ESG round-up: Europe’s pension regulator launches first climate risk stress test

The latest developments in sustainable finance: Schroders introduces 'engagement objectives' for its fund managers.

Europe’s pension regulator EIOPA has launched its first ever climate risk stress test for the bloc’s pension funds. The test will assess the resilience of European funds against a climate change scenario developed with the European Systemic Risk Board and the European Central Bank. Its scenario, which builds on those developed by the Network for Greening the Financial System, “reflects a sudden, disorderly transition to climate neutrality due to delayed policy action”. The results of the stress test are expected to be published in December.  

HSBC Asset Management, NEST and USS are among a group of investors who have warned 17 European heavyweights including BP, Shell and Rio Tinto that they may face votes against audit committee chairs over their continued failure to meet expectations on climate accounting. In total, 34 investors representing over $7.1 trillion in assets supported the letters to the companies, which asked for an explanation as to why expectations spelt out by investors in 2020 have not been met. “In simple terms, poor accounting is exacerbating the perilous state of our climate. It is time investors held audit committee directors and auditors to account for delivering 1.5C-aligned accounting disclosures,” said Natasha Landell-Mills, partner and head of stewardship at Sarasin & Partners.  

European securities markets regulator ESMA is looking for experts to join a new sustainability-focused working group. The new body, which was announced in ESMA’s recent Sustainable Finance Roadmap, will be made up of around 20 members for an initial two-year term. The watchdog stated that it is looking for candidates from a “variety of backgrounds and the different segments of the sustainable investment value chain”.  

UK fund manager Schroders is introducing “engagement objectives” for its fund managers and analysts as part of its newly launched “Engagement Blueprint”. Managers and analysts will choose from six core themes to engage with companies on. The themes are climate change, corporate governance, diversity and inclusion, human capital management, human rights, natural capital and biodiversity. The engagement objectives will apply across Schroders’ equities and fixed income desks and will form part of fund managers’ and analysts’ personal performance goals. 

The CEO of Danish insurance and pension fund association F&P has called on the Danish government to set up an expert group to draw up a framework to support investments in democratic and peace-supporting activities. In the same statement, published Monday, Kent Damsgaard also proposed that Danish pension money be used to support the country’s defenses and security.  

Anglo-Australian miner BHP is facing a lawsuit from victims of Brazil’s worst environmental disaster. The Guardian reported Tuesday that more than 200,000 victims of the 2015 Mariana dam disaster are seeking compensation in one of the largest group claims in English legal history.