ESG round-up: Vanguard fined by Australian regulators over misleading disclosures

The latest developments in sustainable finance: Railpen updates voting policies; PRI, CFA Institute and GSIA work on ESG terminology project.

The Australian Securities & Investments Commission (ASIC) has issued infringement notices to Vanguard Australia for alleged greenwashing following concerns that its Product Disclosure Statements (PDS) “may have been liable to mislead” investors by claiming to prevent investment in companies involved in significant tobacco sales. Though the funds excluded makers of cigarettes and other tobacco products, they didn’t exclude companies involved in tobacco sales. The investment manager paid a A$39,960 ($27,000; €26,000) fine in compliance with the infringement notices. In a statement, Vanguard described this as an “inadvertent error” which it self-reported to the ASIC in line with statutory obligations. “The error in the Product Disclosure Statements did not result in any adverse financial impact on investors, and at no time would any of the three funds have held different securities if it had tracked the misdescribed index.”

Railpen has published its revised global voting policy for the 2023 AGM season, introducing new policies on climate transition plans and biodiversity, cybersecurity and mental health. The pension scheme, which manages £35 billion ($42.7 billion; €40.6 billion), has also enhanced its voting and engagement positions on dual-class structures, fair pay, the treatment of gig economy workers and modern slavery.

Together with the Principles for Responsible Investment (PRI) and CFA Institute, the Global Sustainable Investment Alliance is collaborating on an ESG terminology project to refine and align sustainable investing terms. The announcement was made at PRI in Person in Barcelona last week. The organisations are aiming to produce a resource for the industry which will explain approaches to ESG investment, clarify and align ESG terminology, and provide guidelines for the use of the terminology.

Aviva Investors has called for antimicrobial resistance (AMR) to be tackled ahead of the start of COP15 this week. Its research, in partnership with the British Society for Antimicrobial Chemotherapy and the University of Exeter, found that climate change and biodiversity loss are likely to increase the severity and frequency of AMR as well as stopping certain medicines from working. To address this, the asset manager is calling for an AMR panel of scientists to be formed similar to the Intergovernmental Panel on Climate Change, to ban the use of antimicrobials in agricultural supply chains and for global leadership to further progress on antimicrobial development.

Korean Re, Asia’s second largest reinsurance company, has announced that it will no longer be providing reinsurance for new coal mining or power plant construction from 2023. The reinsurer is the latest company to adopt coal-exit policies, with 60 percent of the market, including Hannover Re and Swiss Re, announcing policies. Despite the policy, NGO Insure Our Future said that Korean Re’s policies are much weaker than those of its international peers, as it does not address reinsurance treaties for ongoing coal operations and allows exceptions based on national energy policies or demand in developing countries. Responsible Investor has contacted the company for comment.

The Investor Group on Climate Change (IGCC) has welcomed the Australian government’s decision to establish net-zero emissions sector pathways based on the recommendations of independent statutory body The Climate Change Authority. Erwin Jackson, IGCC policy director said: “In September this year, the IGCC released its members’ priorities for the policies that will support investors funding the transition to net zero. Sector by sector targets and pathways were one of the recommendations in the report, so we are pleased to see the Climate Change Authority making the aligned recommendation and the government establishing this approach.”

An independent environmental and human rights legacy impact assessment of Rio Tinto’s former Panguna mine will begin in Bougainville this week. Last year, the company publicly committed to fund the independent assessment following a human rights complaint brought forward by the Human Rights Law Centre on behalf of 156 local community members. The complaint alleged that massive volumes of mine waste pollution left behind by the mine is putting the community at risk due to pollution issues.

Seven in 10 employees from an ethnic minority background are experiencing racial discrimination within financial services, according to a report by campaign group Reboot. The study found that 82 percent of people have experienced unwelcome comments based on their background, with 25 percent of respondents saying racial jokes are still tolerated in their workplace. The survey, which collected data from 800 people working in financial services roles, also found that 44 percent of ethnic minorities said the speed of their career progression has been slower than their white peers, with 32 percent saying they don’t have the same opportunities as these colleagues.

Up by over 20 percent from last year, 66 percent of FTSE 350 companies now have at least one board member from an ethnically diverse background according to research from Thomson Reuters. The study found that the FTSE 100 are performing the best, with 84 percent having at least one board member from an ethnic minority background, compared to only 55 percent of the FTSE 250.