A couple of months ago, People’s Pension CIO Dan Mikulskis penned his first regular op-ed for IPE. In that piece, he argued that CIOs need to take more ownership of ESG as it undergoes a necessary sharpening. Whether or not this is quite what he had in mind, this week PGGM CIO Lars Dijkstra put his name to an op-ed with colleague Andres van der Linden to warn the European Commission against giving in to lobbying for changes to the EU Emissions Trading System (ETS) that could weaken its core function. A key consideration for them is how ETS revenues are spent.
The op-ed is a follow-up to a statement that PGGM and some 45 other investors signed earlier last month to encourage EU lawmakers to maintain a strong carbon price in the region. Indeed, investors don’t have much time left to weigh in on the Commission, which is expected to publish its proposal for a revision of the ETS this week as part of a bigger package of documents that will also include a proposal for an Industrial Decarbonisation Bank.
With August just around the corner, pre-summer policy dumps seem to be the name of the game. In the UK this week, the government and regulators published a host of interlinked documents intended to drive forward myriad facets of well-trailed pensions reform.
None of it is specific to sustainable finance, although the Financial Conduct Authority does spill some ink explaining why it is not currently proposing to incorporate sustainability-related metrics into its value for money framework. This is in part because it does not want to pre-empt ongoing reviews, such as of the TCFD-based reporting regime for pension funds and whether or not UK Sustainability Reporting Standards should apply to occupational pension schemes.
On the former, the chair of the Trustee Sustainability Working Group this week ramped up his campaign to replace pension fund TCFD and implementation reports with transition plans, arguing that the money spent on reporting would be better spent on actually investing in climate solutions. “Every hour an ESG specialist spends reviewing disclosure wording is an hour not spent developing solutions for pension schemes to invest in renewable infrastructure, climate technology, energy transition projects or natural capital,” wrote Bobby Riddaway in an op-ed picked up by UK pensions media.
Other developments to bring to your attention include:
- EU member states have confirmed a plan to allow ‘climate transition’ funds to invest in the expansion of fossil-fuel projects. Meanwhile, an apparent lack of consensus in the European Parliament means a vote on the Sustainable Finance Disclosures Regulation that was meant to take place this Wednesday may now be pushed back until after the summer break.
- Sweden’s largest pension fund Alecta has committed $110m (€95m) to an emerging markets climate strategy managed by the Swiss impact investment manager responsAbility Investments.
- The Net Zero Asset Owner Alliance is developing an AI-assisted framework that will allow asset owners to evaluate and compare the climate stewardship performance of the world’s largest asset managers.
- And last but not least, an analysis taking a closer look at the state of stewardship five years since Exxon’s famous stand-off with its shareholders over decarbonisation.
Susanna Rust
ESG Editor
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