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RI ESG Briefing, January 25: China and UK team up on TCFD disclosure

Round-up of the latest ESG developments.

Environmental

China and the UK have partnered to work on the recommendations of the Taskforce on Climate-related Financial Disclosure. The City of London Green Finance Initiative, the China Green Finance Committee and the Principles for Responsible Investment have established a “private group of UK and Chinese financial institutions” to work on disclosure in 2018, according to a blog. “This is the first TCFD pilot for China and will inform the direction of China’s environmental disclosure guidelines, enabling China-UK exchange on effective implementation of TCFD,” the authors say.

US President Donald Trump has approved duties of as much as 30% on solar equipment made outside the US, which some say will handicap the country’s $28bn industry, which relies on foreign imports for 80% of its panels. The newly-set tariffs are set to gradually decline to 15% by the fourth year.

Lloyd’s of London, the world’s oldest insurance market, has become the latest financial firm to announce that it plans to stop investing in coal companies, as part of the responsible investment strategy governing its central mutual fund, which underpins every insurance policy written by Lloyd’s. The definition of what is a coal company and the criteria for divestment will be set over the coming months. Its exclusion of coal will take effect from the 1 April.

German development bank KfW has released an analysis on the oil and gas industry, exploring the options available to industry majors in the face of the Paris Agreement and competition from fracking companies. ‘Big Oil’ – Death of a business model? concludes that the array of options open to oil and gas majors will result in an increasing differentiation in strategy and business models between them over the next five to ten years.

Social

104 companies have been named in Bloomberg’s inaugural all sectors gender-equality index, including Allianz, AXA, Citigroup, Morgan Stanley, Nordea Bank, RBS, UBS and Zurich Insurance. The 2018 Bloomberg Gender-Equality Index (GEI), which measures gender equality across company statistics, policies, and gender-conscious product offerings, will complement the US data giant’s existing ESG offering on its Terminal.

The first-ever antimicrobial resistance (AMR) benchmark has been launched by Dutch non-profit Access to Medicine Foundation, evaluating how the pharmaceutical industry is responding to the threat of AMR. The 2018 AMR Benchmark, which compares the 30 largest pharmaceutical companies’ action on drug-resistant infections, found that GSK and Johnson & Johnson are leading the way among research-based pharmaceutical companies.

The Madrid-based International Institute for Law and the Environment (Instituto Internacional de Derecho y Medio Ambiente or IIDMA) and the Centre for International Environmental Law (CIEL), a US public interest law firm, have submitted a report to the UN Committee on the Rights of the Child, challenging the Spanish Government’s energy policies. IIDMA and CIEL believe the Government is failing to uphold its international obligations to protect the health of children by refusing to effectively regulate coal power plants. According to IIDMA, Spain has 15 coal-fired power plants (with capacity of more than 10GW) with CO2, NOx and dust emissions resulting in more than 700 premature deaths per year, according to reports. ImpactUs, a US-based platform connecting investors and social enterprises, has closed down. The platform, seeded by the MacArthur Foundation, Ford Foundation, Enterprise Community Partners and City First Enterprises, launched last year and sought to aggregate impact investment deals. It has now ceased operation, according to a message on its website.

In a world’s first, the Canada Government has created a new ombudsperson to investigate allegations of human rights abuses linked to Canadian corporate activity abroad, as it seeks to set a “new global benchmark” in responsible business. The Canadian Ombudsperson for Responsible Enterprise (CORE) will be advised by a newly-created multi-stakeholder body, which will also advise the Government.

Governance

The board of the $357bn California Public Employees Retirement System (CalPERS) has directed its investment staff to look into aligning with the UN Sustainable Development Goals (SDGs), according to a report citing Chief Investment Officer Ted Eliopoulos. He described the 17 goals as a “gift to investors” at a board meeting earlier this month, according to Top 1000 funds.

Anti-corporate fraud body COSO and the World Business Council for Sustainable Development (WBCSD) has released a draft summary of its guidance for applying Enterprise Risk Management (ERM) to ESG-related risks. ‘Applying Enterprise Risk Management to Environmental, Social and Governance-related Risks’ is intended to support organisations in accelerating the integration of ESG-related risks and opportunities. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is unofficially known as ‘Treadway’ after its first Chair, former SEC Commissioner James Treadway. The partnership between COSO and WBCSD is the first of its kind.

88% of University and College Union (UCU) members have reportedly voted in favour of strike action over proposed changes to their defined benefit pension scheme, managed by the Universities Superannuation Scheme (USS). In July, USS revealed that its deficit had grown to £17.5bn – a jump from £9bn in 2016 and the largest on record for any British pension scheme. UCU said that without a deal, 14 days of strike action would be held at the 61 universities where ballots met the 50% turnout threshold required for strike action. The first strike will be a two-day walkout on 22 and 23 February.

72% of investment advisors and consultants think responsible investment is “important” according to the latest research by US industry association, Investments & Wealth Institute. The study of 2,050 investment professionals was conducted in September 2017.

French activist fund manager Phitrust has submitted three written questions to be heard at Sodexo’s General Meeting on 23 January, querying the French conglomerate’s failure to disclose incoming CEO, Denis Machel’s base salary; its five year “regulated agreement” with Bellon SA; and out-going CEO, Michel Landel’s “non-competition clause”, which the fund believes does not comply with the corporate governance code for publicly-traded companies.