Large Investor Coalition Pressures ESG Disclosure on 700 Companies

A massive institutional investor consortium is pushing more than 700 companies to reveal more on their environmental impact, including ExxonMobil, Amazon, and Volvo.

The Group of 88, an organization with almost $10 trillion in assets, wants to see more detailed disclosures from the businesses.

Of the 707 companies being targeted, 546 of them are being told to reveal their climate change impact, 166 are to report on water security, and the remaining 115 must disclose their deforestation activities. The demands are overlapping on some companies.

Members of the 88-institution union include the Washington State Investment Board ($104 billion), the New York State Common Retirement Fund ($210 billion), and Australia’s First State Superannuation Scheme ($61 billion). Among the other members are HSBC Asset Management, Aviv Investors, and insurer Legal & General. The firms they’re after have a combined $15.3 trillion market cap spanning 46 countries.

For more stories like this, sign up for the CIO Alert newsletter. 

The engagement is part of the Carbon Disclosure Project’s 2019 non-disclosure campaign, which pushes for more corporate transparency around climate change, deforestation, and water security using shareholder influence from the big-time investors to make the difference. It is the first time in the four-year history of the ESG organization’s campaignit is publicly reporting its results.

“While some companies may say they already disclose in their own sustainability reports – that is not enough on its own,” said Emily Kreps, global director of investor initiatives at the Carbon Disclosure Project. “Investors and the wider market need transparency in the form of consistent, comparable, and relevant metrics that are easy to access, compare, and benchmark.”

Group 88’s highest priority sectors on climate change transparency this year are the services industry, manufacturing