ESG Global Update

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Credit Suisse enters sustainable financing, narrows fossil fuel lending

Credit Suisse is to offer about 300 billion Swiss francs ($452 billion) in sustainable financing throughout the coming decade in renewable energy and green bonds. The bank has also said it would reduce its exposure to the oil and gas sector, with restrictions on loans and underwriting to companies operating thermal coal extraction, coal-fired power plants, and Arctic drilling.

Financing will end for onshore or offshore oil and gas projects in the Arctic, and loans will not be provided to any company making over a quarter of revenue from thermal coal mining or coal power. Enhanced consideration is being given to biodiversity in lending and capital markets, the company said.

California to require minority representation on boards by end of 2021

Lawmakers in California, USA, have passed a bill requiring racial and ethnic diversity on the boards of local companies. The legislation follows a 2018 bill requiring a minimum number of women to sit on company boards in the state. Major companies incorporated in California include Apple Inc., Cisco Systems, and Sempra Energy.

The specifics include:

  • By the end of 2021, California-incorporated companies must include at least one board member who self-identifies as Black, African-American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or as gay, lesbian, bisexual or transgender.

  • Boards of nine members or more must include at least three directors from underrepresented communities by the end of 2022

  • Boards comprising between five and nine members, two directors at a minimum must be from these communities.

According to the ISS ESG Environmental and Social (E&S) Disclosure Quality Score, out of 48 California-incorporated companies in the scoring, 30 have established policies on diversity beyond gender at board level. Senior management doesn’t seem to be part of these policies as yet, with just two of the 48 corporations having a policy in place.

ESG fund ratings solution launched by ISS

ISS ESG, the responsible investment arm of Institutional Shareholder Serviecs Inc. (ISS), has announced a new fund ratings solution that assesses the ESG performance of over 20,000 investment funds across the world.

ISS ESG Fund Ratings and Screening offers clients the opportunity to evaluate fund and peer performance across major ESG themes. The ratings solution draws on ISS ESG’s best-in-class:

  • ESG ratings

  • Governance data

  • Norm-based research

  • Energy and extractives screens

  • Sustainable Development Goals (SDG) impact ratings

  • Carbon emissions analysis

  • Shareholder meeting voting outcomes

  • Sector Based Screen-alignment thematic data sets

  • SDG Solutions

The solution creates a composite and holistic picture of a fund’s ESG performance. Funds are rated on a relative scale of one (bottom) to five (top) stars, with other signals including an absolute score and a fund’s Prime status. Fund rating coverage insists that a minimum of 65 per cent of a fund’s holdings by weight be covered by ISS ESG’s Corporate Ratings. Fund managers and investing professional benefit from the new solution.