ENVIRONMENT

FTSE Russell threatens to expel 208 ESG offenders from FTSE4Good

Around 208 companies may be thrown out of the FTSE 4Good index series for failing to meet more stringent environmental standards. Ratings agency FTSE Russell has given the companies 12 months to meet its tighter climate-performance standards or face deletion from the indices. The new climate standards are based on parameters drawn up by the Transition Pathway Initiative, which assesses business preparedness for the low-carbon economy. Companies in “primary impact subsectors”, like fossil fuel, forestry, mining, transport and utilities, must show that the risks and opportunities of the transition to a low-carbon economy are integrated into their operational decision making. All other developed market companies need to show they are “building capacity” towards this, and that their carbon emissions targets are aligned with the 2015 Paris Agreement. (Financial Times)

SUSTAINABLE INVESTMENT

Legal & General drops AIG and others from funds over climate

Legal & General Investment Management (LGIM), Britain’s biggest asset manager, will drop four companies from a number of its funds over their “insufficient” response to the challenge of climate change, including US insurer AIG. The others to be divested are Chinese lender Industrial and Commercial Bank of China, US utility holding company PPL Corporation and Chinese dairy products holding company China Mengniu Dairy. All had either not responded adequately to corporate engagement or had breached the asset manager’s "red lines” around involvement in the coal sector, their carbon disclosures or their links to deforestation. During the current season for annual general meetings, LGIM said 130 companies would face votes against for not meeting its minimum climate change standards, mostly in the banking, insurance, real estate, tech and telecoms sectors. (Reuters)

DEFORESTATION 

Small price increase in palm oil based products could save forests

Decoupling deforestation from the palm oil industry could be achieved by raising the price of palm-based consumer goods by just 1.8%, a new report from risk analysis firm Chain Reaction Research suggests. The research claims this could be achieved if consumer goods companies with higher profit margins, such as Unilever, Procter & Gamble and PepsiCo, raised the price of palm-based products by 0.15% with   the additional revenue used to help growers implement zero-deforestation commitments with better monitoring and verification, and provide support for smallholder farmers to grow palm oil without encroaching on forests. In related news, KPN Plantation, one of Indonesia's most controversial palm oil companies has committed to restore 38,000 hectares of forest in Papua and Kalimantan to make amends for past deforestation. (Eco-Business 1, Eco-Business 2)

POLICY

Swiss citizens reject carbon tax in world's first 'CO2 referendum'

Swiss voters have rejected a new law which was proposed to help the country meet its target for cutting carbon emissions to tackle the climate crisis. The legislation, which included taxes on car fuel and flight tickets, was opposed by 51.6% of the electorate under Switzerland's system of direct democracy. The defeat might make it harder to reach the goal of net-zero emissions by 2050. In response to the vote, the government will now seek to extend uncontroversial measures like a duty for fuel importers to invest in climate protection projects. Voters also rejected separate proposals for an outright ban on the use of artificial pesticides or to restrict their use by redirecting subsidies to farmers who did not use the chemicals. (The Independent*)

CLIMATE CHANGE

More China coal investments cancelled than authorized since 2017

More China-invested overseas coal-fired power capacity was cancelled than commissioned since 2017, highlighting the obstacles facing the industry as countries work to reduce carbon emissions. The Centre for Research on Energy and Clean Air said that the amount of capacity shelved or cancelled since 2017 was 4.5 times higher than the amount that went into construction over the period. Although 80 gigawatts of China-backed capacity is still in the pipeline, the Centre warns many of the projects could face further setbacks as public opposition rises and financing becomes more difficult. Coal-fired power is one of the biggest sources of climate-warming carbon dioxide emissions, and the wave of cancellations also reflects rising concerns about the sector's long-term economic competitiveness. (Reuters)

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