RI ESG Briefing, October 19: UK pension funds commit to Paris Agreement

The latest industry developments


UK local authority pension funds in Merseyside and Islington, as well as the Environment Agency Pension Fund and pension pool Brunel have teamed up to commit to aligning their investment strategies with the Paris Agreement. In an initiative with ShareAction, the funds say they will take steps including increasing investments in sustainable infrastructure, reducing exposure to high-carbon assets, stepping up engagement with companies and reporting in line with the TCFD recommendations. Chairman of Merseyside Pension Fund, Paul Doughty, said he hoped other local pension funds would “follow the lead”, pointing to the scheme’s commitment to reinvest one third of its passive UK/North America equities in a low-carbon index. Likewise, Islington pension fund last year cut its passive equities carbon footprint by 45%.

The UK’s Financial Conduct Authority (FCA) has announced the Green Fintech Challenge, a programme which will provide support to firms providing “green solutions” to support the UK’s transition to a low carbon economy. Examples include mobilising capital flows toward green products and services, driving efficiency in the sector and measuring climate risk. Support includes a dedicated FCA advisor, authorisation support, and live market testing. This offering is part of FCA’s Innovate Project, which provides regulatory support to selected cohorts of companies; 40% of the programme’s first cohort have gone on to receive investment.

The first global dataset on REITs’ exposure to climate change has been released. The tool scores more than 350 global REITs and 73,000 individual facilities – mapped to the REITs that hold them – on six climate hazards. The dataset is the result of climate data house Four Twenty Seven applying its scoring model of asset-level climate risk exposure to real estate “big data” outfit GeoPhy ‘s database of REITs’ holdings. Click here to enquire about a demo.

The Ceres Investor Network, US-based investment firm Gratitude Railroad, and impact-focused private equity firm Arborview Capital are among eight new supporters to the Sustainable Wild-caught Fisheries Investment Principles, boosting the number of signatories by 50%. The principles – launched at the World Ocean Summit in March this year – are designed to “put capital to work in sustainable fisheries that can support more fish, food and prosperity for fishing communities”.

Credit Agricole has sold its first green investment notes to its clients in Italy. The bank launched its Climate Action Green Notes this month, with undisclosed terms. Proceeds will be used for Credit Agricole’s green lending.

KfW has issued the KfW EUR Green Bond 2018 – a €1bn 8-year maturity green bond. The German development bank said the bond was met with “unbroken demand” with an order book three times the issue size. Asset managers – including Achmea Investment Management, PGGM, Kempen Capital Management and Actiam – made up more than half the order book.h6. Social

More than half of institutional asset owners and investment consultants incorporating ESG see it as part of their fiduciary duty – double the percentage who said so last year, RBC Global Asset Management has found in its 2018 Responsible Investing Survey. The survey also indicated that ESG analysis is moving beyond equities, with 60% incorporating it into their fixed income portfolios , 43% in real estate, 36% in infrastructure and 34% in alternative assets. 38% of those surveyed believe ESG integration can help boost returns – but 42% said they weren’t sure.

Development Finance Institutions Finnfund in Finland and FinDev in Canada have signed an agreement to cooperate on supporting the Sustainable Development Goals. The pair will seek joint opportunities to invest in the private sector in developing markers and will collaborate on best practices, as well as knowledge sharing and providing each other with technical assistance.

A report launched at the Platform for Inclusive Finance (NpM) conference earlier this month shows that refugee customers of financial services providers perform as well or better than nationals in terms of loan repayment. The paper, available here, provides an overview of the global potential market scope of refugees as well as a review of the sector’s progress in the past few years. The conference, dedicated to improving the financial inclusion of refugees, had almost 200 guests from over 20 countries attend.

The $4.5bn Fresno County Employees Retirement Association is reportedly to partner with the Royal Bank of Canada’s asset management arm for an impact investment venture designed to aid homeownership, affordable rental housing, and small business development in California. The fund will make a $45m commitment to RBC Global Asset Management’s access capital community investment fixed income strategy – which had $1bn AUM as of September 30 – to create a portfolio of investments in California’s Fresno County.


Cbus, one of Australia’s largest super funds, has signed the Australian Asset Owner Stewardship Code, a set of guidelines to promote transparency and accountability in how funds undertake stewardship activities. Cbus CIO Kristian Fok said the fund “has a long history of active ownership” and making effort to “exercise positive influence in the interests of its members”.

The number of ESG regulations have more than doubled in the last three years across the UK, US and Canada, a new study by Datamaran has found, with the ESG data firm warning that non-financial issues are now are “must have, not a nice to have”. The report found that the most regulated topics were: Energy Use in the US Utilities; Product and Service Safety across all regions in Healthcare and Pharmaceuticals; and Business Ethics in the Financial Services across all countries.