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ESG roundup: French award, AXA exits tobacco, German trends

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The French government has launched an award to promote and recognise best practice in climate-related disclosure by investors under new mandatory reporting requirements.

The ministry of the environment is partnering with the 2° Investing Initiative (2°ii), a French multi-stakeholder think tank, on the award initiative.

Its main purpose, according to a statement, is “to foster the emergence of best practices on climate change reporting, consequently providing food for thought for existing international initiatives on climate-related disclosures for investors, and setting the bar for French investors”.

The criteria for the award have yet to be decided, but they will be based around the reporting requirements introduced by Article 173 of France’s “loi sur la transition énergétique pour la croissance verte” (LTE), the law on the energy transition for green growth.

The law is believed to be the first to introduce mandatory disclosure on climate change by institutional investors, and the launch of the award seems in keeping with the French government’s apparent efforts to maintain, if not intensify, the momentum behind the COP21 climate agreement reached in Paris in December.

The award will be presented at a ceremony in November, to be hosted by Ségolène Royal, the environment minister.

In other news, French insurer AXA Group has announced that it will no longer invest in tobacco and will be selling all of its “tobacco industry assets”, currently valued at some €1.8bn.

The insurer will offload immediately all of its equity holdings in tobacco companies, worth around €200m, and refrain from making any new investments in bonds issued by tobacco industry companies.

It will hold on to the bonds, valued at around €1.6bn, it is already invested in until they mature.

In a statement, Thomas Buberl, who will become chief executive at AXA in September, said the decision to divest “has a cost for us, but the case for divestment is clear. The human cost of tobacco is tragic – its economic cost is huge.” 

In divesting from tobacco, AXA follows in the footsteps of other institutional investors that have to one degree or another turned their back on the industry – large ones such as the Norwegian oil fund and smaller ones such as the pension fund of the London Borough of Croydon.

In a contrasting move, however, CalPERS, one of the world’s largest pension funds, is reconsidering whether it should invest in tobacco again after research estimated it missed out on up to $3bn (€2.6bn) of returns. 

In Germany, meanwhile, 42% of institutional investors surveyed by asset manager Union Investment do not expect the global climate agreement reached at the December UN conference in Paris (COP21) to have notable consequences on the capital markets. 

Alexander Schindler, responsible for institutional business at Union, said “this result is surprising” given that tougher climate change mitigation requirements have valuation and risk-management implications for investors that “cannot be underestimated”. 

However, the majority of surveyed investors – 203, with around €3.5bn in assets under management – expect the political drive to reduce greenhouse gases to influence the capital markets. 

The sustainable investment survey, carried out between February and April, found that 21% of German institutional investors take climate change into account in their investment policies.

Of those that don’t, 24% said they planned to do so over the next five years.

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