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RI ESG Briefing, Sept. 20: PGGM, Bâtirente tackle Canadian convenience store group at AGM

The latest ESG market developments

Environmental

The Australian Securities and Investments Commission (ASIC), the country’s corporate, markets, financial services and consumer credit regulator, has found that listed companies could do more to improve the consistency of climate risk disclosure. A new report found “very limited” climate risk disclosure outside of the top-200 companies while some disclosures were “of limited use to investors”. ASIC suggested using the Taskforce on Climate-related Financial Disclosures (TCFD).

Seattle University is set to become the first university in Washington state to divest its endowment of fossil fuels over the next five years, according to report. The Seattle Times said the university estimates its $230m endowment has 6.7% of its portfolio ($13.6m) in fossil fuel investments.

The global transition to a low-carbon economy is providing an opportunity for financial centres to play a leading role in unlocking the potential of sustainable growth, according to a new report. An estimated investment of US$500 billion per year between now and 2030 will be required in order to keep global warming under 1.5° Celsius. As North America’s second largest financial centre, Toronto is well-positioned to develop and expand expertise and talent in sustainable finance and capitalize on this economic opportunity, according to a new report released today by Toronto Finance International (TFI) in collaboration with Ernst & Young LLP (EY Canada) and Corporate Knights.

Social

The Dai-ichi Life Insurance Company has become the first Japanese asset owner to sign the investor statement of the Access to Medicine Foundation, becoming the 73rd signatory to pledge support to the Foundation’s research. As one of the largest life insurers in Japan, Dai-ichi Life manages assets of US$342bn. “We have decided to publicly endorse and sign the investor statement of the Access to Medicine Foundation because we believe that both pharmaceutical companies and investors have respective roles to play in improving access to medicine,” said Miyuki Zeniya, General Manager, Responsible Investment Center at Dai-ichi. The firm will use the foundation’s research and analysis to gain insights into pharmaceutical companies’ performance in material ESG issues. “We will apply those insights when evaluating the medium- and long-term growth potential of pharmaceutical companies and when engaging with those companies.”h6. Governance

Shareholders in Alimentation Couche-Tard were today set to ask the Canadian convenience store group for greater transparency in its management of environmental, social and governance (ESG) issues. Montreal-based engagement firm Æquo was to present a joint proposal from two shareholders (Bâtirente and the Netherlands’ PGGM) at the company’s AGM. Link

Hermes has called for bond and equity holders to unite to engage with companies. The UK-based firm, now part of Federated Investors, have released a new report called We Can All Get Along, written by Co-Head of Credit Mitch Reznick and Hans Christoph-Hirt, Head of Hermes Equity Ownership Services, which seeks to dispel the myths surrounding joint company engagements between bondholders and long-term shareholders. They argue there are strategic issues that are relevant to a company’s current and likely future health and value creation, including the management of ESG (environmental, social and governance) factors.

The Interfaith Center on Corporate Responsibility (ICCR), the $400bn investor coalition, has issued a new report on methane disclosure. Methane Disclosure in the Oil & Gas Industry: Tracking the Impact of Shareholder Engagement evaluates 23 upstream and midstream oil and gas companies on thirteen methane-specific metrics considered material by ICCR’s investor network.

Sustainable fund firm WHEB Asset Management has hit out at the “terrifying circularity” at Elon Musk’s car firm Tesla. “Tesla has a lousy governance approach, in our view, as indeed do Elon Musk’s other companies,” writes Partner Ted Franks in a commentary. “Its valuation was (and still is, by some measures) completely out of kilter with its prospects. Alarmingly, it seems to need that high valuation, to make it possible to raise the cash needed to make the story work. This is a terrifying circularity.” He goes on: “We remain fans of Tesla (if not its stock) and hope that the revolution they started continues.” But recent events have “reminded us of the importance of sustainability in the holistic sense”.

Ratings firm Moody’s Investors Service is seeking feedback from market participants on its proposed new cross-sector methodology for assessing environmental, social and governance (ESG) risks. The methodology would describe Moody’s general principles for assessing ESG risks in its credit analysis globally and apply to all issuers, even where these considerations are not explicitly described in a sector-specific methodology. Feedback is sought by October 18.

Governance is one of the key themes at this year’s International Forum of Sovereign Wealth Funds (IFSWF), which celebrated the tenth anniversary of the Santiago Principles. The meeting, held from September 18-21 in Marrakesh, is entitled Governance, Investment and Innovation in a Changing World and is hosted by Ithmar Capital, the Moroccan strategic investment fund. Disclosure: Responsible Investor’s Managing Editor Hugh Wheelan is moderating several sessions at the event.