RI ESG Briefing, March 6: Norwegian wealth fund sells down US gun stocks

The round-up of the latest ESG developments


The UN has launched an Environmental Rights Initiative to address the “escalating epidemic” of crimes committed on campaigners globally. Led by UN Environment, the initiative is described as “taking a stand against the ongoing threats, intimidation, harassment, and murder of environmental defenders around the world”. UN Environment said it was “calling upon the private sector to move beyond a culture of basic compliance to one where the business community champions the rights of everyone to a clean and healthy environment”.
Chevron Corporation, the American oil major, has released a second report describing the company’s strategic decision-making approach to climate change related risks. It includes evaluations of the competitiveness of its current assets under multiple scenarios, including some of the most restrictive greenhouse gas reduction proposals such as the Sustainable Development Scenario from the International Energy Agency. The report is aimed at demonstrating Chevron’s resilience under a low-carbon scenario.
Nearly two thirds of more than 600 of the largest American publicly traded companies have committed to reduce greenhouse gas emissions, more than half have formal policies to manage water resources, and nearly half have policies to protect the rights of their workers according to a report released recently by Ceres. The analysis was based on data from research provider Vigeo Eiris, measuring company performance against 20 key expectations of sustainability leadership.
A petition has been launched urging Stanford University to divest its endowment from fossil fuel extraction companies by the pressure group Fossil Free Stanford (FFS). In order to make it onto voter ballots, the initiative must receive support from 5% of the undergraduate and graduate populations separately. The Board of Trustees have said that they are not currently considering divestment requests for 2017-18, due to an ongoing review of a previous request to divest from private prison corporations.
A freely-available system to help banks and investors analyse exposure to risk in soft commodity supply chains has been launched, in partnership with Global Canopy, CDP, WWF, Ceres and Spott. The Soft Commodity Risk Platform (SCRIPT), which is financed by The Gordon and Betty Moore Foundation, allows a financial institution to compare the strength of its policies against 150 peers and screens for high-risk companies, covering up to 1,000 companies. This platform helps to identify the risks associated with financing unsustainable companies and promotes the adoption of corporate best practices for reducing deforestation, which has already resulted in the loss of half the world’s tropical forests.h6. Social

Norway’s sovereign wealth fund, the world’s largest, has reportedly sold down most of its stake in the three largest gun makers in the US. In 2017, the $1trn Government Pension Fund Global slashed holdings in American Outdoor Brands – Formerly Smith & Wesson – by almost 90%, Sturm Rugers by almost 50% and Vista Outdoor by 25%. The fund’s Chief Executive noted that the reduction took place before the recent Florida shooting, and that it was based on “quantitative strategies” and not ethical concerns. Last month, gun company Remington Outdoor, confirmed that it was filing for bankruptcy after reaching an agreement with creditors.


A company executing an IPO should not be allowed to restrict shareholder class-action lawsuits through mandatory arbitration, a Democratic member of the US Securities and Exchange Commission (SEC) has reportedly said. The remarks highlight an issue which could split the SEC, now under the control of Jay Clayton, a Trump appointee. Clayton has said that he is “not anxious” to rule on the matter, although his hand could be forced by a company which includes the restriction in its IPO documents. Carlyle Group LP had previously proposed the idea during its IPO in 2011, although it was subsequently withdrawn.
A revised Corporate Governance handbook is being published by the New Zealand Financial Markets Authority (FMA), primarily to prevent overlap with the NZX Code to ensure it remains the primary source of requirements for listed companies. Instead, the handbook is designed as a guide for a wide range of companies and is principle-based, to deliberately avoid the on-size-fits-all approach of a checklist.
German manufacturer of material handling equipment, Jungheinrich, has been singled out by SRI investment house La Financière Responsable (LFR) as an example of a company with best-in-class ESG reporting. The French boutique described the reporting as well-structured and relevant, adding that it was particularly impressed with Jungheinrich’s human resource management (including talent retention and employee health and safety), its research and development, the eco-design of its products and the energy efficiency of its buildings.