s $2.1bn National Investment and Infrastructure Fund would threaten to revive a host of stalled projects in the country potentially including coal, power, petroleum, railways and roads.
French bank BNP Paribas is supporting an Indian initiative aiming to turn millions of farmers’ practices 100% chemical-free by 2024. The Sustainable India Finance Facility, a partnership between UN Environment, BNP Paribas, and the World Agroforestry Centre, will fund the transition through a mixture of commercial and development finance.
ESG research provider RepRisk has released a report on the ESG issues faced by coal-fired power plants in Bangladesh, India and the US. Focusing on risks such as global emissions and local community impacts, the research pulls together RepRisk’s combination of AI and human analysis.h6. Social

The UK Court of Appeal has overturned a High Court ruling that last year found government guidance to Local Government Pension Scheme (LGPS) funds about boycotts, sanctions and divestments relating to foreign and defence policy was unlawful. The case had been brought by campaign group the Palestine Solidarity Campaign and LGPS member Jacqueline Lewis.  While the government guidance acknowledged that LGPS authorities were entitled to base decisions upon non-financial factors, it barred divestment policies directed “against foreign nations and UK defence industries”, other than where formal legal sanctions had been put in place by the government. However, UK Court of Appeal judges has this month overturned the High Court judgement ruling that LGPS funds “should not pursue policies that are contrary to UK foreign policy or UK defence policy”. 
InvestEU, the EU’s successor to the Juncker Plan, will have a €4bn InvestEU ‘Social Window’, one of the recommendations from the High Level Task Force on Investment in Social Infrastructure led by former Italian Prime Minister Romano Prodi. InvestEU is a €15.2bn programme that will allow the EU budget to provide a €38bn guarantee facility to catalyse up to €650bn in investments for sustainable growth, job creation and innovation. Fiorenza Lipparini and Filippo Addarii, co-founders of consultancy PlusValue, who sat on the social infrastructure taskforce said: “We are encouraged by the new emphasis on social investment. We are passionate about the sector and called for a €1bn outcome-based fund. The proposed InvestEU exceeds our expectations.” They have called for experts in social innovation and impact investing to be included in advisors to InvestEU.

Governance

The not-for-profit Focusing Capital on the Long Term Global has launched a series exploring how leaders can drive long-term behaviours. The two reports that kick off the series focus on investor-corporate dialogue and the role of boards.