ESG round-up: CalSTRS to oppose directors over poor diversity and climate change performance

The latest developments in sustainable finance: Engine No. 1 named one of 2022’s most influential companies, SEC namechecks ESG in 2022 priorities

CalSTRS has announced plans to escalate its voting at companies performing poorly on board diversity and climate change in the 2022 proxy season. The Californian pension giant said it would oppose the entire board at firms that have no women on their board or that do not disclose their Scope 1 and 2 emissions. High emitters that do not publish a TCFD report, disclose Scope 1 and 2 emissions and set emissions reduction targets can also expect their entire board to be opposed, as can non-TCFD reporters among the 1,900 largest global companies.

CalSTRS will also oppose nominating committee members at firms that do not have at least 30% women board members and nominating and governance committee members at Russell 1000 Index firms who do not disclose board skills and diversity characteristics. It will vote in favour of shareholder proposals that “demand meaningful net-zero actions”.

The US Securities and Exchange Commission has namechecked ESG in its priorities for 2022. The powerful regulator, which earlier this month put out its proposed corporate climate disclosure rule, said it will “continue to focus on ESG-related advisory services and investment products”, including on whether investment funds are “overstating or misrepresenting” their ESG credentials in marketing and whether they are voting their proxies in alignment with their ESG positions. The SEC also stated that it may “assess and compare” any advisory services offered to issuers by stock exchanges “regarding ESG initiatives”.

Engine No. 1 has been named one of TIME magazine’s most influential companies of 2022. The hedge fund spearheaded efforts to appoint three climate-capable board members at Exxon last year, which TIME describes as “an irresistible David and Goliath tale”. The firm’s CEO said it was having “very constructive conversations” with other firms on climate. According to the results of the net-zero company benchmark released by Climate Action 100+ yesterday, Exxon has not improved since last year on a single one of the nine metrics it was assessed against.

The Singapore Exchange has announced a partnership with the UK government’s climate investment programme MOBILIST. The partnership will allow MOBILIST to provide investment and technical assistance to capital market participants in Singapore, with the programme able to support new issuers through equity investments, technical assistance funding for both equity and debt issuers, advisory services and promotion via government platforms.

The PRI, Alternative Credit Council and Loan Syndications and Trading Association (LSTA) have joined forces on a project to harmonise ESG reporting by borrowers across credit markets. The LSTA said the tool would allow lenders to receive consistent data from borrowers, while harmonising reporting would allow borrowers to concentrate on robust reporting rather than responding to “a multitude of similar questionnaires”.