RI ESG Briefing, September 8: Norges Bank, S&P Ratings, Railpen, Paris Agreement

Environmental

Norway’s Government Pension Fund Global – the country’s $900bn sovereign wealth fund – has excluded US utility Duke Energy from its investment universe on climate grounds. Norges Bank, which oversees the fund, said it would no longer invest in Duke Energy Corp and three of its subsidiaries, “based on an assessment of the risk of severe environmental damage”. The decision was guided by a recommendation from the Council on Ethics. Norges Bank claimed that other measures including engagement were “not appropriate in this case”. Duke Energy told Reuters it had made “significant progress” on environmental performance, adding that it was “unfortunate that [the fund] did not consider Duke Energy’s proactive actions to enhance our environmental stewardship and close ash basins”.

*Standard & Poor’s *has amended credit assessments 60 times in two years on the basis of environmental issues, it’s been reported. The UN Environmental Programme’s Nick Robins tweeted: “Over a two-year period, environmental factors led to 60 credit rating actions @SPGlobal.” The news was apparently told to an audience in Singapore by Mike Wilkins, Head of Global Environmental and Climate Research at S&P’s Global Ratings business.

Boulder in Colorado has become the 17th city in the US to commit to running exclusively off renewable energy by 2030. Mayor Suzanne Jones announced the pledge at an environmental event in Colorado last week, saying the city would use 100% renewables as part of a bid to reduce greenhouse-gas emissions by 80% by 2050. San Francisco, San Diego, Georgetown and Grand Rapids are among the others to make the same commitments.

Members of European Parliament approved the ratification of the Paris Agreement for the EU, according to a tweet today from the European Parliament Committee on Environment, Public Health and Food Safety. “ENVI #MEPs approve conclusion of #ParisAgreement”, the committee said on Twitter, adding that it was passed with 47 votes to 1. It did not provide any more details.h6. Social

Only one major European investor has responded to a campaign to exclude tobacco companies from portfolios, according to Reuters. The Global Taskforce for Tobacco Free Portfolios was launched 18 months ago, but the only institution to respond to its call so far is Axa, which axed tobacco holdings last year on the grounds that it was a health insurer. Reuters claims that it contacted 24 large fund managers with holdings in tobacco, but 17 declined to comment or did not reply.

Governance

Malaysian-based RAM Ratings has released a new commentary, Primer on ESG in Credit Ratings, to illustrate the importance of incorporating ESG factors into credit ratings. RAM Ratings is a signatory to the PRI’s Statement on ESG in Credit Ratings. Promod Dass, Deputy CEO of RAM Ratings said: “In supporting this initiative with PRI, RAM will be examining how ESG factors can be more systematically and transparently incorporated into rating methodologies and rating actions.”

The UK has become the first country to grant its Treasury the regulatory power to require large, multinational companies to publish a group tax strategy report that includes a country-by-country breakdown of finances. A bill with the changes was tabled by Caroline Flint MP and accepted by the House of Commons. It will be included in an updated Finance Bill. The rule change is the result of a cross-party effort to lobby for increased tax transparency in the wake of several multinationals identified as being housed overseas in order to pay reduced tax rates.

RPMI Railpen, the UK’s £22bn (€27.9bn) rail industry pension fund, has joined a number of other investors in voting against the election of all board members at under-fire retail group Sports Direct. Citing a call-to-arms issued by the Investor Forum, Railpen’s Chief Executive Chris Hitchen said that matters of corporate governance and fiduciary obligations should be considered to be of paramount importance. He added: “These issues go beyond Sports Direct specifically: they relate to the integrity of the UK stock market and the behaviours we expect of all companies to which we provide the capital of our beneficiaries.”