ESG round-up: SBTi calls for FIs to pilot updated near-term criteria

The latest developments in sustainable finance: Calls for UniSuper to adopt further climate risk measures fall through; HKEX commits to carbon neutral and net zero targets.

The Science Based Targets initiative (SBTi) has opened a call for financial institutions (FI) to pilot its updated near-term criteria and recommendations. The organisation published a consultation draft of its FI near-term criteria in June for public feedback, along with the draft FI near-term guidance, FI net-zero standard, and draft fossil fuel finance position paper. SBTi has reviewed the feedback and updated the recommendations accordingly. Financial institutions are invited to submit their interest before 15 December.

Calls for Aussie superfund UniSuper to adopt further climate risks management measures failed to be voted through on Friday. More than 1,500 UniSuper members last week called on the superfund to adopt short and medium-term net zero targets; evaluate its alignment to the Paris goals and exposure to transition risk of its portfolio companies; produce a climate risk report; and come up with a plan for how UniSuper will meet ISSB disclosure requirements by the end of January 2024. The recommendations were not voted through on Friday by the consultive committee.

A spokesperson for UniSuper said the fund endorses the goals of the Paris Agreement on climate change. “We have comprehensively outlined our pathway to net zero including our objective to achieve a net-zero status by 2050 and to contribute to a 43 percent reduction in Australia’s emissions by 2030. This year we enhanced our traffic light report by including science-based assessments by two highly credible institutions, SBTi and Monash University’s Climateworks,” they said.

The Hong Kong Stock Exchange (HKEX) has committed to carbon neutrality by 2024, and net zero by 2040. The stock exchange also intends to submit its science-based emission reduction targets to the SBTi for validation in 2024. As part of its carbon neutrality pledge, it will expand its carbon offsetting policy, to cover all remaining material emissions through the purchase of high-quality certified carbon credits.

The European Central Bank (ECB) has reportedly warned 20 banks that it will issue fines if they fail to address issues with their climate risk management. It comes as earlier this month ECB supervisory board vice-chair Frank Elderson threatened banks with daily fines if they do not meet supervisory expectations on climate change. European banks currently have until the end of next year to comply with guidance on managing climate and environment risks published by the ECB in 2020.

Dutch civil service pension fund ABP divested an additional €600m of fossil fuel investments in the six months to 30 June. This follows its commitment made in October 2021 to divest from most fossil fuel producers by the first quarter of 2023. The fund said it still has €5.5 billion in fossil fuel investment, with a remaining portion of equity investments of around €740 million invested through a pension pool, which is expected to be released by next year and sold.

Staying in the Netherlands, pension fund BpfBouw has taken the leading position as most sustainable Dutch pension fund in an annual ranking, following six years of ABP securing the top spot. A comparative study by the Dutch Association of Investors for Sustainable Development (VBDO) of the 49 largest pension funds in the Netherlands examined their responsible investment policies and performance, with BpfBouw placing top overall. The research also found women remain underrepresented on boards, despite commitments made to improve on this, and that on average the sector as a whole performed marginally better on sustainability.

The SDG Loan Fund has mobilised $1.1 billion of investor capital to advance the SDGs in emerging and frontier markets, using a blended finance model. The fund’s capital has been provided by a group of institutional investors including Allianz, the Dutch development bank FMO, and Skandia. The SDG-aligned loans are designed for financial institutions and intermediaries serving SMEs in low and moderate-income countries across Latin America, Asia, Africa, and Eastern Europe in three target sectors including energy, financial institutions, and agribusiness.

The University Pension Plan Ontario (UPP) has launched a climate stewardship plan outlining its climate engagement, proxy voting and advocacy priorities. The plan asks banks, high-emitting Canadian companies, and oil companies that have a significant impact on UPP’s carbon footprint to set interim and long-term GHG emissions targets in line with the Paris goals.

The Investor Group on Climate Change (IGCC), Australian Industry Group, Australian Conservation Foundation, Australian Council of Trade Unions, and WWF-Australia have called on the Australian government to deliver a substantive response to the USA Inflation Reduction Act (IRA) “to unlock maximum global capital and foster the skills and supply chains we will need”. In a statement they asked the government to “act now with a comprehensive set of policy tools, including but not limited to financial and/or tax incentives, that are equal to the immense opportunities and risks confronting us”.

The French government has released its national biodiversity strategy for 2030 as part of its COP15 agreement. The plan sets objectives for the coming decade to reduce biodiversity pressures, protect and restore ecosystems, and reverse the trajectory of biodiversity decline.

Staying in France, public pension fund ERAFP has awarded 21 socially responsible investing portfolio management mandates – 11 active and 10 “stand-by” – for listed shares in Europe and Japan, as part of the renewal of its mandates. The consultation, launched in September 2022, covered six lots corresponding respectively to six types of approach – two lots of index management and four fundamental management lots.

Seventy percent of UK firms have committed to race and ethnicity targets, according to the Diversity Project’s second annual progress report. More than eighty member firms responded to progress questions on gender, race and ethnicity, and social mobility. The research also found 85 percent of respondents are collecting gender pay gap information, but only 63 percent are publishing this externally. On social mobility, more than 50 percent of member firms reporting have adopted targets on this.