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Institutional Investors’ Call to Action on ESG Issues Worldwide

Institutional Investors’ Call to Action on ESG Issues Worldwide

22 October 2020

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ESG issues have been clearly identified and raised as key priorities for institutional investors on a global scale. This month, we've identified some of the key ESG priorities specific to Norges Bank Investment Management (Norges), Martin Currie and Legal & General, and taken a look at some of the guidance they've released which talks to human rights disclosures, climate risk disclosure and board diversity.

Norges GRI1
Norges has recently released commentary on the Global Sustainability Standards Board’s (GSSB) proposed revisions to the GRI’s Universal Standards, specifically around the responsible business conduct and human rights disclosures. The proposal seeks to align the GRI Universal Standards with the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. These revisions will integrate reporting on human rights in the GRI’s Universal Standards. Norges expects companies to disclose their human rights strategies, policies and process, as well as report on their implementation of relevant international standards. Key information Norges expects companies to disclose includes human rights policy commitment, governance structures, due diligence (including risk and impact assessments, taking a value chain perspective), and information regarding stakeholder engagement and remediation processes disclosed where appropriate. Norges notes that although most of the above elements will be included upon implementation of the proposed revision, it would be helpful for GRI to include quantitative and qualitative indicators on the outcomes and effectiveness of companies’ efforts to address potential and actual negative impacts. Overall, Norges expects the aforementioned elements to be integrated to enhance reporting and provide crystallised metrics over time.  

For more information, please click here

Martin Currie & TCFD
In its recently published annual Stewardship Report, Martin Currie has aligned its activities with the recommendations of the Task Force on Climate-related Disclosure (TCFD), noting the importance of TCFD in understanding how companies are managing climate-related risks. Martin Currie will utilise this as a fundamental way to engage with companies, shaping dialogue around 4 key areas of disclosure regarding climate-related risks and opportunities: governance, strategy, risk management and metrics & targets. Martin Currie believes that these issues are of paramount importance as the effects of climate change and the transition to a lower-carbon environment have translated into the need for companies to operate and disclose with consistent and measurable practices.  

For Martin Currie 2020 Stewardship Report, please click here.

Legal & General and Ethnic Diversity 
Legal & General have recently announced that they will expect all FTSE 100 companies to hire a non-white director by 2022. The firm states that it is “trying to give companies an early warning”, with any companies within this mandate not complying being subject to votes against the company’s re-election of the nomination committee chairman. This follows research from McKinsey which found that boards with more gender and ethnic diversity are likely to reflect increased profits compared to other peers. Almost one third of the UK’s leading index still consist of all-white boards. The move by Legal & General highlights the importance of diversity within Boards, but also senior leadership teams, namely due to the fact that companies with diverse Boards and management have been found to be more successful.

For more information, please click here.

Summary

ESG issues have been raised as key priorities for institutional investors on a global scale.

Author

Sodali & Co

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