ESG briefing: Oxford university exits fossil fuels as Crispin Odey fund joins PRI

The Council and Parliament of Oxford University in the UK have agreed to fossil fuel divestment. In the latest edition of its gazette, the university's parliament “instructs Council to divest from the fossil fuel industry, including but not limited to the Carbon Underground’s top 200, requiring an immediate restriction on all direct investment in any fossil fuel exploration and extraction companies and an immediate restriction on new investments in funds which invest primarily in fossil fuel extraction companies (including coal, oil and gas, exploration and extraction, as an addition to Oxford University’s existing restriction on thermal coal and tar sands)”. It also calls on the Council to “require the University’s endowment managers to actively engage with fund managers per the Oxford Martin Principles to request evidence of net zero business plans across Oxford’s entire portfolio of investments, including but not limited to fossil fuel companies. Congregation instructs Council to require an annual review of any remaining fossil fuel investments for Paris- and IPCC-aligned, “hard” net zero plans, and to request that the University’s endowment managers communicate a restriction on any fossil fuel companies which fail to meet that standard to all fund managers, and review and reallocate investments as appropriate”. 

 A group of investors including APG Asset Management, the Church Commissioners for England, Sumitomo Mitsui Trust Asset Management and UBS Asset Management have written to Korea Electric Power Corporation urging it to reconsider current plans to finance new overseas coal-fired power plants. The firm is a target company under the Climate Action 100+ initiative, and the statement was coordinated by the Asia Investor Group on Climate Change.

Controversial billionaire Crispin Odey has signed his hedge fund up to the Principles for Responsible Investment this week. The high-profile investor was widely criticised for betting against the pound during the 2006 Brexit referendum – reportedly making £220m in a single day – and his firm, Odey Asset Management, has so far scored big financial wins from the COVID-19 crisis. Odey Asset Management has joined the PRI in the last few days, along with a slew of others, including: Grupo Catalana Occidente, Régime de retraite de l’Université de Sherbrooke, Pool Reinsurance, Consilium, Solstein Capital, Altra Investments, Excelsior Energy Capital, KanAm Grund Group, Mediterra Capital, Pichardo Asset Management, KIRAO AM, Rothschild & Co Wealth Management Switzerland and Germany, Holland Capital, Sissener,  PEI Asset Management, Bridgewater Associates, OREA CAPITAL.

Norges Bank Investment Management, which this week named Nicolai Tangen as CEO to replace Yngve Slyngstad, has disclosed a 5% stake in Royal Dutch Shell in a filing with the US Securities and Exchange Commission. It’s also disclosed similar stakes in mining giant BHP and cruise line operator Carnival. It comes as NBIM said in a report this week that, since 2012, risk-based divestments have increased the cumulative return on the equity reference portfolio by around 0.27 percentage point, or 0.02 percentage point annually.

195 long-term institutional investors with more than $4.7trn under management have backed a letter to companies in response to the outbreak of coronavirus. RI reported earlier this week that the letter had been put out to the investor community for sign-ons. A full list of signatories can be found here. 

Generation Investment Management, the Al Gore-fronted sustainability boutique, and $1bn (€0.9bn) innovative technology fund Breakthrough Energy Ventures have jointly led an $80m (€72.3m) fundraising round for a food tech company producing plant-based protein. Chicago-based Nature Fynd says its protein “contains all 9 essential amino acids, making it one of the rare non-animal sources of complete protein”. The firm is reportedly targeting regulatory approval from China and Hong Kong within the next 18 to 24 months.

Standard Life Aberdeen (SLA) CEO Keith Skeoch has said the firm will launch 25 funds in 2020, including sustainable and impact products. In an earnings call, Skeoch revealed that SLA’s ESG capabilities had helped it secure “a UK equity mandate for a UK DB scheme” and was increasingly becoming a priority for clients, “particularly local government schemes”.

ETFGI, the ETF/ETP research firm founded by sector pioneer Deborah Fuhr, reported that ESG ETFs and ETPs had net inflows of $7.5bn (€6.8m) in February, bringing the year-to-date total invested to $14.3bn (€12.9m) – nearly five times more than the $2.4bn invested in the asset class a year ago. The iShares MSCI USA ESG Select ETF – the first ESG ETF listed globally – had inflows of $2.2bn (€2.0bn) in February, the most among the largest 20 ESG ETFsETPs by net assets globally.

S&P Global Ratings believes that the impact of flood risk on the credit performance of UK residential mortgage-backed securities (RMBS) will be limited – despite nearly two million UK properties being at risk of flooding.  This is due to various forms of credit enhancement common in UK RMBS transactions which should help with the flow of funds, the low exposure of UK RMBS transactions to flood risk (0.2% of transactions rated by S&P) and the provision of affordable property insurance in flood-prone areas by Flood Re, a government-led initiative.

Climate activists are calling on BlackRock to integrate climate risk into the management of the Federal Reserve’s new economic stimulus programmes. This week, it was announced that BlackRock would manage three programmes on behalf of the Fed, involving corporate bond purchases and ETF purchases. Moira Birss, climate & finance director at Amazon Watch, said: “Just this January, BlackRock announced that it would put climate at the center of its investment strategy moving forward, recognizing the longer-term risk that climate change poses to its clients’ portfolio as well as the wider financial system. As recently as last week, BlackRock staff reiterated this commitment. But while economic recovery for everyday Americans is vitally important right now, corporate bond buying programs like these are stealth fossil fuel company bailouts if adequate climate safeguards are not applied.”