ESG Briefing, May 4: Amundi, LGIM, AXA among backers of new initiative on working conditions

Environmental

SEB’s inaugural green bond has helped reduce CO2 emissions by close to 220,200 tonnes – equivalent to 140,000 cars running 12,000km per year – according to a new report detailing its environmental impact. The proceeds of the kr4.9bn (€500m) bond, which was issued in February 2017, been used to finance projects in renewable energy, sustainable forestry, green buildings, and clean transportation in Sweden, Norway, and Finland. To date, the Swedish financial group has facilitated the issuance of green bonds with a total value of $17.7bn (€14bn).

Barclays has stated that it has “no appetite” for financing projects in UNESCO World Heritage Sites and Ramsar Wetlands in a statement document on the issue published last month. The statement covers both the financial group’s corporate banking and investment banking client activities, focusing specifically on the mining, oil and gas, and major infrastructure industries. It comes as environmental non-profit WWF published research showing that seven out of ten UK consumers would consider ditching banks over environmentally damaging projects in World Heritage sites.

US-based consulting firm Cambridge Associates has found that ESG investments within its clients’ portfolios have more than doubled in the past five years – rising from $4bn to $9.5bn. It also found that more than 130 of its global clients, including endowments and foundations, pensions, and family offices, have already invested in ESG and impact strategies.

Social

Investors representing over $10tn (€8.3tn) in assets – including Amundi, Legal and General, and AXA – have called for greater disclosure on working conditions and supply chains from companies, as Shareaction’s Workforce Disclosure Initiative (WDI) published its inaugural report. The WDI, which seeks data from companies on how they manage issues like diversity, health and safety, precarious contracts, and supply chains, received disclosures from 34 companies– employing nearly 3.5m people – to its pilot survey covered by the report. The initial phase of the initiative was funded by the UK Government’s Department for International Development (DFID) and is being run in collaboration with NGO Oxfam and SHARE, the Canadian responsible investment association.

36 institutional investors representing $109bn in assets have written to the recently appointed CEO of US oil giant Chevron urging him to embark on “a new path forward in dialogue with shareholders”, as concerns mount over a $12bn lawsuit brought against the company by Ecuadorian Amazon communities. The investors – led by US SRI firm Zevin Asset Management – are calling on Michael Wirth, ahead of the company’s annual meeting at the end of the month, to “enter a constructive dialogue on pressing issues that threaten Chevron’s long-term financial stability”. The investors also cite the political and human rights risks affecting areas such as Nigeria and Myanmar and the existential threat of climate change as issues to be addressed.Legal and General, the UK financial services giant, is reportedly set to address the UK’s ‘chronic shortfall’ of affordable homes with a new business aiming to provide 3,000 new homes a year within the next four years. The firm said it was currently in the process of recruiting a management team to run the new division.

Private equity giant KKR has entered the impact investing space with a new business targeting investments in companies that have societal or environmental benefits, Reuters reports . The new business will reportedly will seek investments in smaller medium-sized companies focusing on areas such as renewable energy, education, and environmental management. It will be run by Robert Antablin, previously KKR’s head of energy private equity for the Americas, and Ken Mehlman, KKR’s global head of public affairs.

Governance

UK based engagement specialist Hermes Equity Ownership Services (EOS) recommended a vote against scandal hit Volkswagen’s nomination of two candidates to its supervisory board at its annual meeting (3 May), stating that their appointment would result in board with almost zero independent representation. Michael Viehs, Hermes’ Associate Director of Responsibility stated that the nominations of Marianne Heiß and Wolfgang Porsche “casts doubt on whether the supervisory board has really understood that a governance overhaul remains paramount in the light of the emissions scandal”. Hermes has called for an external supervisory board and corporate culture review, and also for the German car maker to enter in to a dialogue about the effects of climate change on its business model.

New guidance aiming to “demystify” ESG for defined contribution pension schemes’ trustees has been published by the Defined Contribution Investment Forum (DCIF), a membership of investment firms, including: Axa, Northern Trust, and Franklin Templeton. The guidance seeks to “give trustees some practical steps towards incorporating responsible investment”. The also report states that it expects “momentum” on the issue of ESG to build “quickly” as members’ awareness increases.