Boston to Divest From Fossil Fuels, Tobacco, Private Prisons

Boston Mayor Michelle Wu has signed into law an ordinance to divest the city from the fossil fuel, tobacco, and private prison industries by the end of 2025. The ordinance prohibits using public funds to invest in the stocks, securities, or other obligations of any company that derives more than 15% of its revenue from those industries.

Under the new law, fossil fuel investments are defined as investments in any company that derives more than 15% of its revenue from the combustion, distribution, extraction, manufacture, or sale of fossil fuels, including coal, oil and gas, or fossil fuel products. It also includes electric distribution companies with corporate affiliates that derive revenue from fossil fuels.

The ordinance also requires the issuance of a report to track the city’s investments, including plans to improve its holdings 120 days after the law’s passage. In 2014, Wu presided over a Boston City Council hearing that examined the potential effects of fossil fuel divestment and its relation to the city’s economy. She also provided testimony at the state in support of city/state divestment from fossil fuels.

Boston is among an increasing number of municipalities, universities, and private foundations that have announced plans to divest from fossil fuels. In late October, ahead of the 2021 United Nations Climate Change Conference, better known as COP26, Auckland, New Zealand; Copenhagen, Denmark; Glasgow, Scotland; Paris; Rio de Janeiro; and Seattle announced commitments to divest from fossil fuel companies and increase investments to make cities more sustainable. Also last month, Baltimore Mayor Brandon Scott signed a bill that requires the city’s three pension funds to divest from the fossil fuel industry.

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Those are in addition to divestment commitments made last year by Berlin; Bristol, England; Cape Town, South Africa; Durban, South Africa; London; Los Angeles; Milan; New Orleans; New York City; Oslo; Norway; Pittsburgh; and Vancouver, Canada.

“Cities are at the forefront of tackling the climate emergency and there is real momentum to move investments away from fossil fuels and toward climate solutions,” London Mayor Sadiq Khan, who is chair-elect of C40 Cities, a network of mayors working to confront climate change, said in a statement. “I will continue to encourage more cities to join the movement, and urge national governments and private finance institutions to mobilize more finance to invest directly in cities to support a green and fair recovery.”

Boston University Joins Harvard in Divesting From Fossil Fuels

Maine Becomes First State to Pass Fossil Fuel Divestment Bill

Tags: Boston, divest, Fossil Fuels, Massachusetts, Michelle Wu, Private Prisons, Tobacco, Uniform Prudent Management of Institutional Funds Act

A group of major financial institutions, investors, and businesses, including HSBC, Deutsche Bank, and Swiss Re, have launched the “ESG Book,” developed by asset manager Arabesque, as a source for corporate sustainability information based on the 10 principles of the UN Global Compact.

The aim of the “ESG Book” is to make environmental, social, and governance (ESG) data more widely available and comparable through a digital platform, and it will follow five principles:

Companies Are Custodians of Their Own Data. Companies should control their sustainability data by having autonomy over the disclosure and maintenance of data in real time. This is intended to improve transparency and market-driven oversight from investors, banks, and business partners, as well as reduce common ESG data errors.
Data Usage Transparency Interactions Bring Better Reporting. Companies should be empowered to report on the most material and valuable issues requested by investors, which would allow data gaps to be identified more clearly.
Accessibility and Impartiality. ESG data should be reported by companies in a clear and consistent manner, and be readily accessible. ESG data platforms should also support equal access for everyone to promote greater transparency and provide more accurate, up-to-date information.
Framework-Neutral. ESG data should provide “a level-playing field” for all market participants and allow stakeholders to collect and report data based on sustainability questions from multiple frameworks simultaneously. It should also be adaptable and flexible to respond to a fast-moving market and regulatory environment.
Easing the Reporting Burden. Reported ESG data can be mapped across a range of frameworks. For example, if a company discloses carbon dioxideemissions according to standards from the Global Reporting Initiative, other reporting questionnaires can be populated with the same data.

The other companies backing the ESG book include the International Finance Corporation, the United Nations Conference on Trade and Development (UNCTAD), the Global Reporting Initiative, Bridgewater Associates, Hong Kong Exchanges and Clearing Limited (HKEX), Allianz, Glass Lewis, Cardano Development, QUICK, Bank Islam, Goldbeck, Werte Stiftung, the World Business Council for Sustainable Development (WBCSD), Climate Leadership Coalition, Climate Governance Initiative, Climate Policy Initiative, Climate Bonds Initiative, Responsible Jewellery Council, and GeSI.

The “ESG Book” “marks the evolution of corporate sustainability,” Georg Kell, chairman of Arabesque, said in a statement. “It enables more comparable and higher quality ESG data, thereby advancing the mission of making markets more sustainable.”

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Despite a large and growing number of institutional investors looking to increase environmental, social, and governance investing, a lack of disclosure, limited accessibility, and inconsistency of ESG data is holding back capital allocation toward sustainable business activities. A recent survey conducted by software and data firm Backstop Solutions Group found that many allocators are not tracking ESG metrics in their private portfolios, despite wanting to do so. And the main reason they cited for this was a lack of a universal standards for measuring and reporting on ESG data.

Last month, the Board of the International Organization of Securities Commissions (IOSCO) published recommendations about sustainability-related practices, policies, procedures, and disclosures in the asset management industry. The IOSCO said the market for ESG ratings and data has grown in recent years, in part due to a lack of consistent information disclosures at the entity level. IOSCO said regulators should pay greater attention to the use of ESG ratings and data products.

“Investors should be able to understand and trust the ESG ratings and data products they use,” Erik Thedéen, chair of the IOSCO’s Sustainable Finance Task Force, said in a statement.