A unit of global asset manager Invesco has agreed to pay US$17.5 million to settle charges brought the US Securities and Exchange Commission (SEC) for exaggerating the extent of its ESG integration. The SEC charged Atlanta-based Invesco Advisers for making misleading statements about the percentage of company-wide assets under management (AUM) that integrated ESG factors in investment decisions. According to the SEC’s order, from 2020 to 2022, Invesco told clients and stated in marketing materials that between 70-94% of its parent company’s AUM were “ESG integrated”. However, these percentages were found to include a substantial amount of assets that were held in passive exchange-traded funds that did not consider ESG factors in investment decisions. The SEC said Invesco lacked any written policy defining ESG integration. “As stated in the order, Invesco saw commercial value in claiming that a high percentage of company-wide assets were ESG integrated. But saying it doesn’t make it so,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “Companies should be straightforward with their clients and investors rather than seeking to capitalise on investing trends and buzzwords.” The order charges Invesco with willfully violating the Investment Advisers Act of 1940. Without admitting or denying the order’s findings, Invesco agreed to cease and desist from violations of the charged provisions, be censured, and pay the civil penalty.
Sustainable Investor
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Analysis by Finnish pension provider Varma has found that just 9% of its listed high-risk investee companies have an action plan accounting for biodiversity loss in their operations. The organisation’s second survey of the biodiversity accountability attitudes of companies included 318 firms operating in high-risk sectors, including the agricultural, automotive, mining, and oil and gas industries. Of the companies surveyed, 39% had set biodiversity-related targets in their operations, while less than half had expressed intentions to take action to take biodiversity into account or compensate for it. Only 9% had a concrete action plan to fulfil the commitment. A total 18% of companies had not factored biodiversity-related issues into their public policies at all. Varma’s survey found that European companies led on setting biodiversity targets, with firms in North America and most of Asia trailing behind. Japan was an exception, with half of the assessed companies setting targets for preventing biodiversity loss. “Biodiversity loss poses significant risks to companies’ operations, and the related regulation will have a strong impact on companies [and] this will change the operating conditions,” said Hanna Kaskela, Senior Vice President of Sustainability at Varma. “Considering how much information is available on biodiversity loss, it is a miracle that so many companies lacked a concrete action plan to take biodiversity into account.”
Lähes kaikkien yritysten toiminta on riippuvaista luonnosta suoraan tai välillisesti. Lukemattomat lajit ja ekosysteemit ovat vaarantuneet. Kannustamme yrityksiä tunnistamaan oma luontovaikutuksensa. Lue lisää tekemästämme selvityksestä:https://t.co/78K1Qpu5EF pic.twitter.com/rRrPX7iGTJ
— Työeläkeyhtiö Varma (@varma_tweet) November 8, 2024
Global investment manager MPC Capital, which specialises in maritime and energy infrastructure, has launched a new platform for investment in the offshore wind service vessel sector. The firm will be targeting related sectors with strong organic growth potential driven by the global energy transition and has so far secured the construction of six offshore survey and service vessels (OSSV) which are being developed for emission-free operations and will be delivered between 2026-28. “Offshore wind services represent a significant structural growth market, and we are excited to bring our maritime and energy expertise to this rapidly developing sector,” said Constantin Baack. MPC Capital CEO. The firm is actively seeking strategic partners to co-invest in the sector. “Demand for service vessels is set to grow dynamically, while a limited supply of assets is expected to drive strong momentum and create value for both our company and our partners.” The OSSVs will primarily be deployed in offshore wind farms in the North Sea and Baltic Sea, equipped with propulsion technology which enables CO2-neutral operations. “The vessels have been developed in collaboration with established players in the offshore wind industry and are specifically tailored to meet the dynamic needs of this sector and support the energy transition in Northern Europe,” said Baack. “With a strong pipeline of follow-on projects, we look forward to growing our newly established maritime offshore platform.”
