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Established in 1974, Temasek Holdings is the Sovereign Wealth Fund of Singapore. Temasek had S$ 306 billion (US$ 214 billion) of assets under management, as at March 31, 2020.
As a generational investor, Temasek integrates ESG considerations throughout its investment process when assessing thematic, sector, and company-level information. Additionally, with regards to Climate Change strategy, Temasek conducts scenario analysis on portfolio companies to better understand their exposure to climate risk in line with the Taskforce for Climate-related Financial Disclosure. As part of this process, the Sovereign Wealth Fund will engage with companies to achieve net zero carbon emissions by 2050. Furthermore, Temasek is active in industry-wide initiatives such as the United Nations Development Programme’s Steering Group of SDG Impact and the Sustainability Accounting Standards Board (SASB).
Opalesque: About two-thirds of investors agree that the global pandemic has led them to place a higher priority on social factors when analyzing investment risk, according to a survey of attitudes toward ESG investing by Federated Hermes.
GreenBiz: New York Climate Week kicked off with confirmation the number of corporations and governments pledging to deliver net-zero emissions by 2050 at the latest has more than doubled in the past year.
Reuters: Wells Fargo & Co Chief Executive Charles Scharf exasperated some Black employees in a Zoom meeting this summer when he reiterated that the bank had trouble reaching diversity goals because there was not enough qualified minority talent, two participants told Reuters.
IPE: AXA Investment Managers, BNP Paribas Asset Management, Sycomore Asset Management and Mirova have selected the research provider that will develop a tool to allow them to measure the impact of their investments on biodiversity. [Full article available to subscribers.]
Financial Times: Derivatives linked to the price of water will be vital to help businesses and investors manage the increasingly dramatic risk of climate change, a top US markets regulator has said. [Full article available to Financial Times subscribers.]
Financial Times: The leaders of the Big Four accounting firms have come together in an unusual joint initiative to unveil a reporting framework for environmental, social and governance standards. [Full article available to Financial Times subscribers.]
Funds Europe: More than a third of asset managers are not engaging with the issue of climate change, a report has claimed. Research conducted by the UK-based investment consultancy Redington found that more than a third (39%) of asset managers were, when asked, unable to provide an example of a climate change related engagement effort.
Pensions & Investments: The first U.S. government report on climate change's financial impact is sparking some optimism among sustainability-minded investors and advocates. [Full article available to subscribers.]
Institutional Asset Manager: The world’s three largest asset managers, BlackRock, Vanguard, and State Street, have either voted against or abstained from voting on all efforts to halt deforestation by shareholders of consumer brands and agribusiness companies since 2012, a new report from environmental advocacy group Friends of the Earth finds.
PKA is responsible for managing the pensions of Denmark’s healthcare professionals, nurses and social workers. With more than 325,000 members, the Danish public pension fund had 330 billion Danish kroner (USD49.5 billion) in assets under management as at December 31 2019.
As a responsible investor, PKA has implemented screening criteria around tobacco, weapons and coal, as well as the UN Global Compact’s principles. With regards to Climate Change, PKA allocated 10% of its assets to climate solutions. Additionally, as part of its active ownership strategy, PKA pushes companies from the coal, oil and gas sector to incorporate the Paris Agreement’s objectives into their business strategy. As such, the organization joined Climate Action 100+ to engage with their peers and increase their influence on portfolio companies.
Active Ownership Policy (available in Danish only)
Statement of Active Ownership 2019 (available in Danish only)
Reuters: Canada Pension Plan Investment Board (CPPIB), which manages the pensions of 20 million Canadians, is investing billions of dollars in fossil fuel companies, exposing it to significant climate-related risks, research by two universities said on Thursday.
The Guardian: BlackRock, the world’s largest asset manager, has disclosed that in the past year it has voted 55 times against directors at 49 companies for failing to make progress on tackling the climate crisis. [Full article available to The Guardian subscribers.]
IPE: Some asset managers do not invest as responsibly as they claim, a number of Dutch pension funds have said.
Bloomberg: Climate change will have a major affect on companies’ profits and the value of their assets, so its impact should be reflected in their accounts.
Private Equity News: The introduction of the EU Sustainable Finance Disclosure Regulation in March 2021 and the regulatory imperative for funds to better understand the ESG status of their portfolio investments is looming large. [Full article available to Private Equity News subscribers.]
Pensions & Investments: The SEC and other federal agencies should mandate ways to increase diverse managers in the financial industry, Illinois State Treasurer Michael Frerichs told a Securities and Exchange Commission asset management advisory committee Wednesday.
Bloomberg: New Zealand plans to require financial companies to make climate-related disclosures, putting the nation in the vanguard of such reporting requirements.
Bloomberg: Climate Action 100+, a group of more than 500 investment firms that together manage over $47 trillion in assets, called on some of the world’s biggest polluters to be more aggressive in reducing their greenhouse gas emissions and introduce plans to cut them as close to zero as possible.
Financial Times: Exchange traded funds that emphasise good environmental, social and governance factors have surged in popularity, as investors look to boost their returns and push companies to become better corporate citizens. [Full article available to Financial Times subscribers.]
