The US Securities and Exchange Commission (SEC) has charged New York-based investment adviser WisdomTree Asset Management with misstatements and compliance failures relating to the execution of its ESG investment strategy. According to the SEC’s order, between 2020 and 2022, WisdomTree represented in prospectuses and to its board of trustees that three ESG-marketed exchange-traded funds would not invest in companies involved in certain products or activities – including fossil fuels and tobacco. The SEC found that the funds had, in fact, invested in activities including coal mining and transportation, natural gas extraction and distribution, and retail sales of tobacco products. WisdomTree used data from third-party vendors that did not screen out all companies involved in fossil fuel and tobacco-related activities, and did not have policies and procedures over the screening process to exclude such companies. “At a fundamental level, the federal securities laws enforce a straightforward proposition: investment advisers must do what they say and say what they do,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “When investment advisers represent that they will follow particular investment criteria, whether that is investing in, or refraining from investing in, companies involved in certain activities, they have to adhere to that criteria and appropriately disclose any limitations or exceptions to such criteria.” By contrast, Wadhwa added, the funds at issue in the enforcement action made precisely the types of investments that investors would not have expected them to, based on WisdomTree’s disclosures. The firm consented to the entry of the SEC order, which found that it had violated antifraud provisions and compliance rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. Without admitting or denying the SEC’s findings, WisdomTree agreed to a cease-and-desist order and censure, and will pay in US$4million in civil penalty. Although it shut down its ESG taskforce last month, following a 2021 launch, the SEC has been actively undertaking enforcement actions against greenwashing over the past two years.
Sustainable Investor
News in Brief
UK-based pension scheme now:pensions’ new climate investment strategy has put the master trust on track to achieve net zero by 2050 and halve emissions by 2030 based on 2019 levels. As part of the strategy update, now:pensions’ global equity investments are now managed directly by in-house by Cardano Risk Management. Now:pensions is planning to undertake direct engagements with portfolio holdings and divest from those with no credible transition plan. Sixty percent of the master trust’s Diversified Growth fund is now invested in an equity strategy that seeks to support the climate transition, while 11% are held in sustainable and green bonds and 4% in a corporate credit transition-aligned strategy. Forty-three percent of now:pensions’ global equity investments’ climate targets have been approved by the Science Based Targets initiative (SBTi), representing over 30% of its entire portfolio. In addition, the master trust has reported a reduction in portfolio carbon emissions intensity – from 63.1 tonnes of greenhouse gas per £1 million (US$1.29 million) invested across Scopes 1 and 2 in 2023, to 52.0 tonnes in 2024. “Earlier this year, we took the decision to implement a new investment strategy to our portfolio,” said Martyn James, Director of Investment at now:pensions. “This was set, not only with the ambition of improving performance and value for money for our members, but to also comprehensively improve our sustainable approach to investment. These developments put us well on our way to achieving our objectives.”
London-based investment manager Redwheel has created a new Emerging Markets (EMs) Impact Opportunities team – appointing Nandita Sahgal, James Kinsbrook and Raviraj Salecha to kickstart its work. Sahgal will lead the team, while all three have worked together for the past six years on energy transition investment strategies across diverse technologies in emerging Asian markets at EM Impact Capital and at cleantech company ThomasLloyd. The team will focus on investing in mid-market private infrastructure companies across three key sectors – energy generation and storage, transport and mobility, and circular economy in EMs across Asia, excluding China. Redwheel is due to launch an EM Impact Opportunities Fund following the team’s appointment. “Investing across the energy transition spectrum can generate long-term, attractive risk-adjusted and impactful returns,” said Tord Stallvik, CEO at Redwheel. “Nandita, James and Raviraj’s specialised expertise investing in essential transition infrastructure in EMs will complement the existing public and private markets strategies in our growing sustainable thematic franchise.” Redwheel has expanded a number of its sustainable thematic franchises, including through the acquisition of assets from specialist sustainable infrastructure and environmental solutions investor Ecofin, and the launch of Redwheel Clean Economy Strategy, managed by Partner Amanda O’Toole.
Impact advisory firm Tideline has formed a strategic partnership with forecasting technology developer Rho Impact as it looks to improve climate impact estimates for institutional investors. The forecasts will be made through the deployment of Rho’s Koi platform. Launching earlier this year, Koi enables investors to quantify the potential impact of real assets and activities, leveraging data on over 10,000 technology applications, allowing for faster and more informed climate-focused decisions. The partnership also strengthens Tideline’s ability to support clients in assessing investments in climate technologies and decarbonisation strategies, while meeting regulatory compliance requirements and demonstrating their contribution to the net-zero transition. Tideline has been operating for more than a decade and supporting investors that have deployed more than US$200 billion in impact assets. “The collaboration underscores Tideline’s dedication to leading the impact investment market toward more data-driven, sustainable outcomes,” said Ben Thornley, Managing Partner and Co-founder at Tideline. “Rho Impact’s Koi represents a breakthrough in our ability to advise our clients towards competitive and impactful climate strategies [while] this partnership allows us to offer unparalleled emissions avoidance data, ensuring that our clients can confidently allocate capital to the most promising climate solutions.”
