Unsustainable Sovereign Debt and a new Human Rights Score
This week, Arabesque AM Head of Nordics Maria Mähl spoke to NordSIP about the new partnership between Arabesque and Swedish state pension fund AP1, in which AP1 will use Arabesque’s S-Ray ESG data tool to develop a new score to assess the performance of companies based on the UN Guiding Principles on Business and Human Rights (UNGP score).
Elsewhere, the Asset Owners Disclosure Project (AODP) ranked Swedish state pension fund AP4 first in its 2018 survey of 100 global pension funds and their approach to climate-related risk and opportunity. AP1, AP2, AP3 and AP7 also featured in the top 25. Finally, AP4, Norway’s financial services giant Storebrand AM and Danish pension fund Lægernes Pension are three Nordic asset owners among the 92 major global companies backing the Tobacco-Free Finance Pledge (TFFP), a new initiative launched at the UNGA last week which targets SDG#3. Signatories are required to collaborate to raise awareness of the issue of lending to, investing in and insuring tobacco companies.
In an interview with TOBAM CEO Yves Choueifaty, NordSIP highlights why investing in Western Sovereign Debt may not be sustainable, and other ways asset managers can put money where their mouth is.
Skandia, SEB, Handelsbanken and the Church of Sweden entered into an SEK 2.5bn investment partnership in a new sustainability bond developed together with the World Bank that will finance investment in sustainable cities (SDG#11), alongside clean water and renewable energy. The European Investment Bank (EIB) and Societe Generale Finans signed a NOK 1.73bn credit line to support low-carbon transport leasing to SMEs and public and private sector entities in Norway. The first beneficiary was Norgesbuss AS, which will finance 17 electric buses under the agreement.
Heard on E-Street
Japan’s €1.2 trillion Government Pension Investment Fund (GPIF), the world’s largest, has chosen Standard & Poor’s to provide ESG indices for its growing equity portfolio (IPE). The China Construction Banklisted a €500 green bond on the Luxembourg Stock Exchange that will finance projects linked to clean transportation, renewable energy and pollution prevention and control (FundsGlobalAsia).
Vanguardexcluded tobacco stocks from 2 SRI index funds (SRI European Stock fund and SRI Global Stock fund) as part of an expanded screening process (Investment Week). Carmignac has also formulated policy to exclude coal and tobacco investments that will apply to over 90% of its total AUM, halting investment in any company that derives more than 25% of its revenue from coal mining (Investment Europe).
Mobius launched a Luxembourg-domiciled open-ended SICAV fund, the Mobius Emerging Markets Fund, which will invest in emerging and frontier markets and be capped at $1 billion (Investment Week), while DWS launched an ESG-focused small cap strategy focusing on issuers focused on ecological and CSR themes (Citywire Selector). People’s Pension CIO Nico Aspinall suggests that investors are being discouraged from considering ESG factors through a misunderstanding of what ESG means (IPE), while Quartz’s Eshe Nelson looks at the possibility that there has been a “permanent shift in the finance industry’s moral compass” since the financial crisis a decade ago, with socially responsible investments “on track to account for two-thirds of the industry by 2020” (Quartz).
Famous Last Words
“When I say that I’ve always been interested in social justice, it isn’t just to know about it and be aware of it, but to bring about change and bring about justice. We’re looking to change the system” – Judy Byron, a Seattle-based nun, who together with a small band of shareholders forced Sturm Ruger and American Outdoor Brands, two firearm manufacturers, to produce reports detailing how guns are used in violent crimes and what is being done to develop safer weapons in the wake of gun massacres earlier this year in the United States. Shareholders were urged to reject the proposals, but in both cases sided with the activists (NBC News).
Don’t stop believing. Happy weekend,
Your NordSIP team
Image © NosorogUA – Shutterstock