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ESG Round Up: SEC’s Gensler calls for ESG ‘nutrition labels’

The latest developments in sustainable finance: EBRD to vote on Russia and Belarus activity; ERM buys Australian consultancy; Kempen stewrdship report

Investors should be able to assess data on the sustainability performance of ESG funds in the same way that consumers use food and nutrition labels, said SEC boss Gary Gensler in a video uploaded to Twitter yesterday. It is part of an ongoing push by the US financial regulator to stamp out greenwashing by bringing in stricter disclosure rules for fund companies who market their products as being sustainable. In the same video, Gensler noted that there was no standardisation of ESG practices and questioned whether existing ESG funds were backing up their sustainability claims with data.

Witan Investment Trust has joined the Net Zero Asset Managers Initiative and has set a net zero target for its investment portfolio, claiming to be the first investment trust to do so. Witan, one of the largest investment trusts in the UK at £1.9bn, said it would work with its fund managers to achieve its net zero commitment. All of the eight managers it uses are PRI signatories, and half have already signed up to the Net Zero Asset Managers Initiative.

The Governors of the European Bank for Reconstruction and Development are to vote on suspending the access of Russia and Belarus to the bank’s finance and expertise following their invasion of Ukraine. The Governors will have 30 days to vote on the resolution, and a two thirds majority is required for it to pass.

Kempen Asset Management voted against management on 56 out of 102 shareholder proposals tabled at AGMs in 2021 and withheld votes from management at two thirds of meetings, according to its annual stewardship report. The €92bn manager voted in favour of a proposal at Alphabet requiring an independent director nominee with human or civil rights experience, and voted against three members of the compensation committee over “poor stewardship of the company’s pay programmes”.

ESG consultancy ERM is expanding its footprint with an Australian acquisition. It is acquiring Point Advisory, a Melbourne-based firm focused on climate change and sustainability, according to an article published by the Australian Financial Review. Last May, ERM changed hands: Canadian pension funds Ontario Municipal Employees Retirement System and the Alberta Investment Management Corporation sold it to current owner KKR.

Hong Kong’s audit regulator the Financial Reporting Council (FRC) has established an advisory body to provide recommendations on “strategic actions that should be considered in relation to the global developments in financial and sustainability reporting”. It comes as EU regulators and accounting standard-setters IFRS commence work on parallel corporate sustainability disclosure standards. The advisory body includes representative from HSBC, the Asian Corporate Governance Association, McKinsey, KPMG and PwC.

Some 90 companies, including GE and Ford, have partnered with the US government in a new decarbonisation drive to reduce enterprise emissions by half within a decade. However, the initiative only considers Scope 1 and 2 emissions, and not Scope 3 – referring to the indirect emissions produced by an organisation’s customers and suppliers. The approach contrasts with that of the TCFD, the Science Based Target Initiative and other mainstream climate bodies which count both direct and indirect emissions towards an organisation’s carbon footprint.