RI ESG Briefing, Sep 27. The news you need to know: bite-sized.

Round-up of the latest ESG developments.

Environmental

Fundsmith, the UK asset manager run by Terry Smith, the respected UK fund manager, and well-known climate sceptic, looks set to launch a Sustainable Equity Fund, in what could be an interesting change of tack on sustainability. It registered the Fundsmith Sustainable Equity fund with the Financial Conduct Authority on 7 September as a UCITS structured investment company with variable capital (ICVC). Fundsmith declined to comment further. In an interview with The Guardian newspaper two years ago, Smith said: “The media on climate change is so biased it would be laughable if it weren’t for the fact that the subject and the waste of scarce resources on cons which pose as solutions are quite serious.”
Environmental NGO Greenpeace has released an ‘investor briefing’ highlighting the questions investors should ask banks in order to understand whether risks – such as indigenous’ rights violations, environmental impact, and climate action incompatibility – are being adequately assessed, mitigated and managed. Citing the controversy surrounding the Dakota Access Pipeline as a case-study, it warns of the risks entailed in investing in banks involved in damaging and controversial projects.

Social

Over two-thirds of French retail investors want integration of sustainability issues in their savings funds to be mandatory, according the latest SRI survey commissioned by ESG research firm, Vigeo Eiris. The survey, which seeks to gauge awareness of socially responsible investing (SRI) in the country, also found that 49% of retail investors consider their financial advisor to be the most appropriate person to inform them about responsible investment. Over 1,082 individuals were polled in the eighth iteration of the annual survey.

Residential renewable power generation and storage will become profitable for London households by 2030, causing major disruption to the UK utilities sector, according to new research published by the Centre for Climate Finance & Investment at Imperial College Business School. The prediction is based upon the London-based university’s new framework, ‘Firm Power Parity’, which forecasts the milestones by which on-site renewables will match conventional energy supplies on service and cost.

The São Paulo based stock exchange B3 – in partnership with the Brazilian arm of the Global Reporting Initiative (GRI) – has published a report detailing the efforts of its listed companies to publish sustainability or integrated reports taking the UN’s Sustainable Development Goals into account.The ‘Report or Explain for the Sustainable Development Goals (SDGs)’ highlights that of the 33% (147) of companies that responded to the survey 44% either report, are preparing to report, or are considering reporting on the SDGs.h6. Governance

Corporate disclosures of long-term risks are prohibited by a “perfect storm” of “vague regulatory requirements, race to the bottom among peers, limited role of auditors, fear of litigation, and limited demand from financial analysts”, according to a new paper by climate-focused financial think-tank, 2° Investing Initiative. Limited Visibility: The Current State of Corporate Disclosure on Long-term Risks analyses corporate financial disclosures of the 1,600 largest companies (MSCI World). It found that the recommendations of the Task Force on Climate-related Financial Disclosure regarding 2° scenario analysis will face significant obstacles, given the lack of disclosure – with only 5-10% of companies analysed specifically discuss long-term risks – on core financial risks and metrics across all sectors.

Californian cities San Francisco and Oakland have filed separate lawsuits against five oil giants, seeking billions of dollars to mitigate the effects of rising sea levels, which they claim is the result of climate change, Reuters reports. The lawsuits, filed against Chevron Corp, ConocoPhillips, Exxon Mobil Corp, BP Plc, and Royal Dutch Shell Plc, allege that the oil firms “knowingly and recklessly created an ongoing public nuisance that is causing harm now and in the future risks catastrophic harm to human life and property”.

Despite fears to the contrary, the rise of passive investing has led to more engagement from the ‘Big Three’ passive investors – BlackRock, State Street Global Advisors and Vanguard – on gender diversity and climate risks, not less, according to a recent paper by Morningstar. The paper cites the backing of all three to this year’s climate-risk shareholder resolution at Exxon and Occidental, which received 62% and 67% of the vote, respectively, as an example. State Street’s Head of ESG Investments and Asset Stewardship, Rakhi Kumar is quoted as saying “index investing is like being married, with divorce not an option; you have to work out your differences”. The statement comes as new figures were released by the 50/50 Climate Project, concluding that BlackRock and Vanguard are among those with the lowest climate voting scores in its latest survey.