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ESG roundup: FRR, Progress, STOXX, Sustainalytics

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France’s pension reserve fund, Fonds de Réserve pour les Retraites (FRR), has launched a tender for 1-2 external providers to carry out a climate change-focused environmental footprint analysis of its investment portfolios.

The €37.2bn fund is looking to hire up to two providers for a contract of two years, extendible by one year, worth €135,000 in total.

The job in question is to identify the risks from climate change FRR is exposed to via the assets held in its portfolios.

The reserve fund said the exercise should allow it to identify which assets had a high carbon footprint and which were a source of physical climate change and/or energy transition risks – all of this being in the context of “respecting the international goal to limit global warming”.

FRR is mainly after an analysis for its portfolios of developed and emerging market listed equities, developed market bonds and government bonds but said it may also request similar analysis with regard to its private equity and private debt holdings.

The deadline for applications is 30 January.

FRR first calculated the environmental footprint, including its carbon footprint, of its portfolio in 2007. 

The fund recently announced it would no longer invest in certain coal companies for climate change reasons. 

In other news, the closed defined benefit pension fund of Unilever Netherlands, Progress, has licensed two new ESG indices from STOXX, Deutsche Boerse Group’s index business, for use as benchmarks.

The pension fund has selected the Europe and North America versions from the index provider’s Regional Industry Neutral ESG Indices family.

These exclude from the underlying universe – the Stoxx Global 1800 Index – any companies that ESG research and analysis provider Sustainalytics considers to be in breach of the UN Global Compact Principles, as well as companies identified as being involved with controversial weapons such as anti-personnel land mines, cluster weapons, or chemical, biological and nuclear weapons.

The indices are also tilted toward companies that are scored higher against a set of selected environmental, social and governance (ESG) criteria.

In a statement, Michael Kaal, chief risk officer at the Unilever Dutch pension funds, said: “We are conscious of our social responsibility as an institutional investor and seek to act accordingly.

“This means Progress in its investment policy reflects the norms and values of society, and thus takes into account in its investment decisions relevant environmental, social and corporate governance considerations, according to international standards.”

Speaking to IPE in the autumn last year, Kaal said ESG criteria had become a key component of the pension fund’s investment strategy, as it believes “ESG-compliant companies will perform better than non-ESG ones in the long term from a risk/return perspective”. 

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