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RI ESG Briefing, Jan. 29: CalSTRS faces fossil fuel divestment “die in” by school students

The latest responsible investment developments

CalSTRS will be targeted by fossil fuel divestment campaigners tomorrow, with school kids and others from the Bay Area and Sacramento and others planning to march to the pension plan’s headquarters on January 30. A statement from the group said youth drenched in “oil” will ride a mock “oil tanker” from the State Capital and through Sacramento streets. “Students will proceed to the CalSTRS building, where they plan a die-in.”

S&P Dow Jones Indices (SPDJI) has defined a new index concept in line with the criteria for Paris Aligned Benchmarks (PABs), one of two climate benchmark types proposed under the EU Sustainable Finance Action Plan. According to SPDJI, the draft index incorporates “further climate-related objectives” in addition to meeting the minimum requirements for PABs, such as incorporating Scope 3 emissions from inception instead of leveraging a phase-in period of up to four years. Baseline and sectoral exclusions, and the 7% annual decarbonation trajectory will be underpinned by Trucost data.

The Church Commissioners for England have called on ExxonMobil not to block a climate resolution from going to vote, after this week saw the firm file a motion to exclude the proposal. Co-filed by the Church and shareholder advocacy NGO As You Sow, the proposal asks Exxon on report on whether and how it plans to align with the Paris goals, for example by taking responsibility for Scope 3 product emissions, setting net zero greenhouse gas reduction targets (preferably for 2050), and aligning capital expenditures with a net-zero goal.

Euler Hermes, the credit insurer that’s a subsidiary of Allianz, is to become first credit insurer to add ESG criteria to country risk methodology. A LinkedIn post by Allianz Chief Economist Ludovic Subran said the firm's country risk rating methodology now includes ESG-related risks of non-payments by companies, especially environmental vulnerabilities and rising societal risks.

Global emissions trading turnover hit a record high of $214bn last year, with current or expected tightening of regulation pushing prices up, according to research from Refinitiv. The study, reported by Reuters, found that turnover was up 34% on the previous year and marked a third consecutive year of growth. The year also saw the average price of carbon permits in the EU Emissions Trading Scheme, the largest in the world, rise by $10 to $28 a tonne.

Investors in British sovereign bonds are showing interest in “green gilts”, the UK Debt Management Office (DMO) said this week. Minutes from meetings with the DMO said primary dealers and investors had expressed support for green versions of the bonds, Reuters reported.

Credit Suisse’s in-house think tank has published a study on water scarcity, calling for definitive action to be taken on a coordinated global basis. The Credit Suisse Research Institute (CSRI) report said estimates of the required investment in global water and sanitation infrastructure by 2030 vary but could be up to $23.1trn.

The European Public Real Estate Association (EPRA), an industry body that provides indices covering the sector, has found that listed property companies in the region allocate an average of €8.4m annually to environmental efforts such as carbon emissions reduction, water use reduction and recycling. The conclusions were presented in a report, jointly authored by EPRA and Concordia University, which aimed to develop a “model to measure the monetary value of contributions to ESG initiatives” within investment portfolios.

Investors representing $5trn have now backed a statement recognising the “urgent challenge” of forced labour, with new signatories including German investment bank Berenberg and Spanish asset owners VidaCaixa. In the statement, coordinated by KnowTheChain, the investors recognise how they may be exposed through their investments, and the need for pressure on companies to address the risks to millions of workers in supply chains around the world.

Goldman Sachs says it won’t help companies go public without at least one "diverse" board member. CEO David Solomon said that the performance of public offerings of US  companies with at least one female director was "significantly better" than those without. “Starting on July 1st in the U.S. and Europe, we're not going to take a company public unless there's at least one diverse board candidate, with a focus on women," Solomon told CNBC. From 2021 it would request two.

The Investor Forum, the UK engagement body set up in 2014, has published its review of 2019. The forum, which now has 50 members with over £18.5 trillion assets under management, said it had 10 engagements and a total of 32 since inception. An important thematic projects was an initiative on marine plastic pollution. It said it completed six engagements with: FirstGroup plc, GVC Holdings plc, Imperial Brands plc, Inmarsat plc, Safestore plc and Vodafone plc. At the end of 2019 the Forum was working on four “live situations”.

The Principles for Responsible Investment (PRI) has welcomed its 500th asset owner signatory, which Chief Signatory Relations Officer Lorenzo Saa called “a hugely significant milestone”. He said: “There is now a powerful collective force committing to further mainstream responsible investment and lead PRI signatories’ $90trn in AUM towards more sustainable returns.”

Seven more Danish pension funds – representing €334bn in assets – have signed up to the tax code of conduct laid down in August by ATP, Industriens Pension, Pen- sionDanmark and PFA. They include: AP Pension, Lægernes Pension, MP Pension, PenSam, Pædagogernes Pension, P+ and Vel-liv. The principles are designed to promote responsible tax behaviour in unlisted investments managed by external managers.

Facebook has requested that a shareholder proposal calling on the social media giant to take responsibility for content published on its platform – including child pornography and political ads – be excluded from its proxy statement. It argues that the proposal, filed by US non-profit As You Sow, seeks to micromanage the company in a ‘no action’ letter to the US Securities and Exchange Commission (SEC).