RI ESG Briefing, Sept. 18: ERAFP launches climate tender

Environmental

ERAFP, the €33bn French additional pension fund for civil servants, has launched a tender for consulting firms specialising in assessing climate change-related risks and opportunities. The research briefs will be divided into two lots. The first is assessment of the exposure of ERAFP’s equity and bond portfolios using indicators such as carbon footprint and contribution to the energy transition. This will be applied to euro-zone and Europe, North American, Pacific-region and French equities; international convertible bonds; euro and US dollar-denominated OECD and emerging country corporate bonds; and government bonds. The second mandate is assessment of the exposure of ERAFP’s real estate, infrastructure and private equity portfolios. The length of both contracts will be three years. The deadline for the submission of bids 8 October 2019. The tender file is available at www.achatpublic.com.
California State Treasurer, Fiona Ma has called on CalSTRS, the $241bn teachers’ pension plan to divest fossil fuels. Ma is an ex-officio board member of CalSTRS and fellow Californian pension giant CalPERS. Last week, Ma’s office said her support for divestment protestors “broke ranks” with the fund’s Investment Committee.
The move comes as CalSTRS extolled the value of engagement on Twitter following US energy giant Duke Energy’s commitment of net zero carbon emissions by 2050. CalSTRS leads the engagement with Duke Energy as part of the Climate Action 100+ initiative. 
Northern LGPS, the £46bn pension pool for the north of England local government authorities, will be engaging the country’s biggest housebuilders over a range of ESG concerns in the sector. A new report, produced for the pool by PIRC, found that few of the ten biggest listed housebuilders it is invested in set science-based targets for measuring emissions from buildings – a major contributor to the UK’s total carbon footprint – while disclosure on executive pay, the use of agency workers and customer warranties and claims was also limited.
LGPS Central, one of eight UK local authority pension pools, has revealed that it will support the climate lobbying resolution filed earlier this month at Anglo-Australian miner BHP by a group of international institutional investors, including the Church of England Pension Board, ACTIAM and MP Pension. Michael
Marshall, Director of Responsible Investment and Engagement at LGPS, said: “We’re determined to engage with companies both in support of their own alignment with the Paris Goals, but also to support a clear investor voice saying that the funding of powerful anti-climate lobbyists is not appropriate.”
S&P Global Ratings has collected FAQs on the EU’s green taxonomy – the classification system currently being developed to outline climate-aligned business activities. In the document, S&P addresses whether market participants have enough resources to use the taxonomy and whether there is enough data available.
Longevity, a consultancy working on real estate and infrastructure decarbonisation, has opened a new office in Amsterdam, its second European office.
Cornerstone Capital Group has released two new pieces of research on climate change. The first report, No Place to Hide? Climate Change and Systemic Financial Risk, “demystifies academic studies on the risk to global financial assets from various climate change scenarios”. Meanwhile, the second report, Scaling Climate Action: Aligning Investments to Sustainable Development Goal 13, provides an overview of the causes and impacts of climate change, offering “tangible investment ideas”.h6. Social

Nest has announced an initial 12-month commitment of £400-500m to invest in private credit – a move the UK workplace DC scheme said will help it implement its ESG criteria when working with fund managers in selecting loans. The first selected fund managers are Amundi, for global real estate debt, and BlackRock, for global infrastructure debt.
The first global Responsible Gold Mining Principles have been launched by the World Gold Council, addressing key ESG issues and setting out expectations for investors, consumers and the downstream gold supply chain. In the formation of the Principles, the World Gold Council sought views from over 200 organisations and experts, including investors, government, international organisations, civil society, and supply chain participants.
The Asia Securities Forum (ASF) has published a detailed survey on the status of ESG and SDG-related finance in the Asia-Pacific region. Respondents of the survey represented 14 jurisdictions, including the main regional markets of Japan, Australia, Hong Kong, Singapore, China and India. The survey was carried out by the ASF’s working group on SDGs.
Testing and inspection specialist Intertek has launched a ‘kitemark’ to reward businesses which demonstrate that sustainability is embedded in their supply chains. This year, investment house Rathbone Brothers withheld support for Intertek over its reporting on modern slavery, after the Business and Humans Rights Resource Centre said in 2018 Intertek did not meet minimum requirements for acting on modern slavery.

Governance

Macquarie Group’s Nicholas Moore was Australia’s second-highest paid CEO last year, just behind Qantas Airways’ Alan Joyce, with both earning just short of AUD24m, the Australian Council of Superannuation Investors has found in its latest analysis of executive pay. The report found that CEO bonuses in Australia swerved potential negative impacts from Royal Commission proceedings and declining trust last year, with more than half ASX100 CEOs receiving at least 70% of their maximum entitlement.
Over half of proposals filed by the Investors for Opioid Accountability (IOA) over the last two years have led to company agreements to improve governance of opioid management. The finding came in a progress report from the investor engagement coalition, which includes the likes of CalSTRS, BNP Paribas AM, Aberdeen Standard and Walden Asset Management. A total of 20 companies were engaged by the group.
ESG investors do not have to compromise on performance, according to new research from Lxyor Asset Management, which found that positive screening strategy based on ESG scores can raise the sustainability profile of portfolios, without denting returns. See the study here.