ESG round-up: California fossil fuel divestment bill killed in committee

The latest developments in sustainable finance: Enbridge escapes Church Commissioners divestment, DWP launches ‘green nudge’ trials.

A bill in the California senate which would have forced the state’s pension giants to divest from fossil fuels has been killed after it failed to progress past the committee stage. The coalition of NGOs and campaigners behind the bill, which would have required CalPERS and CalSTRS to ditch $9 billion of fossil fuel holdings by 2030, said they would return with similar legislation next year. The state’s pension funds are subject to legislation that prohibits investment in firms that boycott Israel, and a bill requiring divestment from Russia and Belarus was introduced in February.

Canadian pipeline giant Enbridge has escaped the Church Commissioner’s restrictions list for another year, while American Electric Power has been removed from restrictions, according to the £10 billion investor’s latest stewardship report. Eight other companies – including Ecopetrol and Suzano – also requested changes to meet climate hurdles and will gain another year’s reprieve. The Commissioners voted against or abstained on a fifth of management resolutions while supporting more than 80 percent of shareholder resolutions.

The news comes a week after the Commissioners said that a report into one of its predecessor funds showed that it had investment links to the transatlantic slave trade, and said that it was “deeply sorry”. Further details of the report, which found that the Queen Anne’s Bounty fund had investments in the South Sea Company and received benefactions from individuals who profited from slavery, will be published “in due course”.

The UK’s Department for Work and Pensions has launched a “green nudge” trial, looking to engage with pension savers on greening their pensions. Aviva, Smart Pension and Hargreaves Lansdown are taking part in the trial, which looks to “test the impact of behavioural nudges and messages on increasing saver engagement with the sustainability of pension investments”. The move is an extension of the department’s “nudge” strategy, which has previously sought to push savers to take guidance when they access their pensions.

The Nordic Investment Bank has signed up for the Partnership for Carbon Accounting Financials – an industry-driven standard setting initiative on measuring financed emissions. The multilateral development bank, which signed up to the PRI and adopted the TCFD recommendations in 2019, said it has begun reporting emissions associated with its lending and treasury portfolios, and aims to extend its scope of reporting over the next two years.

Citi, ING and Societe Generale have announced a partnership with US-based climate think tank RMI to develop a climate-aligned financing framework for the aluminium sector. Financial institutions which sign up to the framework will commit to reporting the emissions associated with their aluminium portfolios and assessing its trajectory in line with 1.5°C climate targets. The three founding banks, which are considered the largest lenders to the sector, are seeking other financial institutions to join the initiative’s working and review groups.

In other banking news, Crédit Agricole has announced plans to cut emissions from its oil and gas financing by 30 percent by 2030 and from automobile financing by half. The French group said it was also examining its strategy in aviation, real estate, agriculture and shipping. Reclaim Finance’s Lucie Pinson welcomed the announcement, which she said “acknowledges for the first time the need to phase out oil and gas”.

The European Council and Parliament have reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD), the sustainability disclosure regime which replaces the Non-Financial Reporting Directive (NFRD). The final text will be published once it has been formally approved by the Council and Parliament. Richard Howitt, a former member of the European Parliament who worked on EU rules for company non-financial reporting, welcomed the news. “I’m delighted that the new text includes mandatory climate transition plans, setting standards for company sustainability reporting and independent audit of the information,” he said. The application of the regulation will take place in three stages, starting in January 2024 for firms already subject to the NFRD.

Just under 95 percent of UK businesses have published some kind of ESG report, but almost three-quarters don’t have confidence in the data they are reporting, according to a new study from Workiva. The study, which looked at 1,300 British organisations, also found that close to two-thirds of respondents said their organisation was underprepared to meet ESG goals and regulator standards.