RI ESG Briefing, October 3: Wellington, ING, Rhode Island, As You Sow, Central Bank of Malaysia, Transition Pathway Initiative

Environmental

Wellington Management has partnered with a climate research institute in an initiative to integrate climate science and asset management. The project – a collaboration between $1trn investment management firm Wellington and climate research institute Woods Hole Research Center (WHRC) – focuses on modelling how climate change could impact capital markets, and developing investor tools to improve climate risk assessment and investor outcomes. CalPERS will work with the partners to pilot the application of insights from the project, and WHRC will also publish academic papers about the climate modelling.

Dutch bank ING is to use an open source and “cutting edge” scenario analysis method to steer its €500bn lending portfolio towards meeting the Paris climate goals – a step towards aligning its entire portfolio. ING partnered with the 2˚ Investing Initiative (2˚ii) in early 2018 to extend the initiative’s existing 2°C scenario analysis framework for equity and bond portfolios – the so-called Paris Agreement Capital Transition Assessment or PACTA tool – to corporate lending portfolios.

Governments need to raise carbon prices much faster if they are to meet emissions reductions commitments and slow the pace of climate change, a new OECD report has found.

Only 8% of issuers and 10% of investors globally are aware of the existence of the Task Force on Climate-related Financial Disclosures, the G20 initiative which last year issued recommendations aimed at helping companies disclose the financial impact of climate-related risks and opportunities, a new study has found.

Social

Candidate for Ohio Treasurer of State Rob Richardson has reportedly said he would encourage divestment from prisons and conduct a detailed cost analysis of the state criminal justice system if elected. Richardson – the only black candidate on Ohio’s November ballot – is up against Republican Robert Sprague, who called the divestment plans an overreach of the treasurer’s authority.

The Tobacco-Free Finance Pledge launched with over 120 founding signatories and supporters. The pledge encourages signatories to consider the adoption of tobacco-free finance policies across lending, insurance and investment in line with the United Nations’ Sustainable Development Goals and the World Health Organization Framework Convention on Tobacco Control.

The Central Bank of Malaysia is reportedly due to launch a scorecard which aims to evaluate the “positive social, environmental and economic benefits to society” of Shariah-compliant finance later this week in conjunction with the Global Islamic Finance Forum. The scorecard was developed with a group of five Malaysian banks, along with the Global Alliance for Banking on Values (GABV) and Triodos Bank.h6. Governance

Rhode Island’s state pension fund engaged investee companies from IBM to ExxonMobil on issues including student loans, executive pay and gender diversity in 2018, according to a new report. The report, issued by State Treasurer Seth Magaziner, details the $8bn Employees’ Retirement System of Rhode Island (ERSRI)’s actions around strengthening corporate responsibility this year.

A pesticide disclosure proposal filed with General Mills received a vote of support from around 31% of investors. Filed by corporate responsibility group As You Sow, it called on the US food giant to address and gather data on pesticide use in the company’s supply chain, especially focusing on potential harm to bee and pollinator health.

Companies listed in California will be legally required to have at least one female director on their boards by the end of the year and up to three by the end of 2021 – the first time a US state has mandated gender diversity among corporates. This was among measures signed into law by outgoing Governor Jerry Brown, his last opportunity to veto or approve law before he leaves office.

Malaysia has launched the Institute of Corporate Directors Malaysia (ICDM), “a one-stop centre that caters for all board and director needs, offering a suite of services designed to enhance board and director effectiveness”. The institute will organise education programmes aimed at directors serving on listed boards and provide director-sourcing services to companies among others. The establishment of the Institute was spearheaded by the Securities Commission of Malaysia.

Companies in the steel and cement sectors have made “modest” progress in managing climate risks and reducing emissions, according to two new reports by the Transition Pathway Initiative (TPI), the engagement initiative backed by asset owners worth over £7trn in assets. TPI, whose members include US giant pension fund CalPERS, and Sweden’s AP1 and AP4, was last week named as a data partner for the new $30trn investor engagement initiative called Climate Action 100+.

Nasdaq has announced the launch of two new market segments in Stockholm. Nasdaq Stockholm Sustainable Commercial Papers lists green commercial papers issued by the Swedish real estate company Vasakronan AB, and Nasdaq Stockholm Sustainable Products lists structured products issued by Credit Agricole Financial Solutions, arranged by Swedish brokerage firm Garantrum Fondkommission, and are built from Credit Agricole’s green bond framework.

65% of investors say climate change is their top ESG priority, with around 50% expecting to have divested from fossil fuels by 2030, with a new report has found. The study, made by Newsweek Media Group’s Vantage Thought Leadership division, also found that 60% of investors surveyed have a specific policy on the SDGs.