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RI ESG Briefing, February 28: Generali, KLP, ACTIAM, Alaska Permanent Fund, InfluenceMap, Trillium, Russell

The round-up of the latest ESG developments.

Environmental

Italian insurance giant Assicurazioni Generali will divest from the coal industry and raise investments in “green” projects, as part of a new climate change strategy. The insurer intends to divest its current holding of €3.5bn by 2020, and raise investments in “green” sectors to the tune of €3.5bn euros by 2020, mainly through green bonds and infrastructure. Generali is the latest in a growing band of European asset managers to step up efforts to tackle environmental issues, with AXA and Allianz engaged in divestment from coal as well as other environment-oriented moves. Link

Dutch responsible investment heavyweight ACTIAM has joined the Institutional Investors Group on Climate Change (IIGCC), the European forum of investors collaborating for a low carbon future.

The $62bn Alaska Permanent Fund (APFB) is being pressed by climate change activists in the capital Juneau to divest from fossil fuels, local media have reported. The group – called 350 Juneau – presented both a financial and ethical case of why the APFB should divest its $5bn fossil fuel holdings in companies such as Halliburton, Exxon, BP, and Tesoro at the fund’s board of trustees meeting.

As links to climate-lobbying trade groups prompt shareholder resolutions at BHP and Rio Tinto, new research from UK thinktank InfluenceMap has identified the 10 companies likely to be hit next. Pfizer, Microsoft, IBM and UPS are among the companies named as having climate stances at odds with lobby groups such as the National Association of Manufacturers, the US Chamber of Commerce, and the American Legislative Council. BP and Shell also feature on the list.

Social

The Global Steering Group for Impact Investment (GSG) has announced the launch of a National Advisory Board (NAB) for Impact Finance in the Republic of Korea. The NAB is intended to encourage the growth of social enterprise and impact investment within Korea, and aid the country’s progress on the UN’s Sustainable Development Goals (SDGs). Professor Chul Woo Moon, the expert on impact finance and social economy will chair the new body.

UK’s Pension Minister Guy Opperman has reportedly called on the country’s pension schemes to invest in more sustainable and ethical assets, announcing that he will be issuing a consultation to further encourage trustees to invest ethically. He was speaking at the Trades Union Congress Pensions Conference in London.

FTSE350 companies are not pulling their weight as key national employers in terms of promoting both growth and inclusion, according to analysis published by The Good Economy (TGE) this week. The TGE Job Ratings analysis says business employers “must create well-paid and fulfilling jobs” if Prime Minister Theresa May’s aim of achieving an inclusive economy is to be reached.

Eastspring Investments, the Asian asset management arm of Prudential plc, has signed the UN-supported Principles for Responsible Investment – saying integrating ESG considerations into investment decisions is “part of our fiduciary responsibility to our clients”.h6. Governance

Norwegian pension manager KLP has excluded the same four shipping companies that were divested in mid-January by Norway’s giant sovereign wealth fund, the Norwegian Government Pension Fund Global due to concerns over the beaching of decommissioned ships for scrapping. KLP stated its decision to exclude Evergreen Marine Corporation Ltd, Korea Line Corporation, Precious Shipping PCL, and Thoresen Thai Agencies PCL was due to “an unacceptable risk that these companies contribute to serious environmental damage and gross human rights violations”.

The £110m (€124m) bonus to the CEO of housebuilder Persimmon has been deemed “preposterous” and “grossly excessive” in a wave of criticism from shareholders, the Financial Times has reported. The comments follow CEO Jeff Fairburn – one of the UK’s most highly paid executives – promising to donate some of his bonus to charity. Aberdeen Standard Investments, the company’s sixth largest shareholder, said the issue remained a “huge concern” and called on fellow shareholders to “consider their voting positions” of Persimmon’s board at the company’s AGM in April.

US SRI fund firm Trillium has urged Starbucks shareholders to support a resolution aimed at promoting diversity within the company. The proposal asks the US coffee giant to disclose workforce diversity metrics as well as diversity programs and policies, saying current diversity disclosures are “insufficient”. Starbucks holds its AGM on March 21. Link

Institutional investors are focusing on alternative investments, ESG and risk management, according to a survey by Natixis, reported by Institutional Asset Manager. The survey found that the integration of ESG factors into investment strategy is increasingly being used to help manage risk and enhance return potential, with values being the primary driving factor cited this year. This contrasts with last year’s survey, which found that investors were integrating ESG to comply with their company mandate or policy

A new ESG-scoring method that takes materiality into account has been created by global asset manager Russell Investments, the Sustainability Report says. Russell says evidence suggests that material ESG scores are better predictors of stock return than traditional, non-material ESG scores. The method values the materiality of a given ESG factor that is relevant to a particular company, allowing investors to distinguish which companies are scoring highly on ESG issues that are financially material to their business.

BNY Mellon, the asset management and custody giant, has announced that its Depositary Receipts division has agreed to take MSCI ESG Research. Corporate clients will be able, a statement said, to “measure how the market perceives them” from an ESG perspective. Depositary receipts are instruments issued by a bank to represent a foreign company’s listed securities. Terms of the deal weren’t disclosed.