RI ESG Briefing, November 8: The EC proposes plastic ban to tackle marine litter

The latest ESG market developments.

Environmental

The European Commission is proposing EU-wide rules to target the most common 10 single-use plastics found on beaches and seas, and abandoned fishing gear. Both make up 70% of all marine litter. The rules will introduce a plastic ban on certain products such as straws, plates and cotton buds. Producers will also be responsible for covering the costs of waste management and clean up, in addition to raising awareness of the negative impact of littering. Additionally, member states will be obligated to collect 90% of single-use plastic bottles by 2025 under the new rules.

HSBC has reported that it has invested more than $25bn worth in sustainable finance assets across 35 countries. The announcement was made on the anniversary of a pledge to commit $100bn to tackle “systemic risks presented by climate change” through green loans, green and social bond issuances, and two low carbon strategies.

ING will be issuing a dual-currency EUR/USD green bond which will finance a portfolio of renewable energy assets and green buildings in Holland. The bond will be issued in the “HoldCo” senior format with a 7 year USD-denominated and 12 year Euro-denominated issuance. A positive second party opinion was issued by ISS-oekom and the bond is certified by the Climate Bonds Initiative.

The Transition Pathway Initiative (TPI) which assesses corporate readiness for a low-carbon transition has found that only two of the 10 largest oil and gas companies are planning to align with the emissions targets under the Paris Accord. This was based on analysis of publicly-available corporate disclosures. TPI found that only Shell and Total disclosed long-term targets to reduce carbon emissions intensity, although the targets were still incompatible with a 2 degree pathway. However, five of the ten majors, Chevron, EOG Resources, ExxonMobil, Occidental and Reliance, have not disclosed any emission reduction targets at all.

NN Investment Partners has announced a number of engagement priorities for the oil and gas sector after an analysis of 49 producers revealed a significant variance in the quality of climate-related disclosures. The key priorities include encouraging companies to carry out scenario analysis, ensuring adequate board-level oversight of climate risks and improved reporting including the disclosure of scope 1, 2 and 3 emissions.h6. Social

The European Commission has announced a number of measures it will take ahead of the EU Equal Pay Day to address the gender pay gap. It will be opening an online public consultation later this month to evaluate the effectiveness of EU equal pay laws. The Commission has also launched the 2018-19 Action Plan on Tackling the Gender Pay Gap which has 8 key priority areas such as addressing gender segregation in different sectors and enhancing relevant data collection. To date, the EC has channeled €3.3m into projects combatting the pay gap since the first action plan was launched last year.

Securities Commission Malaysia (SC) Chairman, Syed Zaid Albar, said earlier this week that gender diversity on board and senior management was a key priority for the SC, with various initiatives in the pipeline to ensure that Malaysia’s target of 30% representation of women on boards is reached by 2020. According to Albar, the government was “determined to restore Malaysia’s status in global public governance rankings”. The remarks were made at the annual Asian Roundtable on Corporate Governance (ARCG), organised jointly by the SC and the OECD.

Governance

The IFC has announced a new partnership with the UN Sustainable Stock Exchange (SSE) Initiative which aims to “strengthen ESG disclosure and reporting requirements for listed companies across emerging markets”. A longstanding deficiency in ESG data, it says, has prevented investors from investing in EM which are perceived to have “weaker corporate governance and heightened social and environmental risks”. The partnership will draw on the IFC’s Disclosure and Transparency toolkit, released at the start of the year.

The UK’s Pensions and Lifetime Savings Association (PLSA), Investment Association and Local Government Pension Scheme Advisory Board has launched the Cost Transparency initiative which aims to boost the transparency of asset manager fees. The Initiative will develop cost transparency templates for the pensions and investment industry which will allow comparisons to be made, and assist trustees with scrutinising and challenging costs.