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RI ESG Briefing, July 24: NGFS confirms six new members, including Abu Dhabi regulator

The latest ESG market developments

Environmental

The Network for Greening the Financial System has welcomed six new members since April, it has revealed: Abu Dhabi Financial Services Regulatory Authority, Central Bank of Malta, Commission de Surveillance du Secteur Financier (Luxembourg), Dubai Financial Services Authority, Hong Kong Monetary Authority, South African Reserve Bank. Also, two international standard-setting bodies have joined the NGFS as observers: the Basel Committee on Banking Supervision (BCBS) and the International Association of Insurance Supervisors (IAIS). The Network now has 42 members and 8 observers.
Investors are calling on leading European construction material firms to take necessary steps to secure their future in the face of climate change — including committing to achieve net zero emissions no later than 2050. The investors are acting as members of the Institutional Investors Group on Climate Change (IIGCC) and participants in Climate Action 100+, a global shareholder engagement initiative involving more than 320 investors with over $33 trillion in assets collectively under management. Link
BNP Paribas Asset Management has conducted an analysis of seafood sourcing and packaging within the consumer sector, with a view to using the information for engagement and ESG integration.
The £5.6bn London Pensions Fund Authority (LPFA) has axed ExxonMobil from its portfolio, according to the Financial Times. The pension fund, which reviewed its climate policy in 2017, has reduced its fossil fuel exposure to around 0.4% if its assets, having already divested from Coal India, BP and Shell.
Energy giant BP has grown its biofuels business by more than half after entering into a joint venture with major Brazilian agri producer Bunge. The Brazil-based BP Bunge Bioenergia will produce sugar and ethanol for the fuels, in addition to generating electricity from waste biomass to be sold back to the grid.
FAIRR, the $13.2trn investor initiative focused on livestock risk, has released its latest report revealing the companies beginning to capitalise on the rising demand for alternative proteins, a market that is expected to reach $100bn in value in the next 15 years. Appetite for Destruction found Unilever, Tesco and Nestlé to be among the best prepared companies, following FAIRR’s three-year engagement project with 25 of the world’s biggest food retailers and manufacturers.h6. Social

Lancashire County Council Pension has said its impact investment activity in its local area has helped an economic renaissance in the community. The council has made £200m in local investment since 2013.
BNP Paribas has ruled out future financing for US private prison operators, the first non-US bank to do so. The move follows a trend of US financial institutions distancing themselves from the sector, which includes major operators CoreCivic and GEO Group, on the back of controversy surrounding detention policies under the Trump administration. The decision does not affect existing contractual agreements.
Shareholders have withdrawn a resolution filed with Kraft Heinz after the company made commitments around human rights and due diligence. The resolution, filed by members of the Interfaith Center on Corporate Responsibility (ICCR), had argued that Kraft Heinz faced serious human rights and labour risks as a result of migrant and possibly forced labour in its supply chain. The company linked the successful implementation of its new human rights policy to executive pay, and established a steering group to guide the policy’s execution.

Governance

A group of 18 banks including Santander, HSBC Bank, and Banco de la Nación Argentina (Argentina’s national bank) have launched the Sustainable Finance Protocol of Argentina. Among the commitments signatories agree to are to create green and socially responsible financial products, to optimise environment and social risk analysis, and to promote “a culture of sustainability”.
INDOS Financial, an independent fund depository and oversight business focused on alternative assets, has selected Vigeo Eiris as an ESG data provider. INDOS will use the data for ESG screening and verification for clients.
Finance Finland (FFI), the body representing the Finnish financial sector, has become a signatory to the Principles for Responsible Investment, the Principles for Sustainable Insurance, and the Principles for Responsible Banking. FFI said that the commitments aimed to make responsibility an integral part of the financial sector, but that its members would not be bound by the principles.