Major food and beverage producers are increasing their share of revenues from healthier products, according to the Access to Nutrition initiative (ATNI), but are still failing to embed nutrition into their business models. ATNI’s fifth global index found that 34% of overall sales made by 30 of the sector’s largest firms were derived from healthier products, rising from 27% in 2021 and 21% in 2018. Just under a third (31%) of more than 52,000 products analysed in the benchmark were categorised as healthy using the Health Star Rating system. The ATNI is lobbying for food and beverage manufacturers to derive at least half their sales from healthy products by 2030. The index also revealed that 11 out of 30 companies had set age thresholds for product marketing, while nine had some form of affordable nutrition strategy. However, the ATNI said the healthiness of product portfolios remained low overall with no company fully prohibiting the marketing of unhealthy foods to children under 18 across all channels. It also reported that the share of ‘less healthy’ products marketed by the 30 assessed companies is higher in low- and middle-income countries than in high-income countries. Ten of the firms surveyed now use an internationally recognised nutrient profiling model to annually report on portfolio healthiness, with six doing so as percentages of global sales. The ATNI called on investors to make greater use of existing nutrition frameworks to assess investee firms’ performance, to file shareholder resolutions to improve reporting of nutrition-related metrics, and to use their influence with government, ESG data providers and industry bodies to mainstream nutrition into voluntary and mandatory reporting standards. “With key players failing to show enough progress, investors are demanding greater transparency. Companies should heed shareholders concerns and commit to reporting the healthiness of their sales in line with internationally-accepted nutrition standards,” said Thomas Abrams, Co-head of Health at ShareAction.
The European People’s Party (EPP) has proposed amendments to weaken the EU Deforestation Regulation (EUDR), including pushing back the application of the rules by a further year to December 2026. Last month, the EU Council agreed to postpone the application of the EUDR by 12 months, meaning it will apply to large operators and traders from 30 December 2025 and micro and small enterprises from 30 June 2026. The delay was welcomed by some but lambasted by others. In September, the EPP branded the EUDR as a “bureaucratic monster” with “many problems” that needed to be delayed which it followed with the proposed changes to the EUDR the following month. The EPP argued the extended delay to 30 December 2026 would allow for supply chains – particularly in emerging markets – to prepare for the rules, enable the EU to “build adequate enforcement infrastructure”, and avoid “unintended risks”, such as market exclusion. The World Wide Fund for Nature’s European Policy Officer (WWF EU) criticised the EPP’s proposal, arguing the suggested amendments risk having “serious potential consequences” on forests worldwide. “With this move, the EPP betrays trust in EU policy, and starts to deregulate key environmental legislation – a massive embarrassment just ahead of the COP!” said Anke Schulmeister-Oldenhove, Manager of Forests at WWF EU. “The proposed changes make a mockery of the EUDR’s objectives, removing critical elements such as traceability for many products, and allowing products to be placed on the EU market without proper checks. [It] also betrays all those companies that have already invested to prepare for the EUDR and are now faced with far reaching changes and loss of their investments.”
NatureFinance, a Swiss non-profit, has launched a new tool which combines multiple datasets to help financial institutions (FIs) assess their degree of alignment with nature-positive outcomes. The first module of NatureAlign will allow FIs to establish their baseline position with respect to nature, including measuring specific components such as biodiversity and water scarcity. “Coming out of [COP16], we can see two things clearly – progress on saving nature is too slow, and money is not moving in the right direction,” said Julie McCarthy, NatureFinance’s CEO. “With our financial and economic system currently on track for 2-3°C warming, asset managers, asset owners and banks are crucial to redirecting finance towards economic activities that deliver nature-positive outcomes.” NatureAlign will draw data from the likes of the SEED Biocomplexity Index. Future modules of the tool could focus on providing frameworks to assess alignment with the Global Biodiversity Framework (GBF). According to UNEP, nearly US$7 trillion per annum is invested globally in activities that negatively impact nature, the equivalent of roughly 7% of global GDP. “Financial institutions can dramatically transform both the business and natural landscape by proactively managing nature risks and seeking out nature-positive opportunities in their decision-making,” added McCarthy. “Innovative, accessible tools and data are critical to help them know where, how and in what to invest on a rapidly changing planet. We urgently need financial institutions’ leadership to align global investment with an economy that works for nature, climate and people.”
UK-based Guy’s & St Thomas’ Foundation and CCLA Investment Management have launched a global consultation on how to use investor influence to reduce air pollution caused by companies. The consultation seeks feedback from investors, companies, NGOs and academics on proposals for a corporate benchmark to compare firms’ management of air pollution, alongside a structured investor engagement initiative and a collective policy engagement effort. The consultation, conducted by Chronos Sustainability, is open until 17 December, with findings scheduled for publication in February 2025. According to a 2022 UK Health Security Agency report, the burden of long-term exposure to air pollution in 2019 was an effect equivalent to between 29,000 to 43,000 deaths for adults aged 30 and over. In the same year, the global cost of health damages from particulate matter air pollution was estimated by the World Bank at US$8.1 trillion, equivalent to 6.1% of global GDP. Companies are major contributors to air pollution, with sectors such as energy, construction, transport, and agriculture having the largest impact. The consultation will initially focus on companies involved in on-road transport. “Alongside CCLA we are calling on investors and businesses to come together to put air pollution on their sustainability agendas,” said Matt Lomas, Engagement Director – Investment, at Guy’s & St Thomas’ Foundation’s endowment. “We believe that via collaboration we can take meaningful action, and in doing so, have a significant positive impact for people and planet as well as business resilience.”
