RI ESG Briefing, April 30: Finance leaders write to EU Heads of State urging decarbonisation plan

Environmental

Alecta’s Magnus Billing, Stephanie Pfeifer of the Institutional Investors Group on Climate Change (IIGCC) and Impax’s Ian Simm are among a group of 50 finance and business leaders calling for a long-term decarbonisation strategy in the EU. The open letter urges EU heads of state to endorse a strategy to achieve climate neutrality by 2050. It states: “The impacts of climate change are already affecting our bottom lines … A clear, coherent vision from European governments and institutions for climate neutrality by 2050 at the latest will give businesses like ours the long-term guidance we need to invest.’”
Climate activists will be targeting the Bank of England on release of its Inflation Report this week. On Thursday, in a protest outside its offices, they will call on the Bank of England to ‘green’ its quantitative easing programme and use all its powers at its disposal to stop the financial firms it regulates investing more in fossil fuels. The campaign, spearheaded by campaign groups Positive Money and Fossil Free London, also includes a petition that has already attracted over 3,000 signatures.
Norway’s Government Pension Fund Global (GPFG), the country’s NOK9.1trn (€942bn) sovereign wealth fund, is considering increasing its green bond allocation, according to media reports. Yngve Slyngstad, Chief Executive of Norges Bank Investment Management (NBIM), which runs the fund, cited the low costs of green bonds in a parliamentary hearing last week. The fund has NOK43.3bn in environment-related equity mandates at the end of 2018 and NOK13.4bn in green bonds, according to its annual report.
Dutch healthcare pension scheme Pensioenfonds Zorg en Welzijn (PFZW) has invested in SCW Systems, a company based in the Netherlands that plans to make a world first by producing “green gas” from sewage sludge, manure and organic waste. The investment will allow SCW to build new installations at various locations in the Netherlands. PFZW has earmarked €500m for private participations in climate, water scarcity, food security and healthcare. In the coming years even more investments will follow in companies that develop sustainability solutions.
South African bank Standard Bank has become the first company in the country to allow a climate risk shareholder proposal to be heard at its annual meeting (30 May), but has recommended shareholders vote it down. The resolution – filed by the RAITH Foundation and shareholder activist Theo Botha, with support from NGO Just Share – would require the bank to prepare a report on its exposure to climate risk in its lending, financing and investment activities. It needs the support of more than 50% of votes to pass. Tracey Davies, executive director of Just Share, commended the bank for allowing the resolution to be included. She described it as “ground-breaking step” that will “dramatically alter the landscape of shareholder activism and responsible investment in South Africa”.
Repsol and LLOG Exploration have signed an agreement to drill a delineation well at Leon, a discovery from 2014 located 200 miles offshore Louisiana in the Gulf of Mexico. Exploration wells are drilled to appraise the value of a discovery. Tomás García Blanco, Repsol’s Upstream Executive Managing Director, said: “This new project takes our collaboration to a new level […] turning challenges into opportunities that create value for our stakeholders.”h6. Social

Impax has signed the Statement of Investor Commitment to Support a Just Transition on Climate Change, now backed by over 130 institutions with $8trn in AUM. It said: “There is a key role for investors to work with other stakeholders to maximize the social benefits and minimize the downside risks of the transition for workers and communities. In signing this statement, Impax is committing to contributing to this debate.”
A coalition for integrating economic, social, and environmental considerations into the Belt and Road Initiative (BRI) launched this week, with over 100 international and Chinese partner institutions. The Belt and Road Initiative International Green Development Coalition (BRIGC) will aim to bring sustainability into BRI design and projects, serve as a platform for policy dialogue and data exchange, and facilitate cooperation of green technology. It includes China’s Ministry of Ecology and Environment, environment ministries of 25 countries that may host BRI projects, as well as organisations and enterprises. The International Institute for Sustainable Development (IISD) is a leading partner.

Governance

Vanguard is to surrender a fraction of its huge voting power to its active equity fund managers, who control $470bn on its behalf, the asset management giant reportedly announced on Thursday. Vanguard said that it would hand over voting rights of around 9% of its assets, but maintain use of its in-house investment team when voting on its vast index funds and ETFs.
Credit Suisse and Jefferies are set to lose money on a leveraged loan deal for Israeli spyware-maker NSO Group over concerns that its Pegasus software was used to target political dissidents including murdered journalist Jamal Khashoggi, according to reports. The banks are currently offering 90 cents on the dollar after earlier discounts failed to secure investor demand. NSO Group is reportedly seeking $510m to finance a buyout by UK private equity firm Novalpina Capital.
Australian phone giant Telstra has committed to review its industry memberships on climate change, following engagement by shareholder advocacy group Australasian Centre for Corporate Responsibility (ACCR). Telstra follows BHP, National Australia Bank, Rio Tinto, and Westpac who have all put in place processes to review their trade associations’ influence on climate policy. The ACCR announced this month that it would ramp up its scrutiny of anti-climate lobbying ahead of the country’s federal elections in May.
Brazil’s Bolsonaro administration has reportedly cleared the first hurdle to enacting pension reforms – a key election pledge – after a congressional committee voted to allow a bill to proceed in the country’s Congress. The proposal promises savings of $320bn in 10 years although doubts about the new administration’s ability to secure congressional backing continue.