RI ESG Briefing, Jan. 17: GPIF’s Mizuno among founders of new Climate Finance Leadership Initiative

The latest ESG market developments

Environmental

Hiro Mizuno, Executive Managing Director and CIO of Japan’s Government Pension Investment Fund (GPIF) is among the founders of a new climate finance body. Michael Bloomberg, the UN’s Special Envoy for Climate Action, announced the six founding members of the Climate Finance Leadership Initiative (CFLI). Former SEC Chair Mary Schapiro, an advisor to Bloomberg, will act as Vice Chair of the CFLI. Others business leaders include the CEOs of AXA, HSBC, Goldman Sachs, Enel and Macquarie. The CFLI was formed by Bloomberg at the request of the UN Secretary-General António Guterres, who will host a major Climate Summit during the UN General Assembly in New York in September. The CFLI will focus on facilitating the scaling up of private capital flows into climate-friendly investments and deliver a report (in two phases) highlighting best practices and opportunities for enhancing climate finance mobilization.
The Central Banks and Supervisors Network for Greening the Financial System (NGFS) announced five new members to mark its first anniversary. The new members are: the European Banking Authority; Banco de Portugal; Norges Bank; Reserve Bank of New Zealand; and Sveriges Riksbank. Since its inception in 2018, the NGFS has grown from eight members to 24, with five observers. Frank Elderson, chairman of the NGFS, said: “The achievements of the NGFS and the rapid expansion of its membership within a year have exceeded my expectations.”

Oil giant Shell’s pension funds were reportedly among the 72 Dutch pension funds to sign the government-backed covenant on socially responsible investment last month. The board of both of Shell’s funds signed the International Responsible Business Conduct (IRBC) agreement, which is based on OECD and United Nations principles, on the 20 December.
Campaign group BankTrack has slammed a recent energy and climate change statement from Barclays claiming that it is “shot through with ‘half measures’”. The new statement was described by the bank as “supporting the transition to a low carbon economy, while also ensuring that global energy needs continue to be met responsibly”. But BankTrack has criticised the lack of any exclusion or restriction on the financing of fossil fuel projects. 

Social

A report analysing diversity in the UK social investment market has found the representation of women on social investment boards has fallen by 5 percentage points since 2017. Black Asian, Minority Ethnic women are the least likely to hold directorship in the sector, accounting for just 16 (or 2.8%) of all board directors. The report, written by recruitment agency Inclusive boards and commissioned by the Diversity Forum with the support from The Connect Fund, also shows that almost one in five board directors (18%) in the sector attended Oxford or Cambridge universities. This compares to just 1% of the whole population.
The Coalition for Private Investment in Conservation (CPIC) is calling for feedback on blueprints aimed at accelerating the development of investment deals in four sectors: sustainable cocoa, conservation forestry, marine protected areas, and green infrastructure for coastal resilience and for watershed protection. 
 h6. Governance

State Street Global Advisors’ CEO and President, Cyrus Taraporevala has called on corporate boards to place a greater emphasis on corporate culture in a letter to 1,120 public companies listed on major global indices. The head of the world’s third largest asset manager calls on boards to proactively review and monitor corporate culture in the letter outlining its stewardship engagement priorities in 2019.
New York State Comptroller Thomas DiNapoli has reportedly announced that the $207bn New York State Common Retirement Fund has withdrawn shareholder resolutions on executive and CEO remuneration at Microsoft, CVS, Macy’s, The TJX Companies, and Salesforce.com, following agreements with the companies.
Hermes Investment Management has set up a subsidiary in Ireland as part of its contingency plans for Brexit. RI reported in 2017 that the London based responsible investment house, which manages assets of £36bn, was considering a European domicile following the vote to leave the European Union in 2016. Hermes Fund Managers Ireland was authorised by the central Bank of Ireland in December.
UK public pension pool Border to Coast is preparing requests for proposals (RfP) for four to five “direct global equity mandates” and one “multi-manager” mandate worth £4-5bn. It follows the £46bn fund’s hosting of over 100 managers at a meeting last month at which its expectations around responsible investing were laid out to prospective bidders. Board to Coast’s Global Equity Alpha Sub-Fund is expected to be up and running by mid-2019, with RfPs due to be issued shortly.
The European Parliament’s Economic Affairs Committee has approved proposals for the European Supervisory Authorities (ESAs) to have ESG considerations strengthened in their mandate. As part of the broader ‘ESAs’ Package’, Parliament backed the idea of standardised climate stress testing, which many hope will give another push to the Taskforce on Climate-related Financial Disclosures.
US investment consulting and advisory firms Meketa and Pension Consulting Alliance (PCA) have agreed to merge to form Meketa Investment Group. Founded in 1978, Meketa serves over 170 clients with assets of around $1.1trn while PCA dates back to 1988 and advises on $1.4trn.
Pensioenfonds Metaal en Techniek (PMT), the €72bn ($82bn) Dutch metal industry pension fund, has reportedly introduced a new index for its €16bn ($18bn) developed market equity portfolio, which selects companies according to their ESG scores and long-term sustainability. The benchmark, which also excludes tobacco, weapons, fur and adult entertainment stocks, was developed with its fiduciary manager, MN and is built on data from index provider MSCI.
The US city of Boston is set to hold a public hearing on how it invests it assets – believed to be around $8bn –  next month, following pressure from civil society to divest any investments it has in private prisons, guns, or fossil fuels. Bianca Tylek, Director of the Corrections Accountability Project at the Urban Justice Center told RI that a hearing on the City’s investment guidelines is likely to take place in February but hasn’t been scheduled yet. Link