ESG Briefing: NGFS welcomes nine new members

The Network for Greening the Financial System (NGFS), the green central banking network, has welcomed nine new members. They are the central banks of Brazil, Cyprus, Lithuania, Georgia, Estonia, Latvia and the West African States, in addition to the financial supervisory authorities of Denmark and Malta. Separately, the NGFS will soon release its work on “scenario analysis, supervision practices as well as a status report on financial institutions practices” according to its annual report published earlier this week.

Bank Negara Malaysia (BNM), the Malaysian central bank, is developing an “analytical framework to size the impact of climate change on the financial system and economy” according to its 2019 Annual Report published today. In a speech, BNM Governor Nor Shamsiah Mohd Yunus said that the bank was “actively working” with the NGFS on designing the framework. The exercise would aim to “estimate the relevant time frames in which these risks may materialise”, in addition to understanding how the risks would be transmitted.

Rathbones, the UK-based asset manager, and a coalition of investors representing assets of £3.2trn (‎€3.7trn), are considering abstaining from votes to approve annual reports and accounts at the AGMs of 23 FTSE 350 companies that do not fully adhere to the UK’s Modern Slavery Act. Under the Act, UK companies are required to disclose corporate actions undertaken to eliminate modern slavery within their supply chains. The investor campaign, led by Rathbones, has contacted laggards about the nature of their non-compliance and proposed steps to remedy it.

Rabobank, the cooperative Dutch bank, has signed on as a cornerstone investor to a venture capital impact fund focused on early stage start-ups – a phase in which companies with turnovers less than €1m can face difficulty securing investment. The SHIFT III fund, managed by independent Dutch manager NBI Investors, will invest in companies combining commercial goals with environmental objectives and expects to grow its assets to €65m by the end of the year – making it the largest fund of its kind.

Macquarie’s Green Investment Group (GIG) has closed the acquisition of a 79.8MW Norwegian windfarm, marking its entry into Norway. GIG was formerly known as the Green Investment Bank and was owned by the UK Government. Since its privatisation, it has opened up its investments to other countries. Its latest investment is supported by a 17-year power purchase agreement with metals producer Eramet Norway.

The Japan Exchange Group (JPX) – operator of the Tokyo and Osaka exchanges – has published a handbook on ESG disclosure for listed Japanese companies. While the guide does not provide any “prescriptive” data points, it sets out a framework for companies to “link ESG issues to corporate value” and determine the most material information for disclosure. The handbook is currently only available in Japanese.

The Luxembourg Finance Labelling Agency (LuxFLAG), the Grand Duchy’s sustainable funds label, has announced that assets of labelled funds have surpassed €106.2bn as at end-March. The scheme has grown by 88% over the past year, bringing its total to 196 investment products with 123 under the ESG category, six under Environment, three under Climate Finance, 33 under Microfinance, 21 Green Bonds and 10 with Applicant Fund status.

Ethos, the Swiss pension fund-owned governance body, has published its 2019 activity reports for its collaborative domestic and international corporate engagement programmes. It highlighted the need for new Swiss regulation on corporate sustainability reporting, noting that only a third of the largest Swiss companies reported against the recognised Global Reporting Initiative (GRI) standards despite “many years of intensive dialogue”. Ethos has also included progress reports on its engagement with Nestle and Lafarge Holcim as part of the Climate Action 100+ initiative. 

US lawmakers have called on the OECD to mandate the public disclosure of country-by-country corporate tax receipts, putting it in alignment with the GRI. According to a submission by 33 US senators and representatives to the OECD, current legal requirements, which say that companies need only provide country-by-country data to tax authorities, creates risks for investors who are unable to access a company’s tax information. The US taxation authority reported that in 2017, US firms booked profits of $32bn in Bermuda despite having only 547 local employees.