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ESG round-up: Net Zero Asset Managers commits $16trn in latest disclosure report

The latest developments in sustainable finance: Lazard and Schroders compete in 'Great Canadian ESG championship'; Philippines central bank consults on sustainability integration; Euronext launches futures contract on CAC 40 ESG index.

Forty-three members of the Net Zero Asset Managers (NZAM) initiative have disclosed their initial targets for the proportion of assets managed in line with achieving net zero by 2050 or sooner, according the initiative’s latest target disclosure report. Launched in December 2020, the group requires members to work with their asset owner clients to steer investments towards net zero by 2050 or earlier. These latest targets mean that collectively approximately $16 trillion is now committed.

Lazard, Schroders, RBC GAM and eight other asset managers will compete for a share in a C$90 million ($71 million; €66 million) ESG-focused mandate on Thursday as part of the Great Canadian ESG Championship. The event is organised on behalf of nine Canadian institutional investors – six foundations, one university endowment and two charitable trusts – which will be co-investing in the mandate. Insights from the competition will be compiled in a report examining “transparency and credibility in the ESG fund management market”. A similar pitch event held in 2020 by Friends Provident and other UK charities found that many proposals from asset managers fail on social aspects.

The Philippines central bank has published draft expectations on how banks should integrate sustainability considerations within their investment activities via screening on the basis of “traditional moral values, or standards and norms”, investing alongside ESG trends and other approaches. Banks were also told to establish an effective risk management framework and sufficient board and senior management oversight on the subject. The draft is open for public comment until 1 June.

Euronext has launched a futures contract on its CAC 40 ESG index to facilitate the ongoing reallocation of assets from the CAC 40 index to its ESG version. The CAC 40 ESG index was introduced in March 2021 and excludes companies involved in coal, controversial weapons and tobacco activities. It has so far absorbed a quarter of assets under management of the CAC 40 index. The new futures contract, which is supported by BNP Paribas and Societe Generale, aims to lower the cost of trading and help market participants manage and hedge ESG portfolios efficiently in compliance with ESG principles.

Forty-five percent of asset managers, pension funds and insurers do not have ESG investment policies in place, according to a survey of more than 190 institutional investors carried out by fintech solutions provider Clearwater Analytics. A lack of available and comparable ESG data was flagged as the main reason for this by one-third of respondents that did not have a clear ESG strategy. Operational issues around managing ESG data were also highlighted in the research, with 40 percent of respondents stating they use spreadsheets for reporting. ESG data for private debt was singled out as the biggest laggard by the survey participants.

Find out more about these topics from industry leaders at the RI Europe 2022 conference, taking place in person in London on 14-15 June.