RI ESG Briefing, May 18: ERAFP puts c.€10m into La Française Inflection Point zero carbon fund

The round-up of the latest ESG developments.

Environmental

ERAFP, the French public sector additional pension scheme, says is planning to invest €50m before the end of the year in international equity funds aimed at combating climate change. As part of its selection process for collective funds, ERAFP relied in particular on the amLeague platform to identify the best “low-carbon” strategies. It worked with Cedrus AM and amLeague to put in place a virtual management platform enabling managers to demonstrate their “low-carbon” management expertise. The first investments, of around €10 million, have been made in the fund La Française LUX – Inflection Point Zero Carbon.

UK based analytics and data provider IHS Markit has claimed that the Task Force on Climate-Related Financial Disclosure’s (TCFD) draft recommendations on climate related reporting “could obscure material information, create a false sense of certainty, and distort markets”. The view was expressed in a recent report ‘Climate-related Financial Risk and the Oil and Gas Sector’ published by IHS Markit and reportedly financed by oil firms BP, Chevron, ConocoPhillips, and Total. The TCFD, which was created by the G20’s Financial Stability Board, last year proposed that companies disclose in their public financial findings how they identify and manage risks to their business from climate change.

The US has fallen behind China (1st) and India (2nd) to 3rd place in global advisory firm EY’s annual Renewable Energy Country Attractiveness Index. The report cites the US’ changing political atmosphere as contributing to the fall but also acknowledges both China and India’s recent commitments to renewables: China recently pledged $363bn to developing renewable power capacity by 2020, and India’s Government plans to build 175GW in renewable energy generation by 2022. The report also showed that the UK has temporarily climbed back into the top 10 most attractive countries for renewable energy investment.

The University of Manchester has opted to continue investing in fossil fuels after a recent attempt to get the UK based institution to divest failed. The University’s Board of Governors made the decision after a two-year consultation period over the issue came to a close. It is reported that UK universities invest an estimated £5.2bn annually in the fossil fuel industry. Over 45 universities have launched divestment campaigns since the UK fossil fuel divestment movement was created in 2013.

Social

Moxie Future, a responsible investment platform dedicated to women investors, has been launched by Jessica Robinson, former Asian Head for the United Nations-supported Principles for Responsible Investment (PRI). The recently created Hong Kong based organisation, which focuses on markets in China, Australia, UK, Germany, and the US, seeks to enable women to grow their wealth by investing more effectively and sustainably. Prior to joining the PRI, Robinson was formerly Chief Executive of Asian think tank the Association for Sustainable and Responsible Investment in Asia (ASrIA), and ran the Asia Investor Group on Climate Change.

International Transport Workers’ Federation (ITF), the global trade union federation, has published a report, ‘The Trouble with TiSA’, to highlight the threat to jobs and workers’ rights the Trade in Services Agreement (TiSA) poses. TiSA is a proposed international trade treaty involving the EU and 22 other countries, including the US, which is reportedly supported by many corporate giants, such as Microsoft, IBM, and Google.h6. Governance

Asset Manager ACTIAM is excluding tobacco manufacturers from all its investment portfolios and index funds with immediate effect. Head of Responsible Investment Dennis van der Putten said: “By excluding tobacco, we are making further steps towards shaping our investment policy around social themes.”

Shareholders representing more than $10tn in assets are reportedly planning to vote in favour of a resolution with US oil giant Exxon-Mobil to publish an annual assessment of the long-term portfolio impacts of technological advances and global climate change policies. The resolution, which is being opposed by Exxon’s management, was filed by the Church Commissioners for England and the New York State Comptroller. Last year a similar proposal received 38.2% of the vote.

Shareholders at Chevron have withdrawn a shareholder proposal calling for the US oil firm to report regularly on the risks posed by policies to address climate change, after the company published a report ‘Managing Climate Change Risks: a perspective for investors’ on the issue in March, FT reports . The withdrawn proposal was originally filed by Wespath Investment Management, US fund manager for the United Methodist church, and UK based Hermes Investment Management, the ESG focused asset manager wholly owned by the BT Pension Scheme. Chevron’s annual meeting takes place on May 31.

UK fund manager Royal London Asset Management (RLAM) has commended oil giant BP’s remuneration committee’s decision to “significantly reduce the total pay” awarded to CEO, Bob Dudley ahead of the oil giant’s upcoming annual general meeting. Ashley Hamilton Claxton, Corporate Governance Manager at RLAM, said: “Against the backdrop of a season of AGMs where companies have been doing the bare minimum to gain shareholder approval in 2017, BP has led the way and applied discretion to override the formulaic outcome of the pay policy.”

Volkswagen’s Chief Executive, Matthias Müller is being investigated by German State prosecutors for his role in the company’s emissions scandal, it has been reported. Prosecutors are also investigating VW Supervisory Board Chairman, Hans Dieter Pötsch and the group’s former CEO, Martin Winterkorn to ascertain whether the three men knew of the scandal before it became public.

US SRI fund firm Domini Impact Investments has released a paper outlining the challenges for responsible investing in Burma. The report finds that despite the country’s apparent commitment to Democratic reforms, and despite the US Government announcing that it would no longer require US firms operating in Burma to report on their human rights risk assessments, the country remains a high risk environment for business operations due to weak human rights protections, weak environmental regulations, and weak institutional governance.

Hermes Equity Ownership Services has urged Deutsche Bank to develop an ambitious sustainability strategy with tangible targets which is integrated into and supportive of its business strategy. While acknowledging that the bank’s problems mean it hasn’t been a focus for the past few years, “it needs to move from a reactive to a proactive approach to sustainability”.