ESG Briefing: Trump administration slams CalPERS’ ‘concerning’ investments in Chinese military companies

The latest developments in sustainable finance

The Trump administration is reportedly “looking at” CalPERS’ investments in Chinese military companies, US national security adviser Robert O’Brien has confirmed, calling it “an issue of security for American investors”. The comments come amid mounting US-China tensions over trade disputes and alleged Chinese espionage. O’Brien said: “Some of the CalPERS investment policies are incredibly concerning… Putting investments into companies that don’t follow generally accepted accounting principles and don’t have the same reporting requirements that American companies do is scary.” He added: “Why are we…supporting a defense industry that is popping out a couple of destroyers and frigates a month and threatening to have total over-mass against us in the Indo-Pacific?” CalPERS CIO Yu Ben Meng came under fire from representative Jim Banks last month for an alleged “long and cozy” relationship with Beijing.

NGO Global Witness has filed a complaint to the OECD against British government lender UK Export Finance, accusing it of contravening the Paris climate accord with its financing of global fossil fuel projects. It is the first such complaint against an export credit agency on climate grounds. Global Witness also alleged the agency, which provides financial assistance to UK exporters, breaches OECD guidelines by failing to report or reduce its emissions. Though the OECD cannot enforce change in the behaviour of businesses and organisations, it can publicly denounce them for breaking its rules. 

The carbon price under the EU Emissions Trading System (ETS) fell to below €20 per tonne for the first time in over a year yesterday amid coronavirus-fuelled panic in the financial markets. EU carbon credits (EUAs) ended down 6% last week at €21.93, but plunged a further 11% on Monday in the biggest daily drop since 2018. Last year, the price hit €29 for the first time since 2008, partly off the back of reforms designed to reduce what had been a persistent oversupply of allowances in the market dragging prices down, and dipping to a record low of under €3 in 2013.

Pension trustees are overwhelmingly male (83%) and a quarter of schemes have no women on their boards, the Pensions and Lifetime Saving Association (PLSA) has pointed out in a new inclusion guide that calls lack of board diversity in the industry a “particular problem”. Age is also a significant factor, with over-60s accounting for one third of trustees, while less than 2.5% are under 30 and 7% are over 70. The PLSA guide said more diverse trustee boards are governed better and are more likely to pay attention to key facts and assess relevant evidence, reaching the “best conclusion” and explain decisions. The news follows the announcement from the Pensions Regulator last month that it was establishing a working group for improving diversity and inclusion on trustee boards, maintaining it may use supervision and enforcement powers to look at how trustees are trying to improve diversity.

Banks' issuance of green bonds and other debt instruments designed to support sustainability objectives set a new global record in 2019, according to a new report by Moody's Investors Service. The agency said it reflects investors' increased use of environmental, social and governance (ESG) criteria to select portfolio assets, as well as banks' growing role in financing the transition to a low-carbon economy. Moody’s said banks' issuance of green, social and sustainability (GSS) bonds rose 41% year-on-year to a record $121.8bn – taking the cumulative total since 2015 to $335.5bn.

ESG data firm RepRisk has integrated the Sustainability Accounting Standards Board (SASB) Framework into the latest version of its flagship ESG Risk Platform. It’s a “new feature that allows you to identify and assess the industry-specific material ESG risks in line with the SASB standards”.