Australian and New Zealand ESG Update
/Rest launches its first socially responsible investment option
The Sustainable Growth option is now available for Rest’s 1.7 million members after member demand. A member survey in late 2020 received responses from over 7,000 members with 75 per cent saying they had a moderate to strong interest in the option. The new option is 75 per cent growth and 25 per cent defensive assets in Australian and international shares, property, infrastructure, bonds and cash.
The sustainable investment categories continue to widen past standard negative screening, with this option screening for a few notable extras such as gender discrimination, a recent track record of environmental damage or excessive executive remuneration. Rest is launching the option on the back of the Federal Court case launched by Rest member, Mark McVeigh, with the result of Rest agreeing to all McVeigh’s requests, including publicly acknowledging climate change poses both economic and social threats.
New Amundi ESG strategy to mitigate against societal damage as we shift to renewables
Amundi has updated its responsible investing green bond fund with a new focus on mitigating against damage caused by the shift to renewable energy. The new fund, Just Transition for Climate, has kept its fixed income and credit investment roots, with a clearer focus on carbon reduction while integrating ratings for employment, communities and ‘society at large’.
The fund strategy looks to engage with companies during their transition to a low-carbon economy. The benchmark is the Bloomberg Barclays Euro Aggregate Corporate Index, with the fund using negative screens based on climate and social criteria, only open to companies with specific scores.
A good example of an applicable company is ENGIE. The global energy company has a significant presence in Australia, with its most recent big event being the announcement to close its large coal-fired powerplant at Hazelwood in Victoria, which occurred in 2017. ENGIE then closed or divested all high-carbon-emitting facilities in Australia and built wind and gas-fired power plants in three states, with more projects planned. ENGIE has committed to phasing out coal by 2025 in Europe and 2027 in the rest of the world.
Citi adds ESG scores to City Velocity Clarity
Citi’s global securities services data platform, Citi Velocity Clarity, now has ESG scores available. Clients can now analyse the sustainability exposure of elements of the portfolio and security level. Citi says the capability is one of a kind within major asset servicing providers. Clients can interact with the data, focusing on countries or sectors, and download or feed the data into internal reporting. Citi also recently launched its Citi ESG World Indices.
Government trying to stop bond class action
Kate O’Donnell, a 23-year-old student, brought a case against the Commonwealth over how climate change risk relates to government bonds, with the government now seeking to halt the action. The Court recently made orders laying out how the case will proceed.
The Commonwealth is seeking to strike the part of the claim referring to the class action proceedings, requesting interlocutory relief. Interlocutory relief means a court order is made that compels or prevents a party from participating in certain acts, pending the final determination of the case. In this instance, the Commonwealth is wanting relief from the class action portion of O’Donnell’s claim. A hearing has been scheduled to decide on this relief.
O’Donnell is not seeking money in damages, but to effect change in the government’s handling of climate change. Originally, O’Donnell invested around $1,000 in exchange-traded Australian government bonds via the CommSec app in 2020. O’Donnell has the same lawyer that represented Mark McVeigh, who successfully made a case for his superannuation fund, Rest, to take climate change more seriously.
