RI ESG Briefing, Jan. 23: Church of England Pension Board to launch “Paris-aligned” passive index

The latest responsible investment developments

The Church of England Pension Board is launching a “Paris-aligned” passive index next Thursday at the London Stock Exchange. It is expected that a significant portion of the £500m (€592m) the Church invests in passive equity indexes will be shifted to the new index. The index draws from the Church’s work on the Transition Pathway Initiative (TPI), alongside FTSE Russell and the Grantham Research Institute at the London School of Economics, which uses publicly disclosed company information to gauge the quality of companies’ management of greenhouse gas emissions against international targets and national pledges made under the Paris Agreement. The news came as the Church revealed it had joined the Net Zero Asset Owner Alliance, alongside insurer Generali. 

Credit Suisse has become a signatory to the Poseidon Principles, which seek to enhance the role of maritime finance in addressing global environmental issues, and to the goal of reducing shipping’s total annual greenhouse gas emissions by at least 50% by 2050. The Swiss banking giant – one of the world’s leading ship financiers – made the announcement at the World Economic Forum (WEF) in Davos that it had part of a group of now 16 financial organizations that have signed the principles, which were developed by the Global Maritime Forum and launched last year.

Four-hundred financial players will be ranked on their performance and impact on meeting the UN Sustainable Development Goals (SDGs), after they were included in the World Benchmarking Alliance (WBA)’s 2,000 most influential companies for a sustainable future. The list, called the SDG2000, is comprised of companies with the most impact across seven key transformation areas: food systems, decarbonisation and energy, circular economy, digital, financial, urban and social – and includes pension funds, sovereign wealth funds, asset managers, insurers and more. WBA said the work is part of its mission to measure the private sector’s sustainability impact and efforts with one global accountability mechanism. 

GRESB (Global Real Estate Sustainability Benchmark) is upgrading its Asset Portal so managers can assess specific ESG risk exposure at an asset-level, and introducing a new asset-level validation process. The ESG real assets data provider said asset-level reporting “will facilitate the next evolution in data accessibility and reliability” in its assessments and benchmarks. It also confirmed its 2020 GRESB Real Estate Assessment will include an integration with the Carbon Risk Real Estate Monitor (CRREM) methodology to show real estate carbon transition pathways at both asset and portfolio level to remain within 1.5 and 2.0 degrees of warming. 

Sustainable debt in Nasdaq’s European Debt Market grew by 65% last year, the fifth consecutive year of growth since the exchange group launched the world´s first market for sustainable bonds in 2015. While green bonds continue to dominate the market, 2019 saw the first social bonds listed in Stockholm and Iceland. Nasdaq also launched its Sustainable Bond Network, “a platform for increased transparency in the global sustainable bond markets”, in December.

The UK’s Prince Charles has launched a Sustainable Markets Council at Davos. The advisory body of public-private philanthropic leaders will aim “to demonstrate the potential of sustainable markets, which can ensure that the economy operates in favour of the planet while contributing to continued prosperity”.

Investors still struggle to accurately compare impact results across the market, and cite a lack of transparency as a challenge, according to a new report from the Global Impact Investing Network (GIIN). The State of Impact Measurement and Management (IMM) Practice survey is the second time the GIIN has analysed the IMM market. It also finds that investors describe increasing sophistication in IMM with 90% or more noting some progress in that past three years.

The UAE Guiding Principles of Sustainable Finance launched in Abu Dhabi last week. It coincided with an announcement by the Abu Dhabi Department of Energy of a planned consultation on green bond standards and plans for a social impact bond this year.

The Society for Threatened People (STP) has filed a complaint with the Swiss National Contact Point, under the OECD Guidelines for Multinational Enterprises system, against BKW Energie for violation of indigenous peoples’ rights concerning the construction of a wind farm in Norway. The NGO was considering, but decided against, including Credit Suisse, which has financial ties to the wind farm, in the complaint. In a statement STP said: “In October last year, we completed a mediation process with Credit Suisse facilitated by the Swiss NCP. As a result of this, CS agreed to adapt its internal policies to give more weight to indigenous rights in its project-related investments. We eagerly await for these changes to be implemented and in the meantime continue to closely monitor the Bank’s business conduct. We will see what this means for the Fosen Vind project.” 

Lyxor Asset Management, part of Societe Generale Group, is integrating ESG filters into its sovereign bond management business. The firm said it was using MSCI data to assess countries’ long-term economic sustainability taking into account its ESG risk exposure, overweighting sovereign bonds with good ESG scores without excluding others. Governance is given a 50% weighting, with social and environmental representing 25% each. The firm said: “We assume that good governance, including the effective functioning of a country's financial, political and legal institutions, is a dominant factor in a country's ability to address environmental and societal risks and to ensure the sustainability of its economic policy choices.”

MSCI is to acquire a minority stake in private asset data provider The Burgiss Group in a “strategic partnership”. Burgiss offers private asset transparency and performance benchmark tools, including performance data covering close to 10,000 private asset funds representing nearly $7trn of committed capital around the world. MSCI said the partnership would include the development of new tools and solutions.

News and data provider Refinitiv has announced the launch of the Future of Sustainable Data Alliance in conjunction with the World Economic Forum, the United Nations and various other bodies. The aim is to accelerate the mobilization of capital into sustainable finance. It said: “The Alliance will solve the question: What data do investors and governments need to meet the requirements of both regulators and customers for sustainable investments and products in pursuit of the 2030 Agenda.”

Nasdaq said it will offer corporate clients an ESG workflow and reporting service to help them “navigate the complex series of corporate sustainability frameworks”. Frameworks supported will include Global Reporting Initiative (GRI), ISS, MSCI, RobecoSAM, the Sustainability Accounting Standards Board (SASB), Sustainalytics, and the Task Force on Climate-related Financial Disclosures (TCFD), among others. 

Style Analytics, which provides factor-based portfolio and market analytical tools, is expanding its ESG factor analysis tool with the launch of Carbon Risk Ratings and emission data from Sustainalytics. The new offering is available alongside Style Analytics’ ESG and factor Style Skyline.