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ESG roundup: Storebrand exits coal companies, LGPS urged to double infra assets

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Storebrand, Norway’s soon-to-be largest pension provider, has expanded its coal divestment criteria with 10 companies falling foul of the new standards.

Under the new criteria, companies involved in the construction of new coal-fired power plants will be excluded as will firms “that do not divest from coal companies they are likely to have left in their portfolios”. Storebrand said it would carry out additional analysis of companies with high levels of coal in their portfolios, and significant revenue from distribution.

The excluded companies included RWE, E.On, and Uniper, with 14,300 megawatts residing in the total amount of investments being dropped. This exceeded the entire coal power capacity of the UK and Ireland, or more than the entire coal power capacity of Greece, the Netherlands and France, according to Storebrand.

“The coal industry simply has to go if we are to meet climate targets,” said Jan Erik Saugestad, CEO of Storebrand Asset Management.

Storebrand has agreed to buy compatriot asset manager Skagen, which would make Storebrand Norway’s largest pension provider by assets under management, according to IPE data.

UK pension funds back ‘systems science’ initiative

The £28bn Brunel Pension Partnership, the Environment Agency Pension Fund, Tribe Impact Capital and WHEB Asset Management have become founding investor members of the Development Council of Future-Fit, an organisation that seeks to help companies and investors transform how they create long-term value for themselves and society as a whole. 

At the heart of its work is the Future-Fit Business Benchmark, which “translates systems science into a practical, free-to-use tool designed to help business leaders and investors respond authentically and successfully to today’s biggest challenges”.

The organisation presented a major update of the benchmark at a London event earlier this month, where it welcomed the aforementioned investors to the Development Council.

LGPS energy infrastructure opportunity

The investment pools being formed by the UK’s local government pension schemes are collectively aiming to double their allocation to infrastructure, equivalent to investment of an extra £8bn, according to a report published this week by the City of London Corporation’s Green Finance Initiative.

To date 0.6% of the schemes’ total assets (£216bn) was invested in infrastructure, according to the report.

The report covered opportunities for UK pension funds to invest in unlisted renewable equity infrastructure and was written by Helene Winch, senior responsible investment specalist at HSBC Global Asset Management, and Gerard Wynn, energy finance consultant at the Institute for Energy Economics and Financial Analysis. 

ESG portfolio analytics tool 

State Street has launched a new analytics tool designed to provide information to help clients bring transparency and standardisation to their ESG investing. ESGX provides a web platform through which clients could assess ESG factor exposure in their portfolios, such as a company’s carbon footprint and the type of labour used in a supply chain.

Clients would also have the ability to review reports, which can be updated daily, that show how the ESG profile of a portfolio has evolved over time.

State Street has also concluded agreements with new data providers such as Arabesque. Its ESGX tool will offer the latter’s algorithm-based technology, which analyses the sustainability performance of the world’s largest listed corporations, using self-learning quantitative models and data scores as a risk management and compliance measure.

PRI pushes for successor to modern portfolio theory 

 nathan fabian pri

Nathan Fabian, PRI: “We haven’t kept up”

PRI is planning a series of activities intended to “reimagine, look beyond” modern portfolio theory. One of the activities is to offer a £10,000 prize for research that “bridges disciplines and investigates issues such as: time horizons, performance and incentives, valuation, pricing, ownership and information”.

The PRI argued that the current financial system did not operate sustainability and often failed societies, and so it needed to to be realigned to encourage sustainable, equitable economies. 

“The world has changed but we haven’t kept up step. We are way behind. We are accepting blind spots but these blind spots are right in front of us,” said Nathan Fabian, director of policy and research, PRI. 

 

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