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RI ESG Briefing, July 10: PenSam/PKA, Principles for Responsible Investment, Sarasin, Amundi, Repsol, POSCO

The latest ESG market developments

Environmental

Denmark: Labour-market pension funds PenSam and PKA are investing DKK750m (€100m) in the El Campo wind farm project in Texas run by Longroad Energy, the renewables firm co-owned by the New Zealand Superannuation Fund. The pension funds made the investment via AIP Management, which grew out of alternatives firm PKA AIP which was founded by PKA in 2012. “The El Campo wind farm is our second sizeable investment in renewable assets in the US within a year and it represents yet another important addition to our ambitious green investment strategy,” said Michael Nellemann Pedersen, CIO of PKA. PenSam CIO Claus Jørgensen added it “fits our portfolio very well”. Link

Amundi and the European Investment Bank (EIB) have launched The Green Credit Continuum, a joint initiative aimed at fostering the development of a European green debt market beyond investment grade green bonds. The EIB will commit up to €60m to a fund investing in high-yield corporate green bonds, green private debt and green securitised credit, with the aim of raising €1bn within three years. The pair aim to create several funds based on this model.

The key bodies representing French financial services have declared they will double down on combating climate change and contributing to the 2050 carbon neutrality target. The declaration – signed by the ASF (French Association of Financial Societies), AFG (French Asset Management Association), FBF (French Banking Federation), FFA (French Insurance Federation), private equity association France Invest, Paris EUROPLACE and Finance for Tomorrow – outlined a string of new commitments, including around coal, climate risk scenario analysis, and the creation of an observatory to track the achievements and actions of the Paris Financial Center in green and sustainable finance.

The Rockefeller Foundation has announced a new Climate and Resilience initiative, which will focus on market-changing opportunities that increase climate and resilience capital flows into solutions and projects that improve the lives of the world’s most vulnerable people. The initiative will be led by Elizabeth Yee, Managing Director, who joins the Rockefeller Foundation from 100 Resilient Cities (100RC) after serving as the organization’s Vice President of Resilience Finance.

Social

Spanish energy company Repsol has launched a €50m social investment fund through its foundation, Fundación Repsol, aimed at investing in social enterprises focused on the energy transition and the inclusion of vulnerable groups in Spain. Repsol caused controversy in 2017 when it became the first oil company to issue a green bond, giving rise to long-running debates around the ESG credentials of green bond issuers. Its new fund, managed by the company “Repsol Impacto Social,” intends to allocate €5m by the end of the year.

South Korea-based POSCO has reportedly become the first global steelmaker to issue sustainable bonds. The Korea IT Times said POSCO issued $500m of five-year ESG bonds. POSCO established its Sustainable Financing Framework in April in line with the Green Bond and Social Bond standards of the International Capital Market Association and received certification from Sustainalytics, the report said.h6. Governance

The Principles for Responsible Investment (PRI) has released a guide for asset owners on investment consultants and ESG, saying “consultants advise on how trillions of dollars are invested worldwide, but most consultants are failing to consider the role that environmental, social and governance (ESG) issues play in investment performance”. The guide covers investment strategy, fiduciary obligations and the manager selection process.

Fund manager Sarasin & Partners has sold a £33.8m (€37.5m) stake, or almost 20% of its holdings, in Royal Dutch Shell, saying the oil giant’s spending plans are not in alignment with the Paris climate accord. Sarasin wrote to Shell Chairman Chad Holliday, according to media reports, saying that it was “extremely disappointed” that despite a commitment to act on climate change, Shell’s strategy “aims to deliver rising fossil fuel production to at least 2030”. Shell was quoted by Reuters as saying the divestment was “disappointing”.

Over 90% of independent shareholders supported an equal voting rights resolution at Google’s parent company Alphabet last month. “After last year’s sexual harassment scandals, data breaches, and controversies over censored Google searches in China, our company’s management has been called ‘amoral, myopic, reckless, and even incompetent’ by the press,” said Julie Goodridge CEO at Northstar Asset Management, the Boston-based filer of the resolution. “But shareholders have no way to make management accountable to them, and no reason to believe that the board will step in when necessary.” Alphabet currently has three classes of stock – class A has one vote per share, class B 10 votes per share, and class C no voting rights.

Nearly 100 US investors representing $1.6trn in assets are calling for disclosure of gender equality data from companies they fear are unwilling to back up diversity commitments with evidence. In 2018, 84% of the S&P 100 companies made public commitments to gender equality but only 51% disclosed their parental leave policies and a mere 1% published gender pay information. Andrew Behar, CEO of As You Sow, the shareholder campaign group convening the investors, said: ““This is a material issue for every company. Leaders willing to publicly disclose their policies and practices on gender, race, and sexual orientation will be the companies that succeed by attracting and retaining the best and the brightest employees, and reducing risk to benefit shareholders.”

Global food systems face systemic and sector-specific risks from climate change, biodiversity loss and dietary shifts, according to a newly published investor briefing on food retailers, caterers and restaurants. The paper, put together by the University of Oxford’s Food Climate Research Network and thinktank The Food Foundation, was informed by a series of workshops attended by analysts from investors including Candriam, CCLA, Rathbone Greenbank Investments and Janus Henderson, and is backed by investor network FAIRR, environmental data body CDP and shareholder campaign group ShareAction. A follow up report, expected in September, will look at critical disclosure gaps for the sectors.