ESG Round-up: PRI boots out Russia’s VTB Capital Asset Management

The latest developments in sustainable finance: EOS to suspend Russian engagements, 50% of UK pension funds have impact investments

The Principles for Responsible Investment will delist the asset management arm of Russia’s state-owned VTB Bank, which has been subject to UK sanctions following the Russian invasion of Ukraine. The manager, which held assets worth $58bn at the end of 2021 and manages more than 60 funds, joined in September 2021 and so was yet to submit a public report. The VTB Group press office did not respond to a request for comment about the decision.

The US Securities and Exchange Commission may propose its landmark climate risk rules as early as Wednesday next week, according to reports in Reuters, with the regulator committed to issuing the proposal before the end of the month.

EOS at Federated Hermes will suspend engagement with Russian companies, claiming it is “highly unlikely” such firms will meaningfully engage. The UK-based specialist will also ask non-Russian companies with connections to the country to explain how they are ensuring employee safety and due diligence measures. EOS has also released its engagement strategy for the next two years, identifying climate change, human and labour rights, human capital, and board effectiveness and ethical culture as its four priority themes for 2022. Over the course of 2021, it engaged with 1,208 companies on 4,154 issues, and made positive progress on 835 issues, it said.

Twice as many female directors have sustainability expertise than male directors, according to a report from the Diligent Institute examining boards in Japan, the EU, US, UK and Canada. The report found a small increase in the share of board seats held by women compared with last year, rising from 27% to 29%, and the proportion of chair and lead directors that are women rising from 8% to 10%. The report also found that female directors are far more likely to hold ‘independent’ status than men (84% compared with 59%) and that 52% of women hold more than one board position versus 36% of men – suggesting boards tap the same small group of women instead of new talent.

Meanwhile, MSCI has predicted it will take until 2042 for women to reach 50% representation on boards. While four out of five European companies have more than 30% female representation on their boards, only 5.2% in developed markets have a female CEO – a figure rising to 5.4% in emerging markets. Just 1.2% of companies in the MSCI ACWI had a majority female board.

Impact investments average 4.87% of UK pension scheme assets, with more than half of the country’s pension funds having some exposure to the asset class. A survey of £150bn of pension funds by Pensions for Purpose found that social infrastructure and affordable housing were the most popular social impact investments. The £9.9bn South Yorkshire Pensions Authority said a lack of scale, lack of clarity over social impacts and investments not fitting a fund’s financial objectives were the main barriers to making social impact investments for them.

Singapore’s DBS has established a new board sustainability committee. The four-member committee will be chaired by DBS’ CEO, and will provide oversight for the bank’s sustainability goals, targets and disclosures, as well as stakeholder engagement and governance of sustainability matters.