Building climate resilience is essential for cities as they face accelerating risks from more frequent and severe extreme weather events, according to Zurich Insurance Group and Economist Impact – a sustainability-focused subsidiary of The Economist. This, they said in a report, will require investment in climate-resilient infrastructure, integration of mitigation and adaptation measures, and collaboration across government levels and departments. The involvement of the private sector, including the insurance industry, was described as “essential” – leveraging private companies’ innovation, investment and expertise to help governments develop scalable solutions. “Proactive, coordinated efforts from all stakeholders – governments, businesses and communities – are essential for building urban climate resilience and preparing cities to thrive amidst accelerating risks to their environments, economies and public health,” the report noted, further highlighting the critical role of transparent communication and community engagement in fostering confidence and ensuring equitable and inclusive processes. “Cities are on the frontline of the climate crisis, but they also have the power to lead the charge in building community resilience,” said Dirk De Nil, Global Head of Zurich Resilience Solutions – Zurich Insurance’s risk engineering and sustainability services platform. “Insurers with their natural hazard expertise and capabilities can play a critical role in supporting urban areas, businesses and communities in developing robust strategies to enhance their resilience and secure a sustainable future.” The report was based on a literature review, a survey involving 5,000 residents globally, and interviews with 15 climate experts from the World Economic Forum, the International Labour Organization and UN-Habitat – the UN’s agency for human settlements. Four in five respondents felt their city was underprepared for climate-related risks, with major concerns around heatwaves, air pollution, water shortages and flooding.
The Private Infrastructure Development Group’s (PIDG) Emerging Africa Infrastructure Fund (EAIF), which is managed by South African asset manager Ninety One, has expanded its mandate to stimulate sustainable infrastructure investment and growth in South and Southeast Asia. As part of the expanded mandate, the EAIF was renamed the Emerging Africa and Asia Infrastructure Fund (EAAIF). “As sustainable infrastructure financing becomes a more significant priority for countries across the globe, we are delighted to announce EAAIF’s expansion into Asia,” said Martijn Proos, Co-head of Emerging Market Alternative Credit and Managing Director for the EAAIF at Ninety One. “This expansion enables the fund to further diversify its portfolio, and share expertise from the team’s project, corporate and structured finance, asset management, and de-risking expertise across geographies in Asia and Africa – creating economic opportunities that deliver impact and commercially sound returns.” The fund will now have access to investment opportunities that will enhance the sustainability-related resilience of vulnerable communities across dynamic growth markets such as Indonesia, Vietnam and Malaysia. “From a strategic base in Singapore, EAAIF will seek to invest in transformative infrastructure projects in priority sectors such as renewable energy, digital communications and transport,” said Roland Janssens, Managing Director at Ninety One. “EAAIF will leverage PIDG and Ninety One’s strong track record of investing in Asia to support participation in Asian infrastructure debt markets and accelerate the transition to a lower-carbon future.”
Governments globally have fallen short of the pledge to conserve 30% of the ocean by 2030, a report from Metabolic Consulting with support from Bloomberg Philanthropies’ Ocean Initiative, Campaign for Nature, the Marine Conservation Institute and SkyTruth has shown. Two years into the world’s commitment to the Global Biodiversity Framework’s 30×30 Target to protect 30% of the Earth’s surface, countries are significantly off track to meet their pledge, the report noted ahead of COP16. Global marine protection has increased by just 0.5% since the target was set, meaning only 2.8% of oceans are likely to be effectively protected, while just 8.3% are designated as marine protected areas (MPAs). Most of those areas are protected in name only, and so loosely regulated that substantial harmful activities within them are allowed to continue. As of 23 September, just 19 countries and EU member states had submitted National Biodiversity Strategies and Actions Plans to the UN Convention on Biodiversity Secretariat – a “critical step” in the biodiversity conservation process, the report noted. At the current rate of progression, only 9.7% of the ocean will be protected by 2030, the report estimated. “Protecting and conserving at least 30% of the world’s ocean is vital to safeguard marine biodiversity and the billions of people who depend on it for their livelihoods and food security,” John Kerry, former US Secretary of State, and José María Figueres, ex-president of Costa Rica, said in a foreword to the report. “It is also essential to preserving the ocean’s ability to act as our greatest climate ally by absorbing billions of tonnes of carbon emissions every year.” The report also warned that a broad definition of MPAs is applied inconsistently across countries, leaving scope for ‘blue washing’ and allowing the continuation of activities incompatible with effective biodiversity – including industrial-scale fishing, oil and gas extraction, mining, dredging, and dumping. The research was based on analysis led by the Marine Conservation Institute, with data shared by ocean experts who assessed nearly 90% of global MPAs.
