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ESG roundup: NBIM among $3trn investor group pushing TCFD-reporting

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A near-$3trn (€2trn) group of investors – including Norway’s giant sovereign wealth fund – has formed to promote action on climate reporting by the investor community.

Together with the UN Environment Finance Initiative (UNEP FI), nine investors will work towards providing a first set of information in line with the recommendations of the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD).

“The outputs and conclusions of the group will encourage and ease the adoption of the TCFD’s recommendations by the wider industry,” UNEP FI said in a statement.

A report on the pilot project is expected to be published by the end of 2018.

The investors, who are all UNEP FI investment members, are: Addenda Capital, Aviva, Caisse de Dépôt et Placement du Québec, Desjardins Group, La Française Group, Nordea Investment Management, Norges Bank Investment Management, Rockefeller Asset Management, and Storebrand Asset Management.

The UNEP FI project is not the only investor initiative on TCFD-aligned reporting. The City of London Green Finance Initiative, China Green Finance Committee and the Principles for Responsible Investment (PRI) have also put together a group of financial institutions, including institutional investors, to trial reporting based on the TCFD recommendations.

The UNEP FI said the group would not act in isolation, citing existing investor groups and initiatives such as the Institutional Investor Group on Climate Change and the Investor Agenda.

FRC: Calling all pension funds 

The UK’s Financial Reporting Council (FRC) wants to hear from pension funds to better understand their views on the Stewardship Code, which the public body is reviewing.

Writing in a blog on the FRC’s website, its head of investor engagement Jen Sisson said the FRC wanted more asset owners to sign up to the code.

“But we understand that there are competing issues that pension fund trustees need to balance, and that there is often limited time available to do so,” she added.

The FRC has already outlined some of the changes it has considered making to the Stewardship Code. In the blog, Sisson said the accounting regulator wanted to know if it should provide more clarity on the expectations of those investing directly versus those investing indirectly, like many pension schemes, and if the code should more explicitly refer to environmental, social and governance factors and broader social impact.

“As we move through the process of reviewing the UK Stewardship code we want to hear from you,” said Sisson.

The Local Authority Pension Fund Forum (LAPFF), a £200bn (€227bn) association of UK public pension funds, has called for the FRC to be wound up and replaced with a proper statutory body.

ISS takes over oekom

oekom research, a Munich-based ESG research and ratings provider, has been bought by Institutional Shareholder Services (ISS), a major US provider of corporate governance and ESG products and services.

oekom research will be renamed ISS-oekom and complement the work of ISS’ existing responsible investment teams, according to a statement.

“As institutions across the globe continue to seek out holistic responsible investment solutions and services, ISS is pleased to respond to those demands through this transaction,” said ISS chief operating officer Stephen Harvey.

The move is part of an emerging trend of consolidation among ESG/corporate governance service providers.

Public pension funds turn spotlight on ‘precarious work’  

The LAPFF has set out its stall on “precarious work”, publishing a report that identifies it as an investment risk and calls for changes to regulation and oversight as well as company practice.

It also includes guidance for investors on how to engage with companies on issues such as zero-hours contracts, slavery, and general working conditions.

Ian Greenwood and Denise Le Gal, LAPFF vice-chairs, said: “Investors can no longer turn a blind eye to precarious work. This report not only demonstrates the reputational and legal risks, it also highlights a worrying trend of companies seeing workers as a cost to be cut rather than an asset to be invested in to create long-term value.”

The report can be found here.

The art of manager selection

Asset owners should be clear about their expectations for the “real economy impact” of their investments when going about manager selection, according to a new guide from the PRI.

Clarity on this aspect “will help to align interests for a long-term commercial relationship,” it said.

The PRI has been promoting more and better integration of ESG-related issues in manager selection for some time. It said its new guide provided more detail on what ESG-related issues asset owners needed to think about when looking to select an investment manager.

The PRI said: “Among others, this new document makes a fundamental point around manager selection: If there is no cultural fit and understanding of ESG factors between an asset owner and a potential manager, there is little [foundation] to establish a long-term investment relationship.”

The guide can be found here

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