RI ESG Briefing, Feb. 19: Investor group backing mine dam action swells to $3.8trn

The round-up of the latest ESG developments

Environmental

RBS, the UK bank, says it is currently undertaking climate scenario analysis across its main lending portfolio. In a new report, it said: “Two scenarios are being considered: a ‘Business as Usual’ 3.7°C rise and a ‘Paris Agreement’ 2°C rise.” The time frames used for analysis are aligned to RBS strategy: short 0-2 years, medium 3-5 years and long 6-30 years. Both physical and transitional risks are being incorporated. It said the results of the analysis will inform future strategy and focus areas for more in-depth climate scenario analysis.

Derivatives exchange Eurex and index firm STOXX have gone live with futures on ESG benchmarks. They cover ESG Exclusions, Low Carbon and Climate Impact and aim to “help market participants address the challenges and opportunities of ESG-driven asset management” – and SEK1.2trn (€118bn) Scandinavian fund house Swedbank Robur is supportive. “Swedbank Robur welcomes Eurex’s new ESG Family – we believe it will be a credible and cost-effective way for us to get a European ESG exposure,” said Magnus Linder, responsible for derivatives trading at Swedbank Robur. “This allows asset owners to further manage unwanted sustainability risks, seek additional alpha and better meet their various investment mandates,” says Michael Peters, Head of Equity and Equity Index at Eurex.

Ten equity funds have been recognized as the top performers on climate change in Europe at the CDP Europe Awards in Brussels, based on data from the Climetrics tool developed by CDP and ISS-climate. The funds cited include offerings from BNP Paribas Asset Management, La Financiere de l´Echiquier, La Banque Postale Asset Management, Mirova, OFI Asset Management, Candriam and NN Investment Partners.

Social

The UK’s Prince of Wales has launched a $10m development impact bond to help improve education for over 2000,000 in India through his charity the British Asian Trust. The impact bond has been launched by the Trust with support of the UK government’s Department for International Development, Comic Relief, the Mittal Foundation and the UBS Optimus Foundation.

The market for social bonds grew 41% to $11.1bn last year, according to BloombergNEF research. Government was the biggest issuer, accounting for 70% of the bonds, followed by the financial sector, with 26%.

Europe’s largest asset manager Amundi and Dutch banks ABN Amro and ING have become the latest signatories to the Platform Living Wage Financials (PLWF), an initiative to push companies in the garment sector to do more on living wages in global supply chains. The PWLF, which was launched last year and is now backed by €2.3trn in assets, is expanding its remit in 2019 to include the food and agricultural and food retail sectors.h6. Governance

The Church of England and investors now totalling £3trn ($3.8trn/€3.4trn) in assets under management have welcomed a statement by mining firm BHP that backs investors’ call on tailings dam safety. The statement follows on from a previous joint call issued by the Church of England Pensions Board, Church Commissioners for England, Sweden’s Public Pension Funds calling for a global independent public classification system and corresponding independent and public audits that monitor the safety risk of mining company tailings dams. The call was made by investors following the Vale dam disaster in Brazil. Investors are convening a high level meeting on the issue in London on April 4 chaired by the Bishop of Birmingham, David Urquhart.

Institutional Shareholder Services, the US firm known for its proxy research that is rapidly re-making itself as a full-service ESG provider, has bought Australian ESG research house CAER for an undisclosed sum. Canberra-based CAER (the name derives from ‘Centre for Australian Ethical Research’) was set up in 2000 and has been part of the Vigeo Eiris research network.

DKK127bn (€17bn) Danish labour market pension fund PenSam has reportedly added tax as a special area in its responsible investment policy following a litany of scandals. It would investigate any companies in which it invests if they pay very little tax or channel profits through tax havens, according to European pensions title IPE.

The California Public Employees’ Retirement System, the New York State Teachers’ Retirement System and the Ohio Public Employees Retirement System top the list of public pensions with shares in private prisons, CoreCivic and Geo Group, says the American Federation of Teachers (AFT). The labour union is calling on public pension funds to divest from private prisons, or at the very least engage on human rights policies. AFT has found 24 public pension plans hold more than $75m in stock in the two prison companies.

The World Resources Institute, the US-based think tank, has scanned the state of the sustainability data market. “While there is growing attention to getting better data and more robust, standardized company disclosures, it will take a wider set of actions under a multifaceted approach to meet investors’ data needs,” it says in WRI Commentary: What Investors Want from Sustainability Data.