ESG round-up: Former GPIF stewardship head appointed to ISSB

The latest developments in sustainable finance: GFANZ to get powers to kick out members; Federated Hermes defends anti-ESG body sponsorship.

The former head of stewardship at Japan’s GPIF is among the latest batch of experts to be named members of the IFRS Foundation’s International Sustainability Standards Board (ISSB), the global sustainability standards body launched in November. Hiroshi Komori, who stepped down from his role at the $1.59 trillion pension fund in April, was named alongside two representatives from the corporate world, who join from Siemens and German wholesaler Metro.

The appointments take the ISSB board to 13 members. Komori served as senior director and head of the stewardship and ESG division at GPIF from 2015 to 2022. ISSB closed the consultation on its draft sustainability standards last month.

GFANZ is set to get powers to kick out financial institutions that fail to hit its targets, the Financial Times has reported. The alliance beefed up its requirements earlier this year to exclude financing for new coal projects. The FT reported that it was in the process of setting up an independent accountability body, provided it can secure funding. Civil society groups would be able to report financial institutions not following the criteria, and it would gain the power to expel members from the start of 2023.

Federated Hermes has defended its sponsorship of anti-ESG state treasurers’ association the State Financial Officers Foundation (SFOF). In a statement signed by its two CEOs and the head of EOS, the investor said that it took part in events with a variety of organisations, and that its participation “does not serve as an endorsement of any organisation’s particular perspective on any issue”.

RI, which first revealed that Federated Hermes was sponsoring SFOF, reported last week that Federated Hermes paid $50,000 for its sponsorship, in return for benefits including “sponsorship of opening dinner, column in e-newsletter, and one 30-40 minute virtual private mtg”.

The UK nuclear industry has begun lobbying the Treasury to include nuclear power in the next iteration of its green financing framework, according to reports in The Daily Telegraph [paywalled]. The UK government is looking to take a public stake in the Sizewell C nuclear plant as it tries to replace Chinese investment in the country’s nuclear power stations – lobbyists have suggested green bonds could be used to finance this. It is seen as increasingly likely that nuclear power will be included in the UK’s green taxonomy, which could provide further impetus for its inclusion in green gilt financing.

In other green bond news, ING has said that the “phase of rapid acceleration” in sovereign and SSA issuance of green bonds seems to be over. Sovereign-related ESG issuance so far this year stands at €80 billion, compared with €112 billion at the same point in 2021. While ING said there was a chance that 2022 issuances will outweigh that of 2021, the slowing growth in supply comes against a background of smaller and more volatile greeniums, with German, British and Belgian greeniums all shrinking over the past few months.

Former PRI CEO Fiona Reynolds has warned that “over-thinking, over-regulation and over-standardisation” is complicating what she calls the very simple investment philosophy of ESG. Writing in Top1000Funds in response to the ESG backlash, Reynolds said that many criticisms of the issue fundamentally misunderstand ESG. “ESG principles can all be boiled down to a few simple truths,” she continued.

“We all have responsibilities as citizens, and we should all act ethically, and we should invest in ways that don’t contribute to human suffering or to the detriment of the planet we all inhabit. Do we really need endless regulations and legislation to understand these basic concepts before acting? I hope the answer is no.”

The median pay of a FTSE 100 CEO rose 39 percent from 2020 to 2021, according to statistics published by the High Pay Centre. The average pay packet rose from £2.46 million ($2.89 million; €2.92 million) to £3.41 million in that time, with the median CEO now paid 109 times more than the median full-time worker. The highest paid CEO in 2021 was Sébastien de Montessus of mining firm Endeavour, who received £16.9 million, followed by the CEOs of AstraZeneca, CRH and Anglo American.