RI ESG Briefing, May 16: KfW issues €3bn green bond on back of new use-of-proceeds policy

The round-up of the latest ESG market developments


KfW, the German development bank, has issued its largest ever green bond, with a €3bn, eight-year deal this week. The long-standing pioneer of the green bond market has also just expanded its programme to cover energy efficient buildings, in a bid to meet investor demand for the asset class. Previously, its green bonds were used to finance renewable energy projects.
Hong Kong has become the first Asian government to sign up to the Green Bond Pledge, an initiative developed by international climate finance and environmental groups. Signatories acknowledge the importance of climate resilient infrastructure and capital projects, and pledge to support the development of the green bond market as a source of project finance. Other members include various public issuers in the US – such as the California State Treasury – and the Government of Mexico City.
The UK’s United Reformed Church voted to divest its £100m (€115m) fund from fossil fuels yesterday at a meeting of its Mission Council. The motion was tabled by the United Reformed Church Synod of Scotland, which dropped its own fossil fuel investments in 2015. It called on the Protestant dominated church to divest from companies involved in the extraction or supply of oil and gas by the time of its General Assembly in 2020. A more modest proposal calling on the church to divest from fossil fuel companies that have not achieved “clear progress toward developing their business” to align with the Paris Agreement by the end of 2020, was rejected at the meeting.
Phillips, the Dutch technology company has priced its inaugural €740m Green Innovation Bond, with Rabobank acting as Sustainability Structuring Advisor. The issuance, which matures in 2026, carries a coupon of 0.5% and will be used to finance expenditure relating to ‘green’ research and development, implementation of circular economy products and Phillip’s Sustainable Operations Programmes.
Carbon emissions coming from large power plants across the world are to be measured using satellite imagery and disclosed to the public in a new project from Carbon Tracker. The endeavour received a $1.7m grant from Google.org after Carbon Tracker, in collaboration with non-profit WattTime and the World Resources Institute (WRI), were chosen through the Google AI Impact Challenge. Carbon Tracker said the data to come out of the project could be used to hold polluting plants accountable to environmental standards and to enable advanced new emissions reduction technologies.
Oddo BHF Asset Management has removed coal investments from its ESG-linked portfolios as part of a wider strategy to combat climate change, the firm has announced. ESG portfolios account for €6.6bn (12%) of the company’s overall assets. The Franco-German house said the new policy excluded mining and power companies generating more than 5% and 30% (respectively) of their revenues from coal. Head of ESG Research Nicolas Jacob said: “It’s increasingly clear that coal is economically at a dead end. For an asset manager with fiduciary duties for long-term investors, it makes sense to exclude coal from the investment universe.”
La Française, a Paris-based asset manager, has signed up to the Transition Pathway Initiative (TPI) which “aims to assess companies’ preparedness for the transition to a low-carbon economy”.
The UK’s Shadow Chancellor John McDonnell has said UK companies failing to tackle climate change will be delisted from the London Stock Exchange. In an interview with the Guardian, McDonnell said he had already proposed that the criteria for listed a company on the stock exchange include human rights, trade union rights and environmental policy. He continued: “Now we are going to discuss how we can insert climate change as one of the criteria”. When asked if he would delist firms without climate change plans, he said: ”Yes”.
Knight Frank, the global property consultancy, will purchase 100% renewable electricity for properties under its management until 2021. According to the firm, this will lead to a reduction of over 100,000 tonnes Carbon Dioxide, equivalent to taking nearly 17,000 cars off the road.h6. Social

The Investment Association, the UK fund management industry group which represents £7.7trn (€8.9trn) in assets, has reprimanded nearly 100 firms lagging on board gender diversity, the Guardian revealed this week. The association’s Institutional Voter Information Service issued the highest warning, or “red top”, to the annual reports of 20 firms with one or no women directors, including Domino’s Pizza, Millennium & Copthorne Hotels and shipping firm Clarkson. A further 74 firms including Glencore, Metro Bank, and Centrica have been issued with an “amber top”, meaning women account for less than 25% of the board.
Private equity houses Summa Equity and EQT Partners, and family-owned banking and asset management group LGT Group have announced commitments to the UN SDG Impact Initiative at its Nordic Springboard launch in Oslo today (15 May). The initiative, led by the UN’s Development Programme (UNDP), aims to provide insights and tools to support investor contributions to the SDGs.
Norwegian private pension fund manager KLP has sold shares of NOK97m (€9.9m) in Vale after deciding to exclude the Brazilian miner Vale from its portfolio. KLP cited the disaster that killed at least 230 in Brumadinho earlier this year as “an unacceptable risk” amounting to “serious human rights violations and environmental damage”. KLP’s Head of Responsible Investments Jeanett Bergan said: “It is clear that what Vale did after the 2015 accident was not sufficient to prevent new accidents and serious consequences. With two such serious accidents it is difficult to have confidence in the company’s ability to safeguard safety.”
The United Nations Capital Development Fund (UNCDF) is teaming up with Earth Security Partnerships (ESP), the non-profit arm of London-based global advisory firm Earth Security Group, on a project producing data to drive capital to the SDGs. The partners will highlight opportunities for promising SDG-positive investments, presented in an annual impact intelligence report.


CFA UK, the UK chapter of investment professionals network CFA Institute, is piloting an ESG entry-level certification programme which aims to meet possible future regulatory requirements similar to the CFA’s flagship Investment Management Certificate. The first sitting will involve 170 investment professionals from 50 asset managers and will conclude in September of this year. General intake will commence from the start of December. Certification will cost £470 per person and is backed by the PRI.
The Board of Goldman Sachs have been served a letter on behalf of two Cleveland pension funds, the Cleveland Bakers and Teamsters pension funds, demanding an investigation and legal action, if necessary, against individuals and entities involved in the Malaysian 1MDB financial scandal. The letter notes that Goldman has put aside an additional $1.9bn on top of its reserves earmarked for legal matters for the scandal.
Swedbank is reportedly facing an investor push to elect three new directors to the board – including former Swedish Prime Minister Goran Perrson as Chair – at an extraordinary AGM next month as the bank reels from a major money laundering scandal. Swedbank’s investor-led nomination committee also proposed two new board members for appointment: Bo Magnusson, a former SEB banker, and Josefin Lindstrand, a lawyer with experience combating money laundering.
The Conference Board (TCB), the US-based membership organisation and research body, is renaming its Governance Center as the Environmental, Social and Governance (ESG) Center. The new department will also incorporate TCB’s Sustainability and Corporate Citizenship and Philanthropy Institutes.
Boeing is facing a securities fraud class action lawsuit brought by investors who purchased shares between January 8 and March 21 of this year after its 737 MAX model was involved in two crashes. The suit alleges that Boeing concealed the full extent of its safety problems caused by the 737 MAX’s larger engines and subsequently withheld necessary safety options unless they were purchased as an optional feature. RI coverage