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RI ESG Briefing, August 4: Scott Stringer, CDP, Bloomberg, Swiss Re, VW

The round-up of the latest ESG news

Environmental

Scott Stringer, Comptroller of New York City, is assessing proposals for carbon footprinting and climate risk consulting services for The New York City Retirement Systems. The systems, which include pension funds for the city’s police force, fire department and education sector, are seeking a firm – or firms – to footprint portfolios and improve the systems’ and the Comptroller’s “understanding of the portfolio risks and opportunities that climate change presents”. The selected provider will also assist “one or more systems in prudently incorporating a focus on climate change risk into their long-term investment strategy”, according to the Request for Proposals, which closed last month. The submissions are now being assessed, and a firm is expected to be selected this month or next, with a contract beginning in October.

The CDP will score efforts to tackle deforestation by the most impactful firms within production, processing, trading, manufacturing and retail. The environmental NGO has partnered with South Pole Group to rate firms on the comprehensiveness of their assessment of deforestation risks relating to operations, reputation and regulation. It will also look at whether these factors are integrated into business planning. The results are due to be published in December.

Michael Bloomberg has written to the SEC urging it to acknowledge the Sustainability Accounting Standards Board (SASB) standards as appropriate for use by companies preparing their SEC filings to comply with Regulation S-K. The SEC is currently consulting on Regulation S-K, including seeking views on sustainability reporting.

Forty-one names from the world of responsible investment, including ShareAction Chief Executive Catherine Howarth, David Zellmer, CIO at Wespath Investment Management and Julian Poulter, CEO of the Asset Owner Disclosure Project, have signed their names in support of Preventable Surprises’ ‘Missing 60%’ campaign. The movement, headed by Preventable Surprises Founder and CEO Raj Thamotheram, aims to engage investors in US companies who did not vote in favour of climate change disclosure resolutions, which attracted approximately 40% backing at 2016 AGMs. Other signees include E3G Chairman Tom Burke, ICCR’s Program Director for Climate and Environment, Christina Herman, and Sonia Kowal, President of Zevin Asset Management.h6. Social

The Charity Commission, the UK regulator for charities, has published guidance for trustees on the new social investment power introduced this month ahead of the Charities (Protection and Social Investment) Act 2016 coming into force. It means that, for the first time, social investment has been defined in UK regulation. When introducing the new power in the House of Lords, Lord Bridges of Headley said the intention of the power was to “help charities to make social investments so that they can fulfil their mission in new and innovative ways” and that it would “give charities the confidence and certainty to invest in this growing sector”.

Rating agencies are a growing force within socially responsible investing, says the latest issue of The Cerulli Edge – Global Edition. Cerulli expects that retail investors and private banks will be the main market for ESG funds ratings. “Although institutional investors are the primary drivers of demand for sustainable investment, they prefer mandates and bespoke solutions―thus generic ESG scores will be of little value to them,” says Barbara Wall, Europe managing director at Cerulli. Justina Deveikyte, a senior analyst at Cerulli, adds that rating agencies can produce very different ESG ratings for the same companies or funds. “It is therefore crucial that users understand the differences in the methodologies used by the agencies, and not blindly count on one ESG score,” she says.

Governance

Alexander Dobrindt, the German Transport Minister, has reportedly said that his office has received a French report on emissions levels at Renault and other car manufacturers, which shows similar abnormalities to those seen that triggered the recent Volkswagen emissions scandal. Elsewhere in Germany, the Bavarian state finance ministry has announced that its €2.1bn civil service pension fund, Bayerische Pensionsfunds, will be suing Volkswagen for damages of €700,000 over its use of so-called ‘deceit devices’ that disguised vehicle emissions during tests. A spokesperson from the ministry pointed out, however, that Pensionfunds had not made an actual loss on its holdings in the German car maker.