Key ESG news : 2020

Have a look at the 2020 Key Governance News related to Sustainability.

Hong Kong Exchanges chair says directors must take lead on sustainability

Laura Cha, chairwoman of Hong Kong Exchanges and Clearing and a member of the territory’s executive council, says that with environmental, social responsibility and governance issues now seen as critical to business success, boards must drive companies' sustainability agenda. She says that while policy-makers and regulators can demand change, directors should play a leading role because they possess the deepest understanding of the businesses' goals and motivations and of the culture of their operating markets, as well as being the primary monitors of risk and guardians of long-term enterprise value.

Best source: World Economic Forum

UK proposes rule on climate risk disclosure for pension schemes

The UK government is proposing that defined contribution pension schemes must disclose how they take account of the impact of climate change on their investments, and that they should report annually on their response. The rules would require greater detail on the impact on investments of various scenarios, such as a 2ºC average global increase in temperatures. Pension schemes would also have to disclose governance procedures for managing climate risks and their holdings in carbon-intensive companies.

Best source: Financial Times (subscription required)

See also: Wall Street Journal (subscription required)

See also: Investment & Pensions Europe

Hong Kong exchange orders stricter ESG reporting

The Hong Kong Stock Exchange will introduce stricter environmental, social responsibility and governance reporting requirements for quoted companies from July 1. The measures, which make boards of directors responsible for ESG issues, require all companies to set out the impact of climate change on their business and publish policies for mitigation.

Best source: International Investment

ESG investors say coronavirus response is test of corporate responsibility

CEO Martin Whittaker of Just Capital, which ranks US corporate groups on their fairness to all their stakeholders, says the response by companies to the coronavirus pandemic will prove an acid test of their social responsibility and commitment to stakeholder capitalism. Microsoft, Alphabet and other tech companies that feature in ESG portfolios are committed to paying staff in full, even if they are unable to work or are on reduced hours, but Amazon’s Whole Foods supermarket chain has been criticised after CEO John Mackey asked staff to offer unused sick leave to colleagues in isolation or who are infected. Airlines including Virgin Atlantic, British Airways, Norwegian and SAS have been criticised for making staff redundant while asking for government bailouts, and for the relatively small pay cuts senior management have accepted. Michael Lewis, head of ESG thematic research at Deutsche Bank's investment subsidiary DWS, says the pandemic has highlighted that the social responsibility element of ESG represents a reputational risk that up to now has been overshadowed by environmental and climate issues.

Best source: Financial Times (subscription required)

UK regulator consults on climate change disclosure requirements for listed issuers 

The Financial Conduct Authority is consulting on proposals to require UK premium listed issuers to declare whether they comply with the recommendations of the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures or explain why they are not following the guidance. The change would affect listed issuers as well as other entities with securities admitted to trading on regulated markets, and those covered by the EU's Market Abuse Regulation and Prospectus Regulation. The task force, headed by Bank of England governor Mark Carney and Michael Bloomberg, says companies should disclose oversight of risks, scenarios for coping with various temperatures, risk management processes and progress in meeting targets.

Best source: Financial Times (subscription required)

See also: Financial Conduct Authority

European Commission to require bailed-out companies to report on environmental goals

The European Commission has indicated it will not impose environmental or sustainability requirements for state aid bail-outs during the Covid-19 pandemic. The Commission has approved national schemes with a value exceeding €1.9trn from countries including Greece, Poland, Portugal, Sweden, Germany, France, Italy, the UK and the Netherlands. However, competition commissioner Margrethe Vestager says companies will have to report on the uses to which they put aid funds, and report on their adherence to environmental and digital transition goals.

Best source: Euractiv

See also: Bloomberg (subscription required)

BlackRock criticised in Australia for failing to back environmental AGM motions

The Australasian Centre for Corporate Responsibility’s executive director, Brynn O’Brien, has accused BlackRock of hypocrisy for not backing shareholder resolutions on environmental standards at Australian oil companies Woodside Energy and Santos. The advocacy group filed resolutions calling on the companies to set targets aligned to the Paris Agreement, believing BlackRock CEO Larry Fink’s promise that the investment manager would place sustainability at the centre of its investment process. BlackRock did not support the motion, although 43% of Santos shareholders and more than half of Woodside investors did.

Best source: Financial Times (subscription required)