ESG round-up: BlackRock, State Street on Oklahoma list of fossil fuel boycotters

US House committee announces attorney general hearing on ESG, $10trn coalition calls for more action on plastics.

BlackRock, State Street, Wells Fargo, JPMorgan Chase and Bank of America are among 13 financial companies that have been added to a list of alleged fossil fuel boycotters by the Oklahoma state treasurer. A press release from the treasurer’s office said the firms would now be ineligible for state contracts, and under the law, state investors must also divest their holdings in them. Responsible Investor obtained responses to the state’s questionnaire by all firms apart from Bank of America in which they deny that they are boycotting fossil fuels. In its response, BlackRock cited its $15 billion investment in Oklahoma energy companies, while JPMorgan highlighted its $38.7 billion credit exposure to the oil and gas industry. A spokesperson for Bank of America said it looked forward to “continued discussion with the Oklahoma treasurer about the many ways we serve clients and communities in Oklahoma, including in the energy sector”.

In other anti-ESG news, the backlash is taking another step on the federal level after James Comer, chair of the House Committee on Oversight and Accountability, announced a hearing on ESG with the attorneys general of Utah and Alabama. The hearing, which will take place on the morning of 10 May, “will be the first in a series which will examine the consequences of ESG priorities”, and will see the concerns of state attorneys general over ESG discussed.

An investor coalition with $10 trillion in combined assets has called on corporates to ramp up action on plastics. The group – co-ordinated by the Dutch Association of Investors for Sustainable Development – has issued a statement warning that plastics pose a serious threat to the environment, and calling on companies to set more ambitious targets to address the problem. They have asked corporates to drastically reduce production and consumption of plastics in alignment with the Paris Agreement and the Kunming-Montreal Global Biodiversity Framework. Signatories include French managers Amundi, AXA Investment Managers and Mirova, and UK giant LGIM.

The Australian Securities and Investments Commission (ASIC) has issued an infringement notice to superannuation fund Future Super due to alleged greenwashing. ASIC was concerned that a Facebook post made by Future Super in 2019 could be misleading by overstating the positive environmental impact of the fund. The post included the statement: “Naysayers don’t join together and move nearly $400 million out of fossil fuels.” At the time of the post, the vehicle had around $400 million in total assets and no basis to represent that the entirety of those funds had been invested in fossil fuels prior to being invested in the fund. Future Super paid the $13,320 infringement notice on 27 April 2023, although the payment is not an admission of guilt or liability. A spokesperson for Future Super said it had self-reported the post, which “was missing an important caveat”.

The ESG debt universe hit a record $5.1 trillion in Q1 2023, according to data from the Institute of International Finance, which includes public and corporate bonds and loans, and asset-backed securities. This was driven by strong ESG primary bond sales. Issuance hit the highest level in five quarters, contrasting with softness in ESG loan activity amid recent market turmoil. A regional split of issuance shows that developed markets accounted for 70 percent of the total. Emerging and frontier markets saw around $740 billion of issuance, more than 40 percent of which came from China.

German insurer Talanx plans to restrict insurance for new oil and gas projects on an individual risk basis. As of 1 July, the group will no longer provide insurance policies for new greenfield upstream oil and gas projects. In addition, it will no longer insure new midstream projects for pipelines and tank farms directly linked to greenfield upstream oil developments. It will also exclude insurance cover for any standalone oil-fired power plants not yet under construction or operation. In the Arctic region, the exclusion of new oil and gas drilling projects is extended to new covers for existing projects. Talanx will also exclude deep sea mining project risks from underwriting.

The International Sustainability Standards Board (ISSB) has requested market input on its agenda priorities for the next two years. The global standards body has identified four potential projects: biodiversity, human capital, human rights and integration of reporting. Stakeholders are also being asked to opine on the “strategic direction and balance of the ISSB’s activities” in a survey. The deadline for comments is 1 September.

Japan Exchange Group and the Asian Development Bank have signed a memorandum of understanding to promote sustainable finance in the APAC region. The two entities have agreed to co-operate on facilitating ESG bond issuances with improved disclosure to market participants, as well as supporting start-ups with technologies looking to solve ESG-related problems, through both debt and equity financing.

Staying in the APAC region, Japan has set a target of having women in 30 percent of top boardroom roles by 2030. In a meeting to promote gender equality, prime minister Fumio Kishida said that gender diversity in listed companies is crucial for “achieving new capitalism and an inclusive society”. Japan ranks below the global average on senior female representation in the workplace. According to a cabinet office survey, last year women represented 11.4 percent of executives in major listed companies in Japan.