ESG round-up: ISS head Retelny slams accusations of ‘pushing ESG agenda’

The latest developments in sustainable finance: 15% support for climate lobbying proposal at Toyota; ASIC tells firms to prepare to adopt ISSB standards.

The Institutional Shareholder Services (ISS) has pushed back against accusations that the firm is “woke” and pushing an ESG agenda. In a statement, ISS president and CEO Gary Retelny wrote that the firm’s proxy advice is “apolitical” and that it is “not an activist or advocacy organisation”. He added that the narrative about ISS is part of “a broader, highly partisan attack on ESG investing”, concluding that “any proxy vote recommendation that includes a consideration of ESG factors will continue to be attacked, just as any failure to support an ESG proposal may be attacked by an unsuccessful shareholder proponent”.

Fifteen percent of shareholders backed the climate lobbying proposal at Toyota on Wednesday. The resolution, which was filed by European investors APG Asset Management, AkademikerPension and Storebrand Asset Management, called on the Japanese carmaker to amend its articles to include the provision of an annual review into the impact of its policy advocacy efforts and its alignment with the Paris Climate Agreement. The filers stated that the tally should “serve as a clear wake-up call for the company to focus on being competitive in the transition to the net-zero society instead of trying to water down important climate legislation”.

ASIC chair Joe Longo has said companies should start to prepare for the International Sustainability Standards Board (ISSB) standards, which are due to launch in late June. In a speech at a conference on Tuesday, Longo said: “Firms should be well advanced in embedding robust corporate governance practices ahead of more rigorous reporting requirements that are imminent in the standards being released by the ISSB”, adding that the preparation for the demands of the standards – which will require companies to collect and analyse data across their organisation and supply chains – should start now.

Staying with Australia, the Australian Prudential Regulation Authority (APRA) has added climate change risk to its statement of intent. The regulator said it will continue to “promote prudent practices and transparency in relation to climate-related risks in the Australian financial system, consistent with the government’s sustainable finance reforms”.

UKSIF and a group of UK asset owners including Scottish Widows, Phoenix Group, Nest and Brunel have called for the government and policymakers to establish to what extent ESG factors and impacts should be addressed within pension scheme trustees’ fiduciary duties. UKSIF has recommended that relevant government departments, including the Department of Work and Pensions, as well as regulators such as the Financial Conduct Authority and The Pensions Regulator issue guidance for UK pension schemes on a statutory or non-statutory basis.

A group of ESG rating providers including Integrum ESG, Covalence, EthiFinance and Inrate have launched the European Association of Sustainability Rating Agencies (EASRA). The association said it aims to become the representative body of a new generation of sustainable finance service providers, with a view to enhancing the functioning of ESG rating provision and its contribution to a more sustainable European economy.

The Institutional Investors Group on Climate Change (IIGCC) has launched an asset owner stewardship questionnaire which provides a series of qualitative questions for due diligence when selecting an asset manager, and quantitative reporting when monitoring asset managers. Among the asks is a request for managers to provide their stewardship and voting policies and stating to what extent they are aligned to net zero.

2 Degrees Investing Initiative (2DII) Germany has rebranded to Theia Finance Labs. Theia will host three research programmes including the tilt SME climate data programme, the climate analytics Transition Monitor Platform, and 2DII’s stress test and long-term risk programme 1in1000.

The Pensions Regulator (TPR) has announced plans to launch an all-trustee survey to collect data on the level of diversity in the trustee universe. At the Pensions and Lifetime Savings Association (PLSA) investment conference last week, TPR interim director of regulatory policy, analysis and advice Louise Davey emphasised the need to measure progress on diversity and inclusion. She added that the regulator is engaging with key schemes to discuss what their current practices are on DE&I.

Norges Bank Investment Management (NBIM) has launched a two-year project with the Stockholm School of Economics to explore psychological safety and resilience among investment employees. NBIM’s initial research started in 2021 when it initiated an internal human performance programme to enhance psychological safety and resilience within the organisation.