RI ESG Briefing, December 13: UK’s Investor Forum publishes apparel sector toolkit

Environmental

Canada’s La Caisse de dépôt et placement du Québec (CDPQ), Sarasin & Partners and SURA Asset Management have joined the UN Portfolio Decarbonization Coalition (PDC). The coalition now convenes 31 investors overseeing the gradual decarbonization of a total of more than US$800bn in assets under management – surpassing the original $100bn target. Link

Leader of the UK’s opposition Labour Party Jeremy Corbyn has urged the £612m Parliamentary Pension Fund to divest from oil, coal, and gas companies. He and Labour’s Shadow Chancellor, John McDonnell became the 99th and 100th MP to sign the Divest Parliament pledge. Corbyn, who is also MP for Islington North, is quoted saying: “to help protect our planet, we must wean our economy off its fossil fuel dependence and do more to move towards clean and renewable energy”.

Twelve Dutch banks, insurance companies, asset managers, and pension providers have developed a new methodology for measuring the carbon footprint of their investments and loans. The Platform Carbon Accounting Financials (PCAF) – developed over the last two years – will enable the financial institutions to set their own climate based targets. PCAF’s members consist of banks ABN AMRO, ASN Bank, Triodos Bank and De Volksbank, pension funds PMT and PME, asset managers ACTIAM, Achmea Investment Management, APG, MN and PGGM, and development bank FMO. ING was urged to commit to the findings of the PCAF in a recent compliant filed against the Dutch bank last month over its indirect emissions.

German insurance giant Talanx has coordinated €832m of senior bond financing, on behalf of a group of institutional investors spanning six European countries, to Borkum Riffgrund 2, an offshore wind farm off Germany’s coastline. The ten-year bond enabled independent infrastructure investor, Global Infrastructure Partners, to acquire a 50% share in the Danish energy supplier, Ørsted, owned wind farm. The transaction value was €1.1bn. This is the second large-scale transaction of this type undertaken by Talanx, the first being the Gode Wind 1 offshore wind farm in 2015.
h6. Social

France’s insurance giant Axa has announced that it will divest an additional €2.4bn in coal assets and €700m in tar sands assets, in a move that has been applauded by campaign groups. This follows a similar reduction in coal investments by the world’s 3rd largest insurance company in 2015. Axa will reportedly use environmental NGO, Urgewald’s Global Coal Exit List to guide its coal divestment efforts.

Social

Dai-ichi Life has announced that it has bought the first ‘gender bond’ issued by the Asian Development Bank. The Japanese insurer is the sole investor in the pioneering bond, investing ¥10bn (£66m). The proceeds raised through the sale will be used by the Manila-based development bank to finance projects that promote gender equality and women’s empowerment, as part of its Strategy 2020.

4,661 social enterprise jobs were created or safeguarded in 2017 by the UK’s 12 specialist responsible finance providers, a report by Responsible Finance has found. The report ‘Responsible Finance: The industry in 2017’ also revealed that these finance providers lent £141m to 363 social enterprises in 2016-17, with 34% of social enterprises seeking some form of finance in the previous 12 months.h6. Governance

The Investor Forum, the UK engagement body prompted by the Kay Review, has published an Investor Toolkit: Working Practices in the Apparel Sector. The 11-page document provides investors with a “framework to analyse the complex issue of working practices in the apparel industry and a practical toolkit to help incorporate these perspectives into the investment process”. It identifies four focus areas: Working Practice Policies; Risk Assessment and Controls; Commitment to Improve; and Communication and Transparency. It also reviews approaches to reporting, Modern Slavery Statements, a range of collaborative initiatives and independent benchmarks and highlights relevant aspects of the recent Taylor Review of Modern Workings Practices.

New York-based proxy solicitation firm Georgeson has agreed to pay $4.5m over an alleged conspiracy to bribe an employee of a proxy advisory firm to obtain confidential information clients’ shareholder voting. As part of a deferred prosecution agreement, Georgeson has agreed to pay the criminal penalty, to continue to cooperate with the US Attorney’s Office in any ongoing investigations and prosecutions relating to the scandal, to enhance its compliance program, and to retain an independent compliance consultant.

One hundred and fifty financial firms – responsible for assets of over $81.7tn – have committed to support the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), which were launched in July 2017. The TCFD announced the growing support at the One Planet Summit hosted by French President Emmanuel Macron celebrating the two-year anniversary of the Paris Agreement.

The Institute of International Finance, the 500-member finance body, has launched a forum to support the TCFD. “Recognizing the need for peer engagement and knowledge sharing as TCFD recommendations are adopted, we are pleased to announce the launch of the IIF Forum on Implementation of TCFD Recommendations,” it said.

Leading financial institutions are continuing to fund companies behind commodity-driven deforestation, despite their commitments to tackle the issue, according to the latest report by campaign group the Global Canopy Programme. Pension funds performed particularly poorly in the rankings with Sweden’s Alecta, the Netherlands’ ABP and CalSTRS of the US all receiving a one-out-five ranking. Overall, the Forest 500 annual rankings for 2017 found just four of the leading 150 financial institutions had a zero-net deforestation commitment that covers all commodities. Link

Banks BNP Paribas, Barclays, and Standard Chartered are part of a pilot testing whether blockchain and other technologies can help unlock financial incentives that reward sustainability in supply chains. The year-long project, which has secured private and public funding of more than £600,000, will trial the concept by using a shared data system for tea farmers in Malawi that supply Unilever and UK-based supermarket Sainsbury’s.

Lawyers at ClientEarth have released new legal analysis on the responsibilities of auditors to consider climate-related risks during UK company audits. The third report in ClientEarth’s ‘Risky Business’ series highlights the findings of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). It outlines the implications of climate-related risks for auditors’ legal and professional duties and warns of increasing risks of shareholder pressure, regulatory intervention and legal liability if auditors fail to take these duties seriously.

The Shenzhen Stock Exchange in China has become the 67th partner of UN Sustainable Stock Exchange Initiative. “This means that SZSE will play a bigger role in supporting sustainable development and promoting green financial construction,” it said in a statement.