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ESG Daily Briefing: Vatican calls for fossil fuel divestment

The latest developments in sustainable finance

The Vatican has called for fossil fuel and arms divestments, as well as closer monitoring of all investments for environmental and social damage. The expectations were laid out in a 225-page guide to celebrate the fifth anniversary of Pope Francis' encyclical on nature, vulnerable people and climate change, called Laudato Si. The document advises that Church leaders and workers “shun companies that are harmful to human or social ecology, such as abortion and armaments, and to the environment, such as fossil fuels”. It confirmed that its own portfolio is now fossil fuel free.

The Bank of England acknowledged that its sterling corporate bond holdings, which make up 2% of its portfolio, do not align with the goals of the Paris Agreement and that there is “additional work needed to meet the UK’s goal of net-zero emissions by 2050”. In its first Climate-related Financial Disclosures report, Andrew Bailey, the new Governor of the Bank of England, said climate change would continue to be a priority under his leadership – having taken the reins from Mark Carney earlier this year.

Danica Pension has become the 26th member of the UN-convened Net-Zero Asset Owner Alliance (AOA), meaning it will transition its investment portfolio of $68bn to net-zero by 2050. The Danish fund’s announcement means the alliance now has four members from Denmark.

The Climate Disclosure Standards Board, Sustainability Accounting Standards Board, Global Reporting Initiative and CDP have said they “envisage a system that delivers on the pillars set out by the TCFD governance – strategy, risk management, metrics and targets – across all sustainability targets”. “Together we are now working to provide the basis for such a globally harmonised system,” the group said in a statement in which it also invited the International Financial Reporting Standards Foundation to join.

The UN Development Programme has launched a consultation on standards for bond issuers and private equity funds seeking to achieve the SDGs. The Practice Assurance Standards were developed by SDG Impact, a flagship initiative of UNDP’s Finance Sector Hub. Consultation is open until 31st July.

CoreCivic’s Board of Directors has suspended the company’s quarterly dividend, while it reassesses its Real Estate Investment Trust structure and capital allocation in the face of the current crisis. The Directors assured investors that the REIT status would remain at least for the 2020 tax year.