Return to search

RI ESG Briefing, Sept. 4: MP Pension, Eumedion, Boston Trust/Walden, Interfaith Center on Corporate Responsibility

The round-up of the latest sustainable finance developments

Environmental

MP Pension has announced it is to sell off its stakes in 10 of the world’s biggest oil firms. The Danish pension fund announced it would sell its stakes in ExxonMobil, BP, Chevron, PetroChina, Rosneft, Royal Dutch Shell, Sinopec, Total, Petrobras and Equinor – believed to be DKK644m ($96m).

Serious failures to address sustainability issues across the factory farming sector is leaving investors exposed to ESG risks like climate change and antibiotics, new research from $16trn investor-backed network FAIRR has found. The Coller FAIRR Protein Producer Index, which assesses how 60 meat, fish and dairy firms perform against sustainability risks, found that climate costs are already hitting the sector, with companies reporting declining revenues because of extreme weather. Fewer than one in four companies were found to report their full greenhouse gas emissions, while only one in sixty has significantly reduced emissions.

Investors representing $5.5trn in assets under management, convened by the Interfaith Center on Corporate Responsibility (ICCR), have called on 35 of the largest oil and gas firms to publicly support “continued federal regulation of methane emissions”, as the US’s Environmental Protection Agency (EPA) proposes rollbacks on the 2016 New Source Performance Standards (NSPS).

Campaign group JustShare has filed a climate risk resolution at FirstRand calling on the South African financial services group to improve disclosure of its climate related risks and “adopt and publicly disclose a policy on lending to fossil fuel-related projects”. It is the second climate change resolution filed by the South African non-profit this year; in May a resolution at Standard Bank was supported by 55% of shareholders.

MSCI has released an investor guide for climate risk reporting in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. The guide was launched to address a “significant gap” that it identified in late 2018 between the climate-related data that companies are disclosing and what investors need to know. The guide looks at the four sections of the TCFD – governance, strategy, risk management, and metrics and targets – to construct a practical plan for implementation.

Social

Investors are failing to see the value of social and governance factors, new analysis by NN Investment Partners has found. According to the study, only 15% believe social factors have the potential to drive returns, while 40% see importance in governance. Two thirds believing that environmental factors have the biggest potential to drive returns.

A type of ethical structured company has been launched in the Isle of Man. It is “a structure which can be used for a range of ethical purposes including Shariah compliance, ‘green’ social impact investment and philanthropy,’‘ said professional services firms IQE and MannBenham, which designed this Isle of Man company limited by shares and by guarantee.

Boston Trust & Investment Management Company and Walden Asset Management have become Boston Trust Walden Company. The new name unifies “Boston Trust & Investment Management Company,” the firm’s former legal name, and “Walden Asset Management,” the brand name formerly used to represent its impact investing practice. “We are not making any changes to our ownership, personnel, or the services we provide. We remain an independent and employee-owned firm committed to serving the needs of our clients,” said Bill Apfel, Executive Managing Director and Chief Investment Officer.h6. Governance

Eumedion, the Dutch corporate governance platform, has called for worldwide harmonisation of non-financial reporting standards, saying the world lacks a leading authoritative body that sets non-financial reporting standards for preparing companies’ management report. “As a consequence hundreds of reporting frameworks have emerged. None of them combines the full breath of topics with the necessary inroads into measurement. Many of the frameworks overlap and many of the differences between the frameworks are not that meaningful.” It welcomed the “laudable efforts” of the Corporate Reporting Dialogue, but noted it includes only a limited number of frameworks and “still the dialogue proves to be a rather slow process”.

Spanish banks have reportedly beefed up their governance structures to address climate related risks. Among them are Bankia (created a new sustainable finance division), Banco Sabadell (rebranded its CSR division as sustainability division), Santander (created a responsible banking, sustainability and culture committee) and Bankinter (its sustainability committee is led by the chairman). The Spanish press also reported a July meeting of industry executives with the Central Bank’s Deputy Governor, Margarita Delgado, to discuss climate change issues. The Spanish Central Bank is a member of the Network for Greening the Financial System since April 2018.

Nordea Asset Management is temporarily suspending purchases of Brazilian government bonds in response to forest fires tearing through the Amazon, according to media reports. Its current exposure to Brazilian sovereign bonds is around €100m. It did not commit to selling action, but Thede Ruest, head of Emerging Markets Debt, said: “if the situation worsens, we may have to exclude Brazil government bonds from our universe”.

Green Century Capital has filed a shareholder resolution at Tyson Foods asking that US meat processing giant reports on deforestation in its supply chains. Unlike its peers, Tyson has yet to set public commitments on the issue, according to the US SRI firm, which filed “protein diversification” resolution at Kraft Heinz earlier this month.

The London Metals Exchange closed its first public consultation on responsible sourcing standards. A Campaign Leader at Global Witness Sophia Pickles noted, however, that the LME must require brands to report on environmental or climate-related risk, which is a provision not included in the current proposed draft. She wrote
that public responses to the LME’s consultation suggest “metal traders would rather ignore climate risks than tackle them.” One response said that if “such requirements preclude the use of coal-produced products [from trade on the LME], an estimated 67% of world production of aluminium would be excluded from trading on the LME”.

Norway: The committee set up to review the ethical exclusion guidelines for the Government Pension Fund Global has launched its website and is inviting “everyone interested to provide input to its work”. The government appointed the committee in April this year; it is chaired by Professor Ola Mestad and is due to publish its report no later than June 15 2020.