ESG round-up: Dutch pension fund divests €303m of fossil fuel shares

Dutch pension fund PFZW has divested €303 million worth of fossil fuel shares after the companies failed to make a commitment to the Paris Climate Agreement. The exits are the second stage of an escalation process on the sector by fund. The first saw PFZW shed €470 million in assets in November because firms had not set carbon reduction targets. In total, investments in 192 companies have been sold by the second-largest pension fund in the Netherlands. Phase three will see PFZW engage with the 94 fossil fuel energy firms in which it retains holdings. They will be asked to set out a “viable energy transition strategy that aligns with ‘Paris’ before the end of 2023” to avoid divestment.

More than 500 Article 8 funds are exposed to Adani stocks, according to data from Bloomberg. Around 80 of the funds have direct holdings in the Indian conglomerate, with the others exposed through funds of funds or index trackers. Eleven Article 9 funds were also found to be exposed to Adani companies, with eight having direct holdings. The Indian group is being investigated for fraud allegations by the Securities and Exchange Board of India following the publication of a report by Hindenburg Research, which accused the group of engaging in stock manipulation and accounting fraud schemes. Adani has rejected the claims.

Brazil state-controlled petroleum company Petrobras has signed the UN oil and gas methane partnership (OGMP 2.0) following ongoing engagement from investors through Climate Action 100+. The OGMP 2.0 is a global initiative coordinated by the UN Environment Programme and the Climate & Clean Air Coalition, which seeks to enable the oil and gas industry to action significant reductions in methane emissions over the next decade. Petrobras has committed to reducing methane emissions intensity by 55 percent across its upstream operations by 2025. The Climate Action 100+ investor leads on Petrobras – which include AllianceBernstein and Nordea – plan to continue to engage the company over the coming year to mobilise further action.

Saudi Aramco CEO Amin Nasser has claimed that a push by ESG investors to rid their portfolio of fossil fuels is based on “flawed assumptions” and will raise the cost of capital for oil and gas projects. According to Energy Voice, the oil major’s top official told the Saudi Capital Market Forum in Riyadh: “If ESG-driven policies are implemented with an automatic bias against any and all conventional energy projects, the resulting underinvestment will have serious implications. For the global economy. For energy affordability. And for energy security.”

Almost half of UK office workers are considering ESG factors with regards to their employment decisions, with millennials and younger employees driving the trend of “climate quitting”. Research from KPMG found that one in three employees aged 18-24 has rejected a job offer based on a company’s ESG record. The findings, which recorded responses from around 6,000 UK office workers, students and apprentices, also showed that almost half of those surveyed want their company to demonstrate a commitment to ESG.

New research suggests that social-focused ESG disclosure requirements in China could have negative impacts on other areas of sustainability-related performance. Researchers from Hong Kong and Chinese universities found that firms that are required to report their contribution to poverty alleviation significantly upped anti-poverty spending but also increased their pollution. Researchers said that mandating ESG disclosure in selected areas may induce firms to trade off different ESG goals.

Companies are recognising the need for climate transition plans but failing to move fast enough ahead of upcoming mandatory disclosure, according to research from CDP. In 2022, more than 18,600 organisations disclosed through CDP’s climate change questionnaire, of which 4,100 reported that they had already developed a 1.5C-aligned climate transition plan. However, only 81 of the 18,600 companies followed best practice by disclosing against all 21 key indicators that denote a credible climate transition plan. Thirteen percent of companies reported on 14-20 key indicators, with 35 percent reporting that they will develop a transition plan within the next two years.

The Institutional Investors Group on Climate Change (IIGCC) has developed a questionnaire to help investors assess their external managers’ climate stewardship and integrate it into their selection, appointment and monitoring processes. The questionnaire builds on the Net Zero Stewardship Toolkit, which aims to support investors in meeting the expectations set out by the Net Zero Asset Managers and Paris Aligned Asset Owner initiatives. The IIGCC is welcoming feedback from asset owners, asset managers and investment consultants. The questionnaire is open for consultation until 28 February.

The Net-Zero Data Public Utility has extended the deadline for its request for proposal to 1 March. The GFANZ-backed climate data project is seeking a contractor to provide a technical execution team with engineering, data management and product development capabilities to deliver a beta pilot of the platform, in line with the recommendations of the climate data steering committee.

EY has bought Attalea Partners, a Madrid-based consultancy specialising in ESG and aimed at private equity managers and their affiliated companies. The consultancy is a member of the Principles for Responsible Investment and the IFRS Foundation Advisory Council, and is a regular collaborator of SpainCap on ESG issues. EY has acquired the firm to contribute to ESG consulting work in its strategy and transactions division, where it will also incorporate 11 professionals in the coming weeks.

WWF has published a guide on integrating nature into transition plans. The paper emphasises the close connection between climate change and nature loss, and urges companies to tackle both issues in their transition planning by adopting a “holistic approach”. WWF argues that businesses should integrate nature in existing climate transition planning frameworks to support the delivery of the Paris Agreement, as well as to align transition plans with the nature-positive goals set out in the global biodiversity framework agreed at COP15.