The Bureau of Labor Funds is responsible for various labor funds in Taiwan, including the Labor Pension Fund, the Labor Retirement Fund and others. With around USD156 billion of total assets under management as of May 2020, the Bureau of Labor Funds is the largest public pension fund in Taiwan.
As Taiwanese society contributes to the Bureau of Labor Funds, they have adopted socially responsible investment strategies to not only improve labor rights and benefits, but to also push corporates to perform social responsibilities, benefiting the entire society.
Bloomberg: The coronavirus pandemic is complicating the task of rooting out modern slavery by making it impossible for companies or investors to visit factory floors in many countries, adding to the challenges of addressing supply-chain risks.
Fortune: Following the death of George Floyd in Minneapolis earlier this year, a wave of protests against racial inequality swept around the globe, shining a spotlight on deeply ingrained issues of systemic racism. The practices and ultimately the role of elected officials, businesses, and investors in addressing minority rights and race are now being called into question.
Financial Times: Climate change threatens not only fires, drought and surging seas but profound risks to the financial system, a federal advisory panel has warned in a first-of-its-kind report from a Wall Street regulator. [Full article available to Financial Times subscribers.]
Bloomberg: JPMorgan Chase & Co., the biggest U.S. bank by assets, is issuing bonds to finance environmentally friendly projects for the first time.
Private Equity Wire: In recent years, the most noticeable movement towards ESG made by large private equity firms was related to the launch of new products, such as impact funds that select small and midcap companies according to specific environmental or social themes (e.g. education, healthcare, sustainable infrastructure) and align with the Sustainable Development Goals. TPG, KKR, Bain Capital, among others, have launched such funds.
Financial Times: Environmental, social and governance investing has been one of the hottest sectors of 2020, as investors have flooded into the market looking to immunise their portfolios against climate risk and help promote a sustainable recovery from the pandemic.
Bloomberg: Électricité de France SA is selling 2.4 billion euros ($2.8 billion) of convertible bonds in a record green deal as it raises funds for renewable-energy projects and bolsters its balance sheet following the coronavirus pandemic.
Reuters: If fund managers are serious about clean investments, they need to get their hands dirty.
Financial Times: The global umbrella body for securities regulators is seeking to harmonise the patchwork of rules governing how companies disclose sustainability risks in a move that could be a game-changer for the fast-growing green finance sector. [Full article available to Financial Times subscribers.]
Established in 2004, the Fonds de Compensation ("FDC") is a public pension fund based in Luxembourg. The FDC had 22.18 billion euros of assets under management as of December 31 2019.
The FDC considers ESG issues throughout its investment process. As part of its Responsible Investment Policy, the FDC elected to implement a screening criteria around the UN Global Compact for all of its portfolios. Furthermore, the FDC has allocated 100 million euros to a Green Bond Portfolio and 200 million euros to strategies contributing to the SDGs. Finally, its Property assets are required to be certified by BREEAM.
Institutional Investor: One agency’s A+ is another’s “laggard” — and neither links to financial performance. Hybrid metrics will change everything, argue Harvard Business School’s Mark Kramer and leaders in the shared-value movement.
Bloomberg: It’s become a hackneyed truism in the age of Covid-19 that global problems need coordinated global solutions. When it comes to combating climate change, the U.S. appears to be setting out alone.
Financial Times: Protesters dressed as bankers and coal miners gathered in London this summer brandishing a banner that read: “Barclays ♡ Coal: UK’s #1 Coal Bank.” [Full article available to Financial Times subscribers.]
Bloomberg: Just like in traditional investing, there are dozens of strategies you can use to be an ESG investor. There are funds that pick the best-rated low-carbon companies, funds that focus on companies with more women on boards, and funds that use a series of ratings and checklists to ensure the stocks they are betting on are “better” than the rest of the market.
Financial Times: M&G, the FTSE 100 asset manager, has taken a tougher stand against companies that cut dividend payments while forking out big executive bonuses, in a sign of the pressure on businesses to share the pain of the coronavirus pandemic. [Full article available to Financial Times Subscribers.]
Bloomberg: Embedding social responsibility into a company’s organizing documents has sometimes been seen as risky, but private equity pioneer and hedge fund founder Jeff Tannenbaum is betting it is the future.
All About Alpha: Economists in general, and scholars of finance in particular, have long been concerned with the “agency problem,” the conflict of interest inherent in any relationship where X is expected, and perhaps required by law or contract, to act in the best interest of Y. The problem exists because, for example, stockholders expect a corporate management to act on their behalf, and limited partners expect a fund management to act on theirs. But it ain’t necessarily so.
Financial Times: Even before Covid-19 hit, there was a growing clamour around the need to integrate environmental, social and governance (ESG) factors into corporate and investment decisions, taking a wider range of stakeholder interests into account. This was intensified by the pandemic and the death of George Floyd, which put social issues and equality under the spotlight. [Full article available to Financial Times subscribers.]
Financial Times: When BP and Royal Dutch Shell announced plans to slash billions of dollars off the value of their assets this summer in response to the coronavirus pandemic and climate change, many of their biggest shareholders were sanguine about the hit. [Full article available to Financial Times subscribers.]
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