RI ESG Briefing, Jan. 9: Sustainalytics buys GES International, Brunel tenders emerging markets

The latest ESG market developments


The Government Pension Fund Global, Norway’s sovereign wealth fund, should divest from fossil fuels and move into unlisted renewable assets at scale, a report published by think tank Re-Define and Norwegian environmental outfit Zero Emission Resource Organisation (ZERO) has urged. The report says Norway is “heavily overexposed to oil and gas”, and that the fund’s manager, Norges Bank Investment Management, should be given a mandate to allocate 5% to renewable infrastructure.

London-based asset manager Sarasin & Partners has joined the Transition Pathway Initiative (TPI), the global, asset-owner led initiative assessing companies’ preparedness for the transition to a low carbon economy. The initiative, which was established by the Church of England National Investing Bodies and the UK’s Environment Agency Pension Fund in 2016, is supported by asset owners representing £8trn ($10trn) in assets under management.

The US Supreme Court has reportedly slapped down Exxon’s attempts to stop the Massachusetts Attorney General getting hold of records that could show whether the oil giant spent decades concealing its knowledge of fossil fuels’ role in climate change. Link


The Dutch Association of Investors for Sustainable Development (VBDO) has reported that adoption of the SDGs remains at low levels in the Netherlands: two thirds of Dutch investors do not have formal policies relating to the SDGs and while only 19% have set SDG-linked investment targets. The conclusion was drawn from a survey – sponsored by fund firm Robeco – of 42 investors, representing €1.36bn in assets.

Sweden’s pension buffer funds – AP1, AP2, AP3, AP4 – have reportedly backed a recommendation from their ethics committee to blacklist cannabis companies to avoid “violations of the UN convention on narcotic drugs”. A UN convention ratified by Sweden limits drug use to medical and scientific purposes.

Canadian pension investment manager PSP Investments is diversifying into GMO-free farms, buying 165 square kilometres of land on the Hawaiian island of Maui in a joint venture with California-based agricultural firm Pomona Farming. The project aims to produce food for local consumption, with the potential to export, as well as creating local jobs.

Insurance and asset management giant AXA is launching a revised Compliance and Ethics Code, with CEO Thomas Buberl saying: “Trust is the essential ingredient of our long-term success.” A “clear set of values and ethics” is critical to provide a “moral compass” to help when “confronted with the technical complexities, competing priorities and sometimes conflicting demands that are part of our day-to-day realities in doing our jobs”.

Ratings agency Fitch has introduced a new system which scores ESG factors on “relevance” to individual credit rating decisions and will be sector and entity-specific. ESG Relevance Scores will initially be made for free, subsequent updates will then be integrated into Fitch’s entity credit research. According to a release, Fitch will be the first credit ratings agency to publish an opinion on how ESG issues affect credit ratings.h6. Governance

ESG research house Sustainalytics, 40% owned by Morningstar, has bought engagement and research firm GES International for an undisclosed sum. “The acquisition combines Sustainalytics’ market leading ESG research and ratings with GES’ extensive engagement and screening services,” a statement said. What became GES was founded in 1992 by former Greenpeace campaigner Magnus Furugård and Susanne Nyman. In 2015, Furugård stepped down from day-to-day management of the firm in 2015 to become chairman while Nyman left a year earlier. In 2014, GES merged with Governance for Owners’ five-strong Stewardship Services arm. “Together we can better serve the growing ESG product and service needs of institutional investors,” said GES’s current CEO Hanna Roberts of the Sustainalytics acquisition. It means Sustainalytics will grow to 17 offices worldwide, with more than 500 team members (200 in research; 20 in engagement). Almost all of the roughly 65 GES employees, including the entire senior management team, will join Sustainalytics.

Brunel Pension Partnership, the UK pension pool, says it has had interest from more than 100 fund managers in a £1.1bn (€1.2bn) emerging markets equities brief expected to consist of three to four individual mandates of £200-£500m. It is now an active search and CIO Mark Mansley said: “We are keen to receive tenders from fund managers which are innovative in their thinking, and with clear, consistent approaches that can be applied widely across the emerging markets specialism.” The deadline for formal expressions of interest is January 25.

Progress on board gender diversity has been slower than anticipated, according to research by index provider MSCI, with 30% representation of women on boards not now expected until 2029, the FT reports. Despite numerous initiatives focused on the issue, MSCI found that women held only 17.9% of directorships at companies on its ACWI Index at the end of October, up 0.6% from the previous year but well short of the 19.4% predicted by MSCI in 2015.

The Employees’ Retirement System of Rhode Island will lead a bid to sue Google for concealing data breaches that compromised the personal information of 52.5m users. The shareholder class action lawsuit against Alphabet Inc, Google’s parent company, accuses the firm of misleading shareholders and regulators by failing to disclose the privacy breaches, calling the company’s behaviour “an unconscionable violation of public trust”.

The Nigerian Stock Exchange has removed three companies from its Corporate Governance Index. NEM Insurance was removed following the suspension of the Corporate Governance Rating System (CGRS) rating of the company; Continental Reinsurance was removed following the company’s application to delist from the Daily Official List of the Exchange; and Diamond Bank was removed in light of recent governance issues.

The Qatar Stock Exchange (QSE) has launched an online ESG platform which will allow listed companies to submit sustainability reports and data on 34 sustainability indicators. The QSE’s push for sustainability reporting began with the publication of ESG reporting guidance in 2016, and dovetails with the objectives of the Qatar National Vision 2030 development plan.