ESG round-up: BlackRock halves support for environmental and social proposals

The latest developments in sustainable finance: CalSTRS continues engagement on 'ghost guns'; Schroders and Green Century sign biodiversity pledge.

BlackRock has halved its support for environmental and social shareholders proposals in the US in the 2022 proxy season. In its 2022 voting bulletin, the manager said it had supported 24 percent of proposals this year, down from 43 percent last year, but noted that average support had fallen from 36 percent to 27 percent – indicating it was not alone in cutting support. Explaining its reasoning for voting against resolutions, BlackRock said that 46 percent had already been implemented or the company was making progress, 21 percent were either too prescriptive or immaterial, and 8 percent were not beneficial to shareholders.

Director support stood at slightly over 90 percent, although BlackRock voted against a quarter of APAC directors on independence grounds and a fifth of EMEA directors due to concerns about overboarding. It voted against 176 directors for explicit climate reasons.

There is a positive spread in performance between equities which received ESG upgrades and downgrades from MSCI in its May adjustments in all but five GICs sectors, according to new research from Jefferies. The financial sector saw the highest outperformance, with financial firms given an ESG ratings upgrade outperforming their universe by 5.44 percent. Based on up and downgrades over a 10-year period, a basket of upgraded equities outperformed their respective universes on a 12-month basis across six sectors, while downgraded equities underperformed in nine sectors.

Sustainability-linked bonds accounted for a quarter of sustainable debt in the first six months of this year, according to figures from Linklaters. China has been leading the green bond market globally, accounting for a quarter of the $245 billion raised this year, while in Europe Germany topped the tables with $29 billion of issuance. Sovereigns, utilities and financials remain the largest suppliers of green bonds, making up 77 percent of issuance, while industrials, materials and consumer sectors account for half of SLBs.

The Investor Group on Climate Change (IGCC), the coalition of Australian and New Zealand institutional investors, has welcomed the introduction of Australia’s climate change bill today, which was strengthened by the recently elected Albanese government to clarify that future emissions reduction targets can only increase. “The introduction of the Climate Change Bill to parliament is an opportunity to unlock hundreds of billions of investments in climate solutions across the economy,” said the IGCC’s director of policy, Erwin Jackson.

Moody’s Investors Service has expanded its ESG credit impact scores to a further three sectors. ESG considerations in the healthcare services and “protein and agriculture” sectors have a moderately negative credit impact due to governance, and environmental and social factors, Moody’s said, while ESG considerations have an overall limited credit impact on the surface transportation and logistics sector.

CalSTRS will focus its ongoing engagement with the credit card industry on ghost guns on discussing challenges and monitoring progress and compliance after US federal regulation requiring serial numbers on the weapons comes into effect in August, a spokesperson told Responsible Investor. The comment was made following publication of the US pension fund’s Q2 engagement update. CalSTRS’s dialogue with the credit card industry complements “other work being done to establish best practices throughout the firearms value chain”, the spokesperson told RI.

Schroders, Green Century, Velliv Pension and Livsforsikring A/S are among the latest signatories to the Finance for Biodiversity Pledge. By signing up, organisations commit to protecting and restoring biodiversity through their finance activities and investments by collaborating and sharing knowledge, engaging with companies, assessing impact, setting targets and public reporting on outcomes ahead of 2025. With the new additions, the pledge boasts 103 members from 19 countries, representing more than €14.7 trillion in assets.

Forty percent of sovereign wealth funds and 15 percent of central banks surveyed by Invesco said that ESG issues are prompting them to increase their active allocations. According to the study: “An active risk-based approach was seen as conferring advantages over a screening-based passive approach; companies or governments that might not meet thresholds for screening can instead be down-weighted.” In its 10th year, the Invesco Global Sovereign Asset Management Study 2022 collated the views of 139 chief investment officers, heads of asset classes and senior portfolio strategists at 81 sovereign wealth funds and 58 central banks, which together manage $23 trillion in assets.