ESG round-up: European Commission cracks down on companies’ green claims

The European Commission has proposed a new directive aiming to tackle misleading environmental claims by companies about their products. According to the proposal, when companies claim their products or services are green, they “will have to respect minimum norms on how to substantiate these claims and how they communicate them”. The proposal will also regulate environmental labels, saying that new public labelling schemes will not be allowed, unless developed at EU level, and any new private schemes will need to show higher environmental ambition than existing ones and get a pre-approval. However, the rules have been criticised by NGOs saying the proposal isn’t robust enough to prevent misleading claims. The green claims directive proposal will be subject to the approval of the European Parliament and Council.

Investors with a collective $2.4 trillion in assets have written to the European Commission and Parliament to express their support of the EU’s proposed forced labour product ban. The legislation would prohibit products made with forced labour from entering the EU market. Investors described this as a “good first step” but have recommended that the EU to focus on implementing mandatory human rights due diligence complementary to the Corporate Sustainability Due Diligence Directive. They also suggested that the EU ensure that the scope of enforcement addresses systemic forced labour patterns across the supply chain, and to introduce compensation which sees companies remediating the harm suffered by the impacted communities.

Danish pension fund AP Pension has divested €41 million from fossil fuel companies, including Shell and TotalEnergies. The pension fund said it has added a further 73 fossil fuel companies to its exclusion list, bringing the total to 187 firms, as a result of tightening its fossil fuel investments criteria for investments within coal, utilities, tar sands and oil and gas.

Calvert has updated its proxy voting guidelines with changes to the way it will be voting on board diversity. Its new guidelines require a minimum of 40 percent representation of men and women respectively in the US, UK, Canada, Australia and South Africa. The guidance also mandates a percentage of directors from an ethnically diverse background proportional to the population of the home country or two ethnically diverse directors, whichever is greater. Calvert has said it will vote against the chair at companies that do not meet these requirements.

Norges Bank Investment Management has ended its observation of Kirin Holdings following two years of monitoring because of the Japanese company’s relationship to an organisation with links to the Myanmar military. The decision, based on a recommendation from Norges’ Council on Ethics, was made because Kirin has ended the relationship and no longer has any activity in Myanmar, NBIM said.

Insurance company Chubb has published new policies to restrict the underwriting of oil and gas extraction based on conservation and emissions criteria. The US group will not insure new or existing oil and gas extraction projects that are located in specific protected areas or do not have plans to manage methane emissions.

The World Federation of Exchanges has published an industry-wide green equity principles guidance, the first global framework for designating stocks and shares as green to improve the flow of funding towards the financing of more sustainable economies. The criteria covers revenues and investments, use of taxonomy, governance, assessment and disclosure.

Redington has launched a stewardship service to support asset owners in their voting activities. The platform – underpinned by Redington’s tech platform Ada Fintech – is designed to help asset owners hold investment managers to account more fully. It will provide aggregated reporting of engagement and voting activity across fund managers, and assess the quality and consistency of engagement and voting.

Fewer than 1 percent of G7’s biggest listed companies count women among one of their top three earners, according to data from ESG Book. Just 29 percent of G7 companies have an equal opportunity and diversity policy, and only 14 percent have specific diversity targets. Of the companies that do have targets, 12 percent of these do not have plans backed by KPIs.

French fintech EthiFinance has acquired German sustainability rating agency imug rating. imug rating was previously a wholly owned subsidiary of imug Beratungsgesellschaft. This is EthiFinance’s third acquisition in Europe in less than two years.

The Luxembourg Sustainable Finance Initiative has become the latest institution to join Eurosif. LSFI membership was approved by the board of the Brussels-based association, which seeks to help drive the growth of the European sustainable financial industry.

Law firm Watson Farley & Williams has advised Navigator Holdings on a $200 million loan agreed with a syndicate of lenders – led by ABN AMRO Bank and Nordea, and including SEB and BNPP – for the financing of 10 vessels. The loan agreement included a sustainability-linked margin adjustment with a KPI connected to fleet environmental criteria, and a second KPI linked to the number of women in leadership roles at Navigator.

Ford Foundation and JUST Capital have collaborated to fund research on human capital. The project studying the effects of DE&I on financial performance will be led by London Business School finance professor Alex Edmans; Caroline Flammer, professor of international and public affairs and of climate at Colombia University; and Simon Glossner, economist at the Federal Reserve Board.