ESG roundup: BlackRock to support fewer shareholder proposals this year

BlackRock has said it will probably support proportionately fewer shareholder resolutions this AGM season than last year because many climate-related proposals coming to the vote appear to be more prescriptive and constraining on company management.

Such proposals may not promote long-term shareholder value, it said.

The asset manager said there had been a “marked increase” in environmental and social shareholder proposals “of varying quality” coming to a vote this year, attributing this at least in part to the US Securities and Exchange Commission (SEC)’s revised guidance on shareholder proposals.

It said it had identified several themes of shareholder proposals that warranted special attention, including ceasing providing finance to fossil fuel companies, requiring alignment of bank and energy company business models solely to a specific 1.5⁰C scenario, and setting absolute scope 3 greenhouse gas emission reduction targets.

“Although it is still early in the shareholder meeting season, we note that many of these more prescriptive climate-related proposals are attracting lower levels of investor support,” BlackRock said in a memo.

“In such cases, we also note that global proxy advisors ISS and Glass Lewis have been recommending that shareholders not support overly prescriptive or constraining proposals.”

The asset manager also said that reducing reliance on Russian energy in the wake of its invasion of Ukraine would impact the net-zero transition. There would be “a need for companies that invest in both traditional and renewable sources of energy and we believe the companies that do that effectively will produce attractive returns for our clients,” it said.

UK taskforce consults on private sector climate transition plans

The UK Transition Plan Taskforce (TPT) has launched a call for evidence on key principles and elements of a credible climate transition plan to inform the development of a sector-neutral framework for such plans.

The framework is supposed to inform new requirements from the government for financial institutions and listed companies to publish robust transition plans that detail how they will decarbonise as the UK moves towards a net-zero economy by 2050.

The call for evidence is TPT’s first publication after it was recently launched by Treasury minister John Glen.

Responses will also help inform the taskforce’s approach to developing sectoral templates to be used by firms from certain sectors alongside the sector-neutral framework.

Key questions being asked by the TPT are if respondents agree with the proposed definition of a transition plan, who the key users are of such plans are and what the key use cases are for them.

It is also asking for views on how the taskforce should select which sectors to develop tailored transition plan templates for, and what financial sub-sectors and real economy sectors should the TPT prioritise following that logic.

The consultation is open until 13 July.

Moody’s: Sustainable bond issuance to be flat in 2022

Issuance of green, social, sustainability and sustainability-linked (GSSS) bonds will be roughly flat compared with last year’s total, with around $1trn for the whole of 2022, Moody’s ESG Solutions has said.

Citing Russia’s invasion of Ukraine and prospects for accelerated monetary policy tightening, it said “broader market conditions will provide greater than anticipated headwinds” for GSSS issuance.

At an instrument level, it is forecasting $550bn of green bonds, $125bn of social bonds, $175bn of sustainability bonds and $150bn of sustainability-linked bonds.

DB consolidator Clara makes net-zero commitment

Clara-Pensions, the first and so far only defined benefit “superfund” to have successfully completed the UK regulator’s assessment process, has made a 2050 net-zero commitment for its investment portfolio.

By 2025 it aims for all listed investments to be aligned with a path to achieving the Paris Agreement goals. Its ambition for 2030 is for this to apply for all listed and non-listed investments.

It decided on the commitment with its fiduciary manager Kempen Capital Management.

Clara has not yet taken on any members or assets. It is planning to announce its first transaction in the third quarter of this year, according to media reports.

Clara’s proposition is to provide a managed journey to an insured buyout, giving members the security of a fully insured pension earlier. Only once all members have their full benefits secured will Clara provide a long-term return on capital for investors.

LAPFF wants more recognition of electric flight progress

The Local Authority Pension Fund Forum (LAPFF), an association of local government pension funds and asset pools in the UK, has called for the government to pay greater attention to the progress made in electric flight as it seeks to develop its strategy for net-zero aviation.

Responding to a further technical consultation from the Department for Transport (DfT), LAPFF said it was concerned that progress made in electric flight, even since the department’s original consultation, had not been reflected in the development of scenarios and thus in conclusions set out in the consultation.

LAPFF’s response also set out concerns about providing support for technologies, such as sustainable aviation fuel (SAF) that still result in carbon emissions and lock this continued technology into the system.

The association said its experience was that, without strong and timely regulation, “achieving the UK’s ambitions for reducing emissions will be slower and less effective as some companies tend only to meet minimum regulatory requirements”.

SEC extends consultation on climate disclosure rule proposal

The US Securities and Exchange Commission (SEC) has extended the public comment period on proposed rules requiring climate-related disclosures by corporates until 17 June.

It has also reopened the comment periods on proposed rules to enhance private fund investor protection and one another proposed rulemaking.

SEC chair Gary Gensler said: “Commenters with diverse views have noted that they would benefit from additional time to review these three proposals, and I’m pleased that the public will have additional time to provide thoughtful feedback.”

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