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Eurosif March/April Newsletter
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COP26 will be postponed until 2021 due to COVID-19
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The decision to move COP26 was taken by UN officials, including COP President, Alok Sharma.

"The world is currently facing an unprecedented global challenge and countries are rightly focusing their efforts on saving lives and fighting Covid-19," Mr Sharma said in a statement.

"That is why we have decided to reschedule COP26."

"We will continue working tirelessly with our partners to deliver the ambition needed to tackle the climate crisis and I look forward to agreeing a new date for the conference."
Sustainable Finance Advisory Board interim report

Cooperation between the public sector, companies and financial market players is crucial for the success of the green economic transformation, argues the Sustainable Finance Advisory Board of the German government in its interim report.

Making the finance industry more sustainable is not only a question of preventing climate change, but also a key competitive factor. The multi-stakeholder group is tasked with the development of a national sustainable finance strategy with the ambitious goal of making Germany a leading sustainable finance location.

The interim report of the Advisory Board, which identifies 53 action areas is under public consultation until May 3. The main addressees of the interim report are the federal government as well as companies and financial market players.

Based on the report the Federal Government has to lead by example by integrating ESG criteria in its own investments and public pensions. Furthermore, companies should drive forward the standardisation of integrated reporting and institutional investors should integrate sustainability parameters into risk management, systematically.

The interim report can be downloaded here: https://sustainable-finance-beirat.de/wp-content/uploads/2020/03/200306_SFB-Zwischenbericht_EN.pdf.  

Web-link to the Sustainable Finance Advisory Board: https://sustainable-finance-beirat.de/en/home/

For any further questions regarding the interim report please contact FNG’s managing director Angela McClellan (mcclellan@forum-ng.org), who is a member of the Sustainable Finance Advisory Board.

 

Are French big listed companies responsible? French SIF to question the CAC 40 on ESG practices

The holding of annual general meetings is disrupted with the current Covid-19 crisis but they will still be conducted. Starting this year, FIR has bought one share from each CAC 40 company in order to send them written questions before their annual general meeting.

20+ Members of French SIF’s Dialogue & Engagement Committee have written 12 questions covering ESG pillars: climate change, biodiversity, gender equality, sustainability in employee savings plans, just transition, payment of suppliers during the Covid-19 crisis and more.

The responses to this first campaign, which just has been launched, will be analysed and the results will be published. FIR intends to renew annually this written questions campaign.

Tackling COVID-19: the commitment of the banking foundations

The Italian financial industry is taking part in the national efforts to fight coronavirus.

On March 18th Acri – the Italian association of banking foundations – launched a €5 million guarantee revolving fund to support the third sector: the initial amount will leverage a total investment of dozens million euros to provide lending to the organisations. In accordance with their mission, many banking foundations are also committed to assist their local communities, thus the whole effort of the category totals €40 million. The third sector is very important in Italy: it includes 350,000 organisations, 900,000 employees and 5 million volunteers.

Third sector organisations proved to be crucial for the country – even more during the current emergency – thanks to their commitment to take care of people social needs; however, they are facing dramatic troubles at the moment because of the lack of medical protection and funding.

CONSOB issues a communication to avoid greenwashing on SRI

On March 12th, CONSOB – the Italian National Competent Authority for Companies and Exchange – published a communication reminding intermediaries that they are bound to European and Italian regulations on transparency when providing advice to clients on SRI products. After assessing the recent EU policy developments on sustainable finance and the increase in the demand of SRI products from retail investors, CONSOB requires intermediaries to deliver complete and transparent information and to verify the suitability of SRI products to the risk/return profile of their clients. 

Gender equality funds

On the occasion of International Women's Day (8th of March), the first RSI Colloquium was held in Spainsif on February 25th and focused on gender equality in sustainable finance through thematic funds. The colloquium was attended by representatives from Andbank, Anesvad, Economistas Sin Fronteras, IE University, Fundación Más Familia, Morningstar, Natixis IM, Santander Asset Management and UGT.

One of the main objectives that gender equality funds have is to integrate the idea that gender diversity is perfectly compatible with profitability. There’s a considerable difference between the number of thematic funds regarding climate action in relation to thematic funds focused on gender inequality. This might be explained by the urgency of climate matters, but also by the lack of homogeneity and transparency on the measurement of non-financial social indicators. 

Among the challenges faced by these funds, the need for a conciliation between work and family in women’s life and the lack of conviction by the financial sector were highlighted. An interesting perspective was taken with the discussion about the influence of the millennial generation on gender equality funds. Thanks to the availability of information and the technological revolution, this generation is expected to engage in sustainable investment demanding greater transparency to financial and non-financial players. The gender equality mainstreaming on sustainable finance will be essential for future generations.

Larry Fink’s letter has fueled a debate on the effectiveness of the actual engagement strategies on climate and the need for risk management, as the director of Alembeeks, Alex Bardaji stated, information is changing as well as our social responsibility towards the companies and clients.

Other international initiatives to foster engagement and coordination between companies such as the Climate Action 100+ were covered, stressing the difficulties of a lack of common standards of information from companies create and and a lack of transparency around engagement from some active managers despite concerned investors and members of public.

The climate emergency has raised concerns over the effectiveness of climate and social engagement that financial entities and companies are taking, not only at the national level but at an international one as well.


 
COVID-19 and Sustainable Finance

In our first piece of work to help members understand the crisis, we held a webinar last week with speakers from MSCI, BMO and Ethical futures.

Zoltan Nagy of MSCI outlined how various “responsible” finance indices had performed in Europe year to date. Very encouragingly, the more “ESG-heavy” they were the less value they had lost. Putting that in outperformance terms, then the MSCI Europe SRI Index had outperformed the mainstream MSCI Europe by about 5.5% YTD; the MSCI Europe ESG Leaders Index by about 2.5% and the ESG MSCI Europe ESG Universal Index by about 1.5%. See ESG Indexes graph here.

Alice Evans of BMO ran through that firm’s initial thoughts, which they have written up here. Key points were: some investee companies were able to give less time to engagement; firms will be judged on how they behave now with respect to their staff; AGMs globally would be complex, some jurisdictions demanded physical meetings;  behaviours in the pharmaceutical area were already showing which firms were helpful and which were less helpful. The central theme was that the way firms acted now would be remembered.

Responding to Alice, James Corah of CCLA made several observations. CCLA felt the crisis was showing the importance of profitable companies in terms of providing employment and bestowing  purpose for people- a view that UKSIF has always held, profit is not a dirty word. James also said the “Find it, fix it, prevent it” initiative would delay the rollout of work to the hospitality and retail sectors in view of the immediate challenges there; and he said CCLA might be seeking support from other members for a statement on mental health support in investee firms.

Julian Parrott of Ethical Futures in Edinburgh gave his thoughts informed by feedback from his retail client base. Clients wanted to see more social equity after this crisis, with the focus on employment terms and senior level pay; clients were worried that climate would be” forgotten” in an understandable focus on social issues; and Julian and his clients were hoping that corporates would find a different way of working- less impactful across the piece. And in a session notable for its forward-looking nature and implicit optimism that change would come, Julian cautioned that the outcomes of the global financial crisis had not been immediately positive for the sector and our views.  
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