A new interactive guide to provide pension funds with the tools they need to ensure their investments are not driving deforestation across the globe has been launched by Global Canopy, Make My Money Matter and SYSTEMIQ.
Research conducted this year by the trio has found that £2 in every £10 individuals save into their pensions in the UK is linked to companies and financial institutions at high risk of deforestation, jeopardising many pension schemes’ ambitious commitments to achieve net zero.
The guide – How to achieve deforestation-free pensions – provides practical steps and actions for pension funds to identify, address and eliminate deforestation risk and associated human rights abuses, as well as future-proof their investments, it was announced.
The guidance was created by Global Canopy in partnership with Make My Money Matter, SYSTEMIQ and in close consultation with 12 pension funds.
Its online format provides different pathways for various investment approaches, which allows users to log-in and access the guidance most relevant for the needs of their specific pension fund.
Building on the Finance Sector Roadmap on Eliminating Commodity Driven Deforestation launched at COP26, the guidance sets out six phases, from identifying and mapping deforestation and its associated human rights risks within portfolios, to setting a policy and engaging with asset managers, to eliminating deforestation from their investments.
Make My Money Matter and Global Canopy call on all pension schemes to review and adopt this best practice guidance – and to sign up to the Race to Zero commitment letter on eliminating agricultural commodity-driven deforestation from their investments by 2025.
MSCI ESG research shows greater concentration in ownership of corporations
Recent research conducted by MSCI ESG Research has found a trend toward greater concentration in ownership of corporations and the implications of these trends for investors in those companies.
Its report – Ownership and control 2022: global equities concentration on the rise – revealed that nearly 46% of all constituents of the MSCI ACWI Index have one or more shareholders/shareholder blocks holding 30% or more of a company’s voting shares. This figure stood at 32% in 2015.
Ownership concentration also increased in the last five years among MSCI ACWI Index constituents that lacked a controlling shareholder – especially among US listed companies and certain sectors, it added.
Among widely held and principal shareholder companies globally, BlackRock held 5% or more of 638 index constituents, and Vanguard held 5% or more of 424 index constituents.
The report stated that these figures were significant “because they confirm the extent to which ownership interests and voting power at principal shareholder and widely held companies have become more concentrated in the hands of a relatively small number of large investors”.
It added: “While other researchers have reported similar findings, much of the academic scholarship in this area has focused on the social and political implications of these shifts, and concerns regarding the possibility of these large institutions exercising too much – or too little – influence over the companies in which they invest.”
Ric Marshall, executive director at MSCI and one of the authors of the report, said: “The prominence and importance of large asset managers and certain other institutional investors as major shareholders of public companies is not new. The scope of their ownership and voting power across the publicly listed company landscape, however, represents a significant shift.”
He added: “From a corporate governance perspective, that’s neither good nor bad. These investors are typically not the ultimate beneficial owners of publicly traded companies. They are complex intermediaries that have and can take steps to encourage their many institutional, and in some cases individual clients, to exercise their shareholder rights.”
BNP Paribas outlines 2025 strategic ambitions
Asset management firm BNP Paribas Asset Management (BNPP AM) has unveiled its strategic ambitions for 2025.
Based on the repositioning of its business, which was completed between 2016 and 2021, BNPP AM aims to by 2025 pursue the following ambitions:
- be the sustainable asset manager of reference in Europe;
- define a clear pathway to net zero for its assets under management;
- have 90% of its open-ended funds classified as SFDR Article 8 or 9;
- continue to outperform its peer group in terms of growth.
Sandro Pierri, chief executive officer, said: “BNPP AM has built an integrated model that has delivered strong performance in difficult environments and demonstrated strength in a highly competitive landscape. We have been able to grow and create value in a sustainable way for clients, employees and the community, and our aim is to maintain this momentum.”
He added that the asset management industry is facing “a period of profound change, driven by the need to reallocate capital towards a more sustainable and inclusive economy; new geopolitical dynamics; evolving regulation; technological transformation; and demographics, including a younger generation that demands more sustainability for its savings”.
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