RI ESG Briefing, March 15: UK urged to step up on green finance

Environmental

The UK has been urged to issue a sovereign green bond and make ESG risks part of fiduciary duty for pension fund trustees in a new report on how to increase green finance in the UK. The Aldersgate Group, a coalition of organisations interested in sustainability, released the report, outlining ways to unlock more UK green finance. It is estimated the country needs £693bn of investment in low-carbon infrastructure by 2031. Recommendations include mandatory TCFD reporting and a ‘green’ test for all government infrastructure investment or grants. The report comes as the UK Government’s Green Finance Taskforce is set to issue its own recommendations in a few weeks. Yesterday, London was ranked the top green financial centre, despite sluggish moves on the topic so far at government level.
Arnold Schwarzenegger is reportedly in talks with law firms about suing global oil companies for first-degree murder. The actor and former governor of California said he is planning a public push on the topic, according to media, arguing in a podcast that oil companies have been aware of their role in exacerbating climate change for over half a century, and have therefore knowingly killed people throughout the world. Schwarzenegger said: “This is no different from the smoking issue. The tobacco industry knew for … decades, that smoking would kill people. … Then eventually they were taken to court and had to pay hundreds of millions of dollars.”
The proposals laid out in the European Commission’s Action Plan for Financing Sustainable Growth will have a “limited” overall near-term credit impact for EU banks, insurers and asset managers, according to a report published by Moody’s. The Action Plan, published last week, outline the Commission’s next steps on making European financial systems more climate resilient and sustainable. Moody’s said immediate and material changes to financial institutions’ regulatory and operating environment was unlikely, given that most of the priority actions call for further consultation and engagement in 2018 and 2019.
Most of Australia’s top companies have “no climate plan”, a study carried out by campaign group Market Forces has found. The study, which analysed disclosures from 73 ASX100 companies operating in high level climate risk sectors, notably found that 84% have no plan to reduce greenhouse gas (GHG) emissions, and over a third have failed to acknowledge the Paris Agreement entirely. Market Forces says the lack of improvements in climate risk disclosure shows a failure to respond to the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) which aim to address the financial risk posed by climate change.
Exxon-partnered biotech firm, Synthetic Genomics, plans to produce cost-competitive, algae-based biofuel on a large scale by 2025, the FT reports. The company believes the it could be the first time advanced biofuels go into large-scale production and rival conventional oil-based fuels. At least one “demonstration plant” is planned by 2025, with the aim to produce 10,000 barrels a day of diesel and jet fuel from genetically modified algae.h6. Social

US investor body the Council of Institutional Investors has published a new guide on combating sexual harassment for corporate boards and investors. Citing the high-profile collapse of Weinstein Co. and 21st Century Fox’s $90m settlement following allegations of sexual misconduct by executives, it warns of the “profound repercussions for companies and their Shareholders” that such allegations pose.
The fourth episode of Man Group’s podcast series, Perspectives towards a Sustainable Future, puts forward the case for divestment from the tobacco industry. It lays out why investor engagement with the tobacco industry is futile and how international policy can explain the recent investor movement towards becoming “tobacco-free”.

Governance

The Chairman of the Korean Teachers’ Credit Union (KTCU), South Korea’s second largest institutional investor, has reportedly urged Korean companies to disclose ESG information to aid responsible investment. Chairman Moon Yong-rin said public institutional investors need more information on companies’ ESG factors so they can turn greater attention to society and the environment. Less than 100 of over 2000 listed firms in Korea currently disclose ESG data. Yong-rin also pledged that the KTCU, which manages 25trn won (€19bn), will double its investment in start-ups and SMEs this year, in line with government policy to promote start-ups.
Egan-Jones is the latest proxy advisor to come out against pay proposals for Tesla’s CEO Elon Musk. The US firm argues that the remuneration plan – to be voted on at a special meeting of shareholders on 21 March – is too costly. It instead recommends, “the board seek to align CEO pay more closely with the performance of the company and work to reduce the cost of any similar plan that may be proposed in the future”.
Many of Australia’s largest companies are at material risk because of significant weaknesses in their codes of conduct and whistleblowing systems, research by the Australian Council of Superannuation Investors (ACSI) has found. The research shows that the codes of conduct at ASX-listed companies are failing to address key business risk topics such as fair dealing, cybercrime, anti-money laundering and human rights, with under 67% of companies covering five of the 13 recommended topics. Whistleblowing systems in ASX200 companies furthermore lack critical features, the research found, with 19% of ASX200 companies failing to mention whistleblowing and how to report wrongdoing in their code of conduct. Only 14 of the 200 companies were identified as exemplifying “leading practice”. ASCI CEO Louise Davidson said, “You can’t say you’re serious about improving corporate culture if you have a code of conduct and whistleblowing system that provides piecemeal coverage, poor usability and weak accessibility.”