ESG round-up: Fourth asset manager departure from CA100+ revealed

The latest developments in sustainable finance: Ceres, ICCR urge manufacturers to oppose SEC lawsuit; HKMA launches competency framework on sustainable finance.

New Jersey’s Lord Abbett withdrew from Climate Action 100+ in January, Responsible Investor can reveal. A spokesperson told RI that the $196 billion investor had joined a number of organisations “as it embarked upon its sustainable investing journey” to gain a better understanding of what peers were doing. “As a privately held, active manager, committed to proprietary fundamental research, we understand the importance our clients place on our independent perspective, especially in the context of security selection,” they continued. “In keeping with our commitment to delivering an independent perspective, we have decided to withdraw from the initiative.” Last week, RI reported that three investors had exited CA100+.

Ceres and the Interfaith Centre on Corporate Responsibility (ICCR) have written to around 50 company board members of the National Association of Manufacturers (NAM) urging them to express their concern about the organisation’s intervention in the National Centre for Public Policy Research’s lawsuit against the SEC. The lawsuit is seeking to eliminate the commission’s oversight of the shareholder proposal process. It alleges that the US regulator should have no role in determining whether shareholder resolutions should or should not be included in companies’ proxy materials, arguing that the rule underpinning the SEC’s authority is “unconstitutional”. The letter also highlights that a significant number of NAM members, including those on the board and executive committee, are active leaders in addressing issues such as climate change, diversity, human rights, environmental pollution, and disclosure of sustainability information.

The Hong Kong Monetary Authority has launched a competency framework on green and sustainable finance. The project is a collaborative effort by HKMA, the Hong Kong Institute of Bankers (HKIB) and the banking industry to establish a set of common and transparent competency standards required for green and sustainable finance (GSF) jobs. The regulator plans to launch the framework in two phases. The first will lay a foundation on the knowledge and application of GSF, while the second will focus on specialised domain areas covering upcoming market developments and regulatory trends.

Article 8 funds saw net redemptions of €14.6 billion in Q2, while Article 9 funds saw their lowest inflows on record, according to Morningstar research. The outflows from Article 8 funds represented a sharp reversal from Q1, which saw inflows of €26 billion into the asset class. Article 9 funds attracted €3.6 billion in Q1, down from €4.4 billion in the previous quarter. Assets in both Article 8 and 9 funds rose by 1.4 percent, passing the €5 trillion mark for the first time. Fund downgrades slowed, with only six funds downgraded from Article 9 to 8. Meanwhile 180 funds were upgraded to Article 8 from Article 6,  and seven Handelsbanken Paris-aligned index funds, which were previously downgraded to Article 8 from Article 9, reverted to Article 9.

The UK environmental audit committee has launched an inquiry into the role of natural capital in the green economy and how government policy is supporting and promoting investment in nature recovery. The inquiry will look at the role private investment can play, and how the UK can develop leading markets in natural capital assets while avoiding the greenwashing of investments. The committee has invited written submissions to address any of the issues raised on nature recovery policy. The deadline for responses is 22 September.

New Zealand has announced plans to legislate against modern slavery. Organisations with a revenue of more than NZ$20 million ($12.3 million, €11.2) will be required to report publicly on their operations’ modern slavery risks, and how they are mitigating against this. The new law was announced by deputy prime minister Carmel Sepuloni last week as part of the government’s commitment to address modern slavery. Legislation will be drafted over the next six months before being introduced to parliament.

IDB Invest and Banco Bolivariano have issued the world’s first blue bond with incentives linked to meeting objectives. The $80 million bond has been subscribed with an $40 million investment from IDB Invest and another from FinDev Canada for $40 million. The resources from the bond placement of the bond are targeting the conservation of the oceans, through the promotion and expansion of access to credit for the sustainable production of shellfish, water and wastewater management, and solid waste management and the circular economy.

S&P Global Ratings has launched integrated use-of-proceeds second party opinions (SPOs), which assess the types of sustainable financing where proceeds are allocated to specific environmental or social projects. The project is backed by the data provider’s Shades of Green methodology, which shows how well a green bond is aligned with a low-carbon future.

The Charity Commission has updated its guidance on investing charity money to incorporate social investment factors. The updated guidance says trustees should consider ESG factors for non-financial reasons and that this approach could “support delivery of your charity’s purposes more directly”. As discussion continues within the sector about charities’ ability to account for the environmental impact of investments, the guidance also clarifies that trustees have discretion to choose what is best in their circumstances.

The European Central Bank (ECB) will likely sell holdings of bonds issued by climate laggards this year, according to analysts at Generali Investments. The bank reiterated its commitment to be aligned with the Paris Agreements in its July meeting, revealing plans to outline the specific methods to achieve this goal by the end of this year. The ECB reduced the carbon intensity of its bond purchases by 65 percent in Q4 2022, compared with the first three quarters of the year, after introducing a “tilt” to greener issuers. Generali Investments said that, since the ECB is no longer buying corporate bonds, selling climate laggards is its “primary option”. The manager suggested a greener collateral framework or green targeted longer-term refinancing operations (TLTRO) as alternative solutions.