ESG Briefing: Generali firms up Sycomore acquisition

Environmental

Italian insurer Generali has announced it has acquired a “majority stake” in Sycomore Asset Management, the Paris-based investor known for its environmental and socially-responsible funds. Talks around the new “strategic partnership” were confirmed last September, following market rumours that a deal was on the cards. Generali, which faced questions over its insurance of coal projects in Eastern Europe at its annual meeting last year, states that the deal will “strengthen its focus and capabilities on sustainability and responsible investments”.
Corporate issuance in the green bond market has helped break records for the asset class, bolstered by debut deals from the telecommunications sector. The latest quarterly report from Swedish bank SEB says the green bond market hit a periodic high in January, beating the previous January by 17% when it came to overall issuance. Corporate issuance accounted for 65% of the deals (up from 53% YoY), with telecoms a welcome new player for those investors looking for diversification in a market that has typically been led by SSAs and banks. Green bonds out of Sweden rocketed 400% to $1.3bn, with the US, France, Canada and Spain also seeing major growth in issuance.

Social

Europe’s largest asset manager Amundi and Dutch banks ABN Amro and ING have become the latest signatories to the Platform Living Wage Financials (PLWF), an initiative to push companies in the garment sector to do more on living wages in global supply chains. The PWLF, which was launched last year and is now backed by €2.3trn in assets, is expanding its remit in 2019 to include the food and agricultural and food retail sectors.
The Prince of Wales this month launched a $10m development impact bond to help improve education for over 2m in India through his charity the British Asian Trust. The impact bond has been launched by the Trust with support of the UK government’s Department for International Development, Comic Relief, the Mittal Foundation and the UBS Optimus Foundation.
The market for social bonds grew 41% to $11.1bn last year, according to BloombergNEF research. Governments were the biggest issuers, accounting for 70% of the bonds, followed by the financial sector, with 26%.
UK-based charity Allia, which consults with impact investment organisations, has acquired a controlling interest in fixed income broker City & Continental. Allia specialises in bond issuance across social sectors such as housing and education. It is behind the Retail Charity Bond platform on the London Stock Exchange which has raised £200m. City & Continental will maintain its name and services while also providing new debt finance solutions for charities and impact businesses under the Allia Impact Finance brand.The California Public Employees’ Retirement System, the New York State Teachers’ Retirement System and the Ohio Public Employees Retirement System top the list of public pensions with shares in private prisons via CoreCivic and Geo Group, says the American Federation of Teachers (AFT). The labour union is calling on public pension funds to divest from private prisons, or at the very least engage on human rights policies. AFT has found 24 public pension plans hold more than $75m in stock in the two prison companies.
The UK’s Department for International Development is to hold a “national conversation” to find out more about the public’s views on ethical, responsible, and impactful investment practices. The scheme, which builds on a broader government work on mainstreaming social impact investing, will be carried out through a series of focus groups and events across the country, as well as a national survey, with the results to be published in autumn.
UBS is to pilot a personalised ESG investment programme that matches client values with the best performing investments. The pilot, which will be introduced in the first quarter of 2019, allows investors to rate how much they care about specific ESG criteria, giving them a personalised sustainability score which will be compared against more than 20,000 ESG-rated stocks and bonds to find the best match.

Governance

The £34.5bn UK pension pool London CIV has published its responsible investment policy. It says it requires all its investment managers to have a responsible investment policy and vote in accordance with the Local Authority Pension Fund Forum (LAPFF). London CIV’s guiding principles in its RI document include human rights, climate change and fossil fuel risk.
Hermes says last year it engaged “nearly all” the 50 companies making up its Hermes SDG Engagement Equity strategy – the portfolio it launched in 2018 to invest specifically in small- and mid-cap companies that “can – through engagement – contribute meaningfully to the SDGs”. The firm’s engagements have included talking to a caterer about hiring from typically underemployed constituencies, and introducing a South African resources company – which employs a demographic shown to have high rates of HIV – to a US pharmaceutical company involved in HIV awareness-raising. Lead Engager Will Pomroy said Hermes hopes to “actually start to set out KPIs and get them to commit to specific actions” in 2019.
CEO pay has dropped at almost half of UK FTSE 250 firms since 2017, with the average pay falling by over 10%, according to new research from Vlerick Business School’s Executive Remuneration Research Centre. The study, which examined the pay levels, habits and incentives of CEOs and CFOs in 862 companies in major stock indexes across Europe, also found that companies in Germany and the UK pay CEOs significantly higher than in the rest of the continent.