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RI ESG Briefing, Jan. 16: ‘Half of UK asset managers lagging on climate engagement’

The latest responsible investment developments

Around half of UK asset managers are lagging on climate change engagement, according to a survey from investment consultant LCP. The survey, which looked at the Responsible Investment practices of 137 managers, found only around half responded with detailed descriptions of their approach and examples of engagement on the issue.

Kenya is inching closer towards issuing a sovereign green bond, as its Treasury and UK government-funded non-profit FSD Africa seek an independent verifier for its green bond framework. The framework and first issuance, which have long been in the pipeline, are expected to set the standards of transparency to be followed by other Kenyan, as well as African, issuers. The deadline for applications is January 24, 2020. 

Société Générale has joined the Hydrogen Council, the CEO-led initiative exploring the potential of hydrogen to accelerate the transition towards green and sustainable energy. The French banking giant is part of the council’s newly created Investor Group, which will be responsible for creating new economic models for low-carbon hydrogen solutions to aid their future large-scale commercialisation.

MP Pensions, a $20bn Danish pension fund, have refused to remove the Norwegian state-run oil major Equinor from its exclusions list, saying that its recently announced target of achieving carbon neutrality by 2050 may be considered ambitious “within the fossil fuel extraction sector” but is “less so when you compare across all sectors”. According to Bloomberg, Anders Schelde, the CIO of MP Pensions said that Equinor has yet to carry out climate scenario analysis to examine the risks its faces in the carbon transition.

Trucost, the environmental data provider recently acquired by S&P, has launched a tool for investors to understand the exposure of corporate assets to climate change. According to the Trucost Climate Change Physical Risk Analytics, wildfires, heatwaves and hurricanes associated with increasing global temperature, are the greatest risk to physical assets.

FTSE Russell, the global index, data and analytics provider, has launched what it says is the first government bond index to adjust country weights based on climate risk consisting solely of European Monetary Union (EMU) countries. The FTSE Climate Risk-Adjusted European Monetary Union (EMU) Government Bond Index (‘Climate EGBI’) expands its Russell’s range of climate risk-adjusted government bond indexes and follows the launch of the ‘Climate WGBI’ in July 2019.

US drug distributor AmerisourceBergen must hand over opioid records to shareholders, a Delaware court has ruled, as the investors assess whether the firm’s board is to blame for its multi-billion-dollar legal exposure to the opioid crisis. Media reports confirmed that James Travis Laster, Vice Chancellor at Delaware Chancery Court, ordered AmerisourceBergen, one of the ‘Big Three’ drug distributors, to give shareholders records on its compliance with opioid drug distribution controls, shooting down company claims that investor demands were too broad and lacked a “proper purpose”.

Charity Bank, a loans and savings bank lending exclusively to charities and social purpose organisations, has secured £500,000 (€583,480) of equity funding from the Esmée Fairbairn Foundation, one of the largest grantmaking organisations in the UK. The bank is focused on attracting an additional £10m (€11.7m) of investments in investments from charities, trusts and foundations to allow it to lend to smaller organisations, “where the funding gap is most acute”.

Large governance downgrades by ISS, the proxy advisor, are correlated with a 1% fall in market value of US shares according to research from King’s Business School. The news comes as proxy advisers face increasing scrutiny from US regulators who have proposed that companies should be able to review proxy voting recommendations before they are sent to shareholders and increasing the shareholder support threshold for motion resubmission, in a win for pro-business groups.

Folksam, the Swedish insurance and pensions provider, is scrutinising Swedish telecommunications company Ericsson over a recently resolved US corruption case in which staff were found to have engaged in bribery. Folksam, which reportedly has a 1.25% in Ericsson valued at SEK3.84bn (€365m), reportedly said that it was not fully informed of what had occurred and needed more information from the company.

Investor initiative Climate Action 100+ should ratchet up pressure on Siemens over the firm’s support of Australia’s controversial Adani coal mine project, according to the Australasian Centre of Corporate Responsibility (ACCR), as bushfires continue to tear through the country. The advocacy group said Siemen’s decision to push forward with a AUD18m contract to supply rail infrastructure to the Carmichael mine was a “test for Climate Action 100+”, and called for immediate talks between investors and the company board. Hermes Investment Management, which leads engagement with Siemens for the initiative, said it could not comment “due to ongoing engagement”. 

Daimler, the parent company of Mercedes-Benz, reportedly faces a class-action lawsuit over the usage of diesel emissions cheat devices in 700,000 of its cars to defeat emissions testing by regulators. A group of 200 institutional investors are seeking €900m in damages alleging that stock prices had fallen from highs of €90 a share to approximately €60 in 2018 after the regulators accused the company of engaging in wrongdoing similar to the 2015 Volkswagen emissions scandal. 

S&P Global has completed the acquisition of RobecoSAM’s ESG Ratings Businesses from RobecoSAM. The unit administers the popular SAM Corporate Sustainability Assessment (CSA) – an annual evaluation of companies’ sustainability practices and provides in-depth sustainability reports on corporate performance.