ESG round-up: HSBC’s Stuart Kirk, UK pensions minister Opperman resign

The latest developments in sustainable finance: Ben & Jerry's sue Unilever; excluding ESG laggards does not harm EU bond portfolio performance.

Stuart Kirk has stepped down as global head of responsible investing at HSBC Asset Management. His resignation follows a recent controversial speech, titled “Why investors need not worry about climate risk”. Kirk lambasted those who have sounded the alarm on the climate crisis, including ex-governor of the Bank of England Mark Carney, whom he quoted on a slide entitled “Unsubstantiated, shrill, partisan, self-serving, apocalyptic warnings are ALWAYS wrong”. On his future plans, Kirk explained in a LinkedIn post that he’s been “gathering a crack group of like-minded individuals” to deliver a “whole new asset class”. He said the first project, to be announced this year, “will underline the central argument in my speech: that human ingenuity can and will overcome the challenges ahead, while at the same time offering huge investment opportunities”.

UK pensions minister Guy Opperman has become the latest in a series of government ministers to resign as political chaos reigns in Westminster. Opperman, the longest-serving pensions minister in history, was responsible for the implementation of mandatory TCFD reporting for UK pension schemes, as well as setting up a number of stewardship initiatives. He was also notable for pushing schemes to engage on ESG issues over divestment. Chancellor of the Exchequer Rishi Sunak and City minister John Glen also quit in recent days.

Less than a fifth (17 percent) of investors supported the living wage proposal at Sainsbury’s today at the UK grocer’s annual general meeting, despite backing from investor heavyweights Legal & General Investment Management, HSBC Asset Management and Aviva Investors. Schroders, a top five shareholder, publicly pre-disclosed that it was not supporting the resolution, resulting in it being asked to leave a fair pay investor group to set up by the proposal’s filer ShareAction. “[W]e’re disappointed that a large proportion shareholders chose to prioritise short-term returns over the real long-term issue: rising inequality in our society,” said Rachel Hargreaves, campaign manager at ShareAction.  

Unilever is being sued by its subsidiary Ben & Jerry’s to block the sale of the ice cream maker’s business interests in Israel, Bloomberg has reported. Last July, Ben & Jerry’s announced plans to end sales in occupied Palestinian territory once its licence agreement expires at the end of 2022. However, the move prompted a backlash from US states opposed to any boycott of Israel, including pledges to divest from Unilever. In response, last week Unilever announced the sale of the business, which would mean Ben & Jerry’s will be sold under its Hebrew and Arabic names throughout Israel and the West Bank under the full ownership of its current licensee. In response to the Bloomberg article, a spokesperson for Unilever told Responsible Investor: “As we said in our statement of 29 June, Unilever had the right to enter this arrangement. The deal has already closed. We do not comment on pending litigation.”

Excluding tobacco, mining, defence, and oil and gas producers would not have hurt the performance of a European fixed income portfolio between 2010 and 2020, according to research by City University’s Bayes Business School. It also found that ESG tilts would have historically improved marginal performance, while improving overall E&S ratings would reduce tail risk. The findings were based on constituents of the iBoxx EUR Corporates bond index, overlaid with Refinitiv ESG data.

The “wide range of approaches” to target setting by members of the Net Zero Asset Management Initiative makes it very difficult to compare them, according to analysis by Morningstar. For example, BlackRock has committed to invest 77 percent of its AUM in issuers with science-based emissions targets – however it has not committed to any quantified emissions reductions target. State Street, in contrast, has pledged to halve carbon emissions but only for 14 percent of its assets.

Investors from the UK, Asia and the US use an average of 9.3 ESG data sources, according to a survey of 300 buy-side firms by analytics provider Alveo. It found that US investors used 9.7 sources on average, the most among firms surveyed, while Asian investors used the least at 8.9. Notably, corporate disclosures were the least common data source cited, while ESG ratings were the most common. Sentiment data is used much more widely in the US than in the UK or Asia.