ESG Briefing, May 11: S&P and Trucost launch SDG tool to screen companies

The round-up of the latest ESG developments


Investors including APG, Calvert Research and Management, Impax Asset Management, the Nordic Investment Bank and PGGM have advised S&P Dow Jones Indices and Trucost on a new SDG tool to assess companies’ contribution to the Sustainable Development Goals. The tool will be fully launched in October, but the prototype has been put out for market feedback. It claims to evaluate firms’ net alignment with all the goals by looking at the positive and negative impacts of goods, services, supply chains and operations. Initially, it is being applied to 11 companies that helped develop the tool, including Iberdrola, Orsted and S&P Global. Companies will be measured against peers and benchmarks, and the assessments may eventually become the basis of new products such as SDG-lens indices, as well as being offered to companies for their own analysis.
Issuance in the green bond market in Q1 2018 broke the record for the same period in 2017, rising by 9% to $34bn, with issuance in April rising 32% year-on-year, SEB research has found. According to SEB Head of Climate & Sustainable Financial Solutions, Christopher Flensborg, the green bond market issuance figures will reach $175bn for 2018, with upside potential to reach $210bn. The full report can be found here


Big Issue Invest (BII), the Big Issue’s social investment arm, has revealed that it has made £10.7m (€12.1m) in investments in 68 mission-led organisations in 2017/18. Its Social Impact Report 2018, which was unveiled at the House of Lords May 2, says BII is tackling poverty in the UK where change is needed most. With a total current investment portfolio of £26.4m, 43% of the organisations BII has invested in offer services to “people with additional needs or disadvantages”. Group Chair of The Big Issue Group, Nigel Kershaw, said: “A lot of great organisations struggle to access small to large-scale loans, so we set out to provide support for those social enterprises and charities making a genuine difference within their communities.

Foro Impacto, a working group aimed at preparing Spain’s membership of the Global Steering Group for Impact Investment, was launched on May 8 by UnLtd Spain, Open Value Foundation and Eurocapital Wealth Management EAFI. Foro Impacto will coordinate the work to create a Spanish National Advisory Board (NAB) that will formally apply for GSG’s membership in one year’s time. José Luis Ruiz de Munain, co-founder of UnLtd Spain, is the Executive Director of Foro Impacto, whose strategic partners are GAWA Capital, an impact investing advisory firm; Ship2B, a foundation that supports social impact startups; and CREAS (Capital Riesgo en el Ámbito Social) an impact investment manager.French SRI manager Mirova has released a paper on how to achieve impact and address environmental, social and governance issues in the pharmaceutical and medical sectors. The investment house recently also announced that it had realigned its portfolio to under 2 Degrees, in alignment with the Paris climate goals. For the full report, see here


BT has come under fire for choosing to maintain its dividend despite its pension deficit hitting £11.3bn. BT is undergoing a restructuring plan, reportedly seeking to reverse a two-year-long slide. Reacting to the news, Justin Cooper, CEO of Link Market Services, part of Link Asset Services, said: “BT has paid its shareholders £10.7bn in dividends in the last decade, almost the size of its current pension deficit. Shareholders still need the company to invest for the future, and they are on the hook for the company’s pension scheme one way or another.”

US university endowments reportedly decreased their ESG investments last year, an annual survey by the National Association of College and University Business Officers (Nacubo) has revealed. According to the study, while responsible investment is growing gradually, this year 16% of participants had investments with high ESG rankings in their portfolios, down from 17% the previous year. Commenting on their hesitance to further commit to responsible investment, universities quoted in the study say that investment decisions reflect performance expectation, or that their fiduciary responsibility is to maximise long-term returns. Principal of the Intentional Endowments Network Georges Dyer said: “There’s a perception this is value-based and not financial so this would interfere with their fiduciary duties. But increasingly […] people say, ‘If you’re not doing this you may be violating [your fiduciary duties]’.”

MSCI has released the second part of its Foundations of ESG Investing series. Following on from part 1, which looked at how ESG affects the valuation and performance of companies, part 2 assesses how an ESG-oriented policy benchmark can promote greater consistency across portfolios. Read the full report here.