The climate targets of Europe’s 20 largest publicly listed banks are “not fit for purpose”, according to research by NGO ShareAction. The report branded the banks’ targets as “too narrow”, noting that they lack clear and robust methodologies, and sufficient alignment with each other. Under these current commitments, a successful shift of finance from fossil fuels to clean energy and green infrastructure at the speed and scale the Paris Agreement requires is “unlikely”, ShareAction said. The analysis showed that 18 out of 20 banks, including HSBC, Barclays and BNP Paribas, are off-track to meet the US$10 to US$1 ratio of green investment to fossil fuels investment needed by 2030 needed to meet the International Energy Agency’s Net Zero Emissions Scenario. Last month, reports from US-based environmental non-profit Sierra Club and the Transition Pathway Initiative Centre also found large banks were taking insufficient action to meet climate targets. “Europe’s biggest banks have a vital role to play in financing the transition to a low-carbon economy, such as scaling up renewable energy, making real estate energy efficient and supporting important industries to decarbonise,” said Xavier Lerin, Senior Research Manager at ShareAction. “We urgently need banks to set more ambitious and coherent targets that transparently map out how they will live up to their commitment to finance the renewable power, green infrastructure and technologies needed to protect people and our economies.” ShareAction will be submitting recommendations to the CEO of each assessed bank on how they can set effective climate targets to reach their net zero goal, such as by setting sector-specific, science-based targets.
🚨Our NEW REPORT finds banks' climate targets are falling short of what is needed to meet net zero
We’re calling on banks set ambitious, transparent & coherent green finance targets to scale up much-needed renewable power like wind turbines & solar📣https://t.co/IBue666blW pic.twitter.com/RAqLRRk5h7
— ShareAction (@ShareAction) November 5, 2024
Gprnt, an ESG disclosure digital platform launched by the Monetary Authority of Singapore (MAS) last year, has released its inaugural disclosure and marketplace offerings. The integrated platform aims to simplify how the financial sector and real economy collect, access and act upon ESG data to support their sustainability initiatives. Gprnt Disclosure will simplify sustainability reporting for companies, offering a generative AI-powered solution to measure Scope 1 and 2 emissions. It will also provide metric packs for use cases such as basic emissions reporting, climate risk management and green procurement. Gprnt Marketplace will serve as a centralised portal to better enable entities to connect to an ecosystem of sustainability solutions. It will pair with Gprnt Disclosure by connecting users to solutions via a proprietary recommendation engine. Gprnt Marketplace has onboarded 78 sustainability solutions so far, including Scope 3 carbon accounting, energy optimisation, green and sustainability-linked financing, and third-party assurance offerings. Next year, Gprnt will forge strategic and commercial partnerships that support the local and regional reporting needs of Singapore’s financial institutions, companies, trade associations and government agencies. It will also roll out new features, such as access to a new digital assurance module, an AI-powered sustainability assistant, a portfolio analytics tool to enhance users’ precision in acting on their reported data, and an ESG data registry.
UK-based workplace pension scheme Nest is to chair a new asset owner council established to enhance transparency, good governance and sustainability in the securities lending market. The new forum was created under the auspices of the Global Principles for Sustainable Securities Lending Community Interest Company (Global PSSL CIC), a multi-stakeholder body formed in 2018 to work with market participants to align securities lending practices with and sustainable finance. According to the Global PSSL CIC, the new council structure will operate under an ‘Active Briefing Culture’ to increase transparency, clarity and efficiency throughout the securities lending value chain. Other founding members of the council include PGGM and the Merseyside Pension Fund. “Nest is looking forward to chairing GPSSL’s new asset owners council,” said Diandra Soobiah, Director of Responsible Investment at Nest. “This initiative represents a significant step towards integrating sustainability, transparency and accountability into the securities lending markets in the interests of asset owners. We hope the council will serve as an influential voice in Global PSSL, and wider value chain, to improve the functioning of the market globally.” Founder Radek Stech said Global PSSL’s stakeholders were committed to increasing transparency and stakeholders’ understanding of the whole securities lending value chain. “I am glad that our 3P Transparency tool and new Active Briefing Culture serve as governance mechanisms on the journey to achieving that goal. This aims to stem the rise in legal and regulatory cases relating to securities lending in recent years.”
