RI ESG Briefing, Jan. 26: California insurance commissioner, BNY Mellon, DONG, CtW, Morgan Stanley

The round-up of the latest ESG news


California Insurance Commissioner Dave Jones has asked all insurance companies doing business in the state to voluntarily divest from thermal coal. Complying with this request would include making no new investments, not renewing any existing investments and selling or withdrawing from existing investments in thermal coal, he said in a statement. Jones regulates the largest insurance market in the United States and the sixth largest in the world, where insurance companies collect $259bn in premiums from Californians annually. Insurers will be asked to provide “detailed and specific” financial disclosures of their investments in the carbon economy including coal, oil and gas. “We will make this new information public so that investors, policyholders, regulators and the general public can know the extent to which insurance companies are invested in the carbon economy,” he said.

DONG Energy, the Danish energy giant, says it has decided to retain its Exploration & Production (E&P) business following a strategic review. It said it aims to build a “world-class” clean energy company with a portfolio based on offshore wind, bioenergy and green distribution and customer solutions. Cash flows from E&P will be part of funding DONG Energy’s investments in renewable energy, though it will write down around DKK16bn of E&P assets due to the continued decline in oil and gas prices.

Oil giant Exxon Mobil has said greater efficiencies and the increased use of renewable fuels would halve the carbon intensity of the world’s economy by 2040 – although climate policies will increase the cost of greenhouse gas emissions, according to the company’s latest long-term outlook. “We expect that as economies continue to grow, improved efficiency and lower-carbon fuels will mean that by 2040, the amount of energy-related CO2 emissions associated with a dollar of global GDP will have dropped by half,” it said.


The EU is mulling “bonds for refugees” to tackle the migrant crisis. In an interview at the World Economic Forum with the Wall Street Journal, the EU’s economic and financial affairs commissioner, Pierre Moscovici, said a tax to raise money for refugees was a possibility, along with “bonds for refugees” that could bring in private money. “We must have ideas about that. It’s not a taboo to reflect on how to make that influx of refugees an economic opportunity for Europe,” he said.

The Wall Street Journal reports that Belgium is currently working with the International Red Cross to develop a social impact bond to fund physical rehabilitation programs for disabled people that will be launched this month. Link

Amid a deepening migrant crisis in Germany, KfW, the government-owned development bank, has increased its interest-free loan programme for the sake of asylum shelters to €1.5bn from €1bn last October. In a statement, the KfW said the funding would help city and municipal governments house up to 150,000 refugees in Germany in temporary shelters. The interest-free loans are have a maturity of ten years, and the KfW said the increase of the facility was for the last time.h6. Governance

Thirty-percent of companies have reported reaching out to socially responsible/ESG investors, up from 26% in 2013, according to a new survey. “Those that do cite primary reasons are to target long-term investors and to diversify their shareholder base,” said BNY Mellon’s annual investor relations survey. Companies also continued to increase their outreach to sovereign wealth funds (SWFs), with 65% of respondents engaging with SWFs over the past year, up from 57% in 2013.

An institutional investor in Allegiant Travel Co., the union pension fund linked-CtW Investment Group, has reportedly written to the Nasdaq-listed transport firm’s board seeking the removal of independent board member and ex-CFO Linda Marvin, who’s reckoned to be too close to management. CtW’s Director of Corporate Governance Michael Pryce-Jones would be working in the coming months to convince directors she should go.

UK-based grant making charity the Children’s Investment Fund Foundation, that is supported by a endowment of $4.4bn, has said it will divest from companies that derive more than 10% of their revenue from extracting fossil fuels unless they have adopted a business strategy and plan to cut emissions to limit climate change to 2 degrees C. It has also announced plans to divest from tobacco manufacturing and marketing companies and food companies which do not commit to adopting the International Code of Marketing Breast Milk.

US class action law firm Bernstein Litowitz Berger & Grossmann has filed a securities class action on behalf of the St. Paul Teachers’ Retirement Fund Association against HeartWare International, the Nasdaq-listed medical device company. The action, in the U.S. District Court for the Southern District of New York, alleges that HeartWare violated provisions of the Exchange Act “by making numerous false and misleading statements and omissions of material fact”.

What’s claimed to be the largest ever study of climate change data from major corporate customers and their suppliers has uncovered what is termed a “significant blindspot” of supply chain risk. The analysis was created on behalf of 75 multinational purchasing organisations; it assesses how prepared companies and their global networks of suppliers are for new regulation and carbon emission reductions following the UN’s international climate deal. It is produced by global non-profit CDP and is written in partnership with BSR.

Morgan Stanley’s Institute for Sustainable Investing has released a report that looks at the behaviours that may act as roadblocks for making sustainable investment decisions. The report, Only Human, recommends easing into a sustainable investing strategy by allocating only a percentage of total assets or identifying a particular issue on which to focus, like energy, sustainable agriculture, or gender issues.