The International Foundation for Valuing Impacts (IFVI) has launched Interim Methodologies – a suite of accounting resources to enable companies and investors to measure and value their environmental impacts. The resources span four categories – air pollution, land use and conversion, waste, and water pollution – and cover more than 430 different types of impacts tailored to 268 countries and regions. Building on the frameworks and protocols of existing standard setters, the IFVI aims to give investors the ability to rely on robust data to measure and compare the impacts created by companies in monetary terms. “The work that we have accomplished has eliminated a significant barrier to impact accounting – lack of open access to impact accounting methodology and value factors,” said Robert Zochowski, President and CEO of the IFVI. “We are closer than ever to a just and sustainable global economy based on the full contribution of business to people and the planet, built upon the practice of impact accounting to promote decision-making based on risk, return, and impact.” The accounting resources include: a global database of 100,000 value factors included in interim and official environmental methodologies; an overview of interim methodologies; spreadsheets outlining interim models; and detailed guides on interim technical manuals. “The destination we must reach is a world in which companies and governments account for their impact in a meaningful way by putting a monetary value on impact and building it into financial statements, so that climate and nature are on the balance sheet,” said Nick Hurd, Chair of the Global Steering Group for Impact Investment Impact and the investor-backed Impact Taskforce.
UK-based proxy voting and stewardship provider Pensions & Investment Research Consultants (PIRC) has reshuffled its leadership team, with incumbent Director of Policy Paul Hunter becoming CEO, and investment manager Baillie Gifford’s Head of Governance Gavin Grant named as Chair. Hunter will become CEO on 1 November, while Grant will join in April 2025. Hunter has worked at the PIRC for more than seven years, having bolstered its stewardship, engagement and voting services and helped deliver outcomes for clients to meet their responsible investment and ESG needs. The PIRC has been headed by Managing Director and Founder Alan MacDougall, who is stepping back from his role after 38 years. “I am delighted that Paul will become PIRC’s new chief executive,” said MacDougall. “He is a first-class leader and marries a passion for stewardship with a focus on delivering for clients and a collaborative approach to working with colleagues, clients and stakeholders.” PIRC board member Grant will take over as chair from Brian Bailey, former director of pensions at West Midlands Pension Fund, who steps down after eight years in the role. Grant has extensive industry experience, having spent more than nine years as head of active ownership at Norges Bank Investment Management and close to a year as BlackRock’s director of investment stewardship before joining Baillie Gifford in 2019. “I am looking forward to working with Paul as we seek to develop the services we provide to our clients, grow the organisation and enhance the impact PIRC has,” said Grant.
The investor-backed Interfaith Center on Corporate Responsibility (ICCR) has called on 200 CEOs to support democratic institutions including free and fair elections and a peaceful transfer of power ahead of the US presidential election. The CEOs targeted are all part of the Business Roundtable (BRT) – a Washington-based lobbyist association representing the chief executives of some of the largest US companies. In the letter, ICCR investor members raised concerns that a destabilised democracy leads to deteriorated economic conditions, creating risks to the public and the economy and hampering the long-term value of investments. “Fair elections and a strong rule of law are essential conditions for a flourishing democracy and a stable economy,” said ICCR CEO Josh Zinner. “As businesses participate in our politics via lobbying and political spending, we encourage them to responsibly use their voice.” The threat of political violence around the poll on 5 November looms large and is being further fuelled by misinformation campaigns and AI deepfakes both from within and outside the US, the statement warned. “As investors, we are concerned about the destabilising social and economic effects of election misinformation, particularly given the advent of AI, and any restrictions on citizens’ legitimate right to vote,” said ICCR Board Chair Rob Fohr. “Upholding the rule of law and the right to vote in free and fair elections should be a priority for everyone, including companies and their stakeholders.” The ICCR urged businesses to issue public statements and encourage actions in support of democratic norms, including: free and fair elections; thorough and complete counting of all ballots; policies and procedures promoting citizens’ right to vote across states; the condemnation of voter intimidation; peaceful transfer of power; and political donations and lobbying activities to support all this.
