USS switches to green equities, Aviva warns firms on sustainability

USS transitions equities to climate index

The £82.2bn Universities Superannuation Scheme plans to transition more than £5bn of its global equity investments to a climate transition index. The assets, previously handled by BlackRock, will be transferred to Legal & General Investment Management. They will be invested according to the Solactive USS Developed Markets Climate Transition Benchmark, a climate transition index developed by USS and German indices provider Solactive. The index will initially cut emissions by at least 30 per cent compared with the broad equity market, and target a 7 per cent annual reduction after that, the scheme said. This will include all scope 1, 2 and 3 emissions. It will exclude companies that rank poorly on the four UN Sustainable Development Goals relating to environmental sustainability and climate impact, and that do not respect the UN Global Compact principles. Conversely, the index will be overweight in companies hitting decarbonisation targets. It must also not be underweight in companies operating in high impact sectors that are critical to the low carbon transition, such as manufacturing and construction. The scheme deemed this to be a “first step” towards its commitment to achieve net zero for carbon by 2050, which it pledged in May 2021. At that time, it said it would likely review its benchmarks to account for ESG factors and divest from high-carbon sectors. The USS plans to set further interim targets later this year.

This article originally appeared on Mandatewire.com

Aviva Investors warns companies over ESG targets

Aviva Investors has warned that it will judge the companies it invests in on biodiversity and human rights, alongside their conduct on climate change and executive pay. “Companies must now turn their pledges into concrete and measurable plans of delivery,” chief executive Mark Versey noted in a letter that will go to 1,500 companies in around 30 countries. Aviva expects companies’ climate action plans to consider their impact on nature and social transitions for workers and communities, rather than solely focusing on slashing emissions. Last year, Aviva voted against just over a quarter of management proposals tabled at shareholder meetings and rejected a third of executive pay proposals at UK companies. 

BMO places spotlight on chemicals

BMO Global Asset Management has set out similar expectations to Aviva on climate change, biodiversity, boardroom pay and human rights. The asset manager said that in particular it will scrutinise chemicals companies, with it keen for the sector to minimise its impact on local communities and cut plastic waste. BMO also called for human rights protection within supply chains, criticising “an over-reliance on social audit firms to assess supplier compliance”. Finally, BMO will encourage “risk-related preconditions” to bonuses, in order to stamp out inappropriate incentive payments should a company’s financial strength or credit quality deteriorate.