RI ESG Briefing, March 21: NZ Super wants collective investor action against social media giants over Christchurch

The latest ESG market developments

Environmental

BNP Paribas Asset Management has committed to align its total assets under management with the Paris agreement by 2025 as part of a firm-wide sustainability strategy. The strategy includes key performance indicators (KPIs) for its investment teams relating to the energy transition, environment sustainability and equality and inclusive growth. Separately, the Cardif insurance division of BNP Paribas, has outlined new targets to reduce its exposure to coal.

Danish pension funds Sampension, Arkitekternes Pensionskasse and Pensionskassen for Jordbrugsakademikere og Dyrlæger have invested DKK90m (€12m) in German sustainable bonds. The bonds, issued by German state North Rhine-Westphalia, are earmarked for initiatives including in climate protection and energy transition, protection of natural resources, as well as education and research on sustainability.

UK regulators the Prudential Regulation Authority and the Financial Conduct Authority hosted the first meeting of the Climate Financial Risk Forum (CFRF) this month – bringing together senior representatives from banks, insurers and asset managers.

Speaking at a roundtable on sustainable finance, Margarita Delgado, Deputy Governor of Banco de España, a member of the Network for Greening the Financial System, said climate change risks affect the valuation of banks’ assets and balance sheets. Delgado said this should be monitored as part of “banks’ solvency under our supervision”, for which central banks should be urging banks to develop risk models that envisage climate change and developing stress tests based on scenario analysis.

Social

Danish pension scheme MP Pension is reportedly to axe its tobacco stocks, bringing years of debate to an end. MP Pension’s board said it had decided to divest, in spite of high returns, because of the fund’s commitment to accountability in its investments, as well as tobacco’s harmful impact on health.

Beyond Ratings, the Paris-based firm specialising in ESG analysis and “positive finance”, has been accredited to issue ratings for central, regional, and local governments as well as (both supranational and national) policy-driven financial institutions by the European Securities and Markets Authority (ESMA).

Japan Post Insurance, one of Japan’s biggest institutional investors, is to triple the ESG investments in its domestic stock portfolio to ¥100bn in the coming years, its CIO Atsushi Tachibana has reportedly said. The life insurer, which is also known as Kampo, will try to identify companies that it believes have the “technological edge” to solve global ESG issues and meet the UN Sustainable Development Goals (SDGs).

Three Dutch fund managers are to ramp up their engagements on palm oil to push for increased sustainability: Robeco, NN Investment Partners and Actiam will intensify and closely monitor their engagements with palm oil companies and the Roundtable on Sustainable Palm Oil (RPSO).h6. Governance

The NZ Super Fund and various other New Zealand public investors – with a combined NZ$90bn (€54bn) — say they are “putting their investment heft” behind calls for Facebook, Google and Twitter to take action following the live-streaming and sharing on social media of last week’s Christchurch terror attacks. NZ Super CEO Matt Whineray said: “We have been profoundly shocked and outraged by the Christchurch terror attacks and their transmission on social media. These companies’ social licence to operate has been severely damaged. We will be calling on Facebook, Google and Twitter to take more responsibility for what is published on their platforms.” The investors are calling on other New Zealand and global investors to join them in engaging with the companies, saying collective action will give the initiative the most impact.

The Mineworkers’ Pension Scheme, the UK coal sector fund, has signed up to the Principles for Responsible Investment. The fund is one the largest in the UK and its trustees incorporate ESG factors into investment decisions. Voting and engagement is undertaken by Baillie Gifford, Schroders and Legal & General on the funds which they manage for the fund and by Hermes Equity Ownership Services on all other listed equities.

Norway’s Government Pension Fund Global (GPFG) has excluded rubber producer Halcyon Agri Corp from its investment portfolio due to environmental violations.

An alliance of pension funds, asset managers and governmental entities is suing Danske Bank for $475m over its huge money-laundering scandal. It follows an inquiry which revealed that Danske’s senior management knew of the illicit activities of its Estonia branch.

State Street Global Advisors has released an ‘Engagement Protocol’ and its annual updated 2019 Proxy Voting and Engagement Guidelines for North America – designed to work in tandem with its also updated Global Proxy Voting and Engagement Principles.

The UK’s opposition Labour party has launched the last in a series of reports aimed at shaping the corporate governance policy if it comes to power. Sheffield University’s Prem Sikka led the research work. The reports cover regulatory architecture, the audit industry, executive pay, and ‘democratising corporations’ – the latter a rebuttal of the shareholder value primacy theory.

More than 30 global banks have provided $1.9trn to fossil fuel companies since the adoption of the Paris climate accord at the end of 2015, according to a report from the Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Sierra Club and Honor the Earth.

Mining giant Rio Tinto has reportedly snubbed a shareholder proposal calling for it to set emission reduction targets for its customers, with its chairman saying it has “very limited control” over the carbon emissions of its clients. A resolution filed by Market Forces, a campaign group supported by Friends of the Earth, wanted the company to set targets for Scope 3 emissions.