RI ESG Briefing, December 4: PRI gathers support for statement on aviation sector

The round-up of the latest sustainable finance developments

The Principles for Responsible Investment is gathering signatory support for an investor statement focusing on the aviation sector. According to the draft, signatories to the statement expect airline and aerospace companies to have board-level oversight of climate change policy, robust transition plans, reducing emissions throughout the value chain, strong governance framework and TCFD-compliant reporting.

UniCredit has committed by 2023 to both exit thermal coal and increase its exposure to renewables by 25%. The Italian lender, which has €831.5bn in assets, has also introduced policies prohibiting the funding of thermal coal mining, coal-fired energy generation, Artic oil and offshore gas extraction, shale and related fracking activities, tar sands oil and deep-sea mining.

AXA has also recently announced new long-term climate commitments. The French insurer has committed to exiting coal within EU and OECD countries by 2030 and everywhere else a decade later in 2040. AXA will also no longer underwrite new and existing property and construction businesses with any coal-related project. Since 2017, AXA does not invest in companies where coal accounts for more than 30% of revenue and / or those which extract over 20MT coal.

Spanish pension fund management company Fonditel Pensiones has become the first Spanish institutional investor to join the environmental shareholder network the Institutional Investors Group on Climate Change (IIGCC). 

Pensionsmyndigheten (the Swedish Pensions Agency) has announced that its internally managed SEK 45bn (€43bn) traditional insurance asset portfolio is now fossil free. It started divesting from companies that produce or distribute fossil fuels as their main business in 2016. The portfolio is also in the process of excluding weapons, alcohol, tobacco, gambling and pornography, redirecting capital companies that contribute to promoting the UN's 17 global goals for sustainable development. Fund department head Erik Fransson, said: “I am convinced that the transition will benefit our savers' return over time, partly because fossil assets can suddenly lose value.”

Twenty-one investors, representing nearly £2trn in AUM and including the likes of Legal and General Investment Management, Hermes EOS, BMO Global Asset Management, and Nest have written to 15 corporates asking they pay their staff the real living wage. The letters, set to CEOs as part of a campaign coordinated by ShareAction, outlined the “growing business case for Living Wage accreditation which has proven to boost productivity, reduce staff turnover and improve employee relations”. The companies chosen are some of the largest in the UK listed on the FTSE 100 and FTSE 250 and include Just Eat, JD Sports, and Royal Mail.

InfluenceMap has released a report tracking instances of corporate lobbying to “water down” the taxonomy element of the EU Sustainable Action Plan. According to the transparency non-profit, 49 out of 50 of Europe’s largest financial groups retain membership to trade associations which has lobbied against a progressive taxonomy such as the European Fund and Asset Management Association (EFAMA), the Association for Financial Markets in Europe (AFME), the European Banking Federation (EBF) and EuropeanIssuers.

Major Italian asset manager Eurizon has revealed to RI that it is in the process of signing up to climate shareholder initiative Climate Action 100+, as part of a bigger push by the firm on collaborative ESG engagement.

Norges Bank Investment Management, the manager for the trillion-dollar Norwegian sovereign wealth fund, has removed Petrobras from its exclusions list after being satisfied that the Brazilian state-owned utility has implemented “comprehensive improvement measures” to address severe internal corruption. In 2017, Petrobras was implicated in the “car wash” corruption scandal considered the worst in Brazilian history.

The Fair Tax Mark initiative said the FAANGs (Facebook, Apple, Amazon, Netflix, Google) plus Microsoft continue to shift profits to tax havens, especially Bermuda, Ireland, Luxembourg and the Netherlands. In a report analysing the 'Silicon Six', The Fair Tax Mark found the companies' global tax gap could amount to $100bn after reviewing 10-K and 10-Q fillings in the US.

Follow This, the environmental shareholder group, has welcomed a commitment by Spanish oil and gas company Repsol to slash emissions to net zero by 2050, making it the first oil major to align with the Paris Agreement. Mark van Baal, Follow This founder, said: “Finally, the first oil major CEO has the guts to break ranks and change course. We hope shareholders and customers will reward CEO Josu Jon Imaz for his bold and brave decision, and other oil majors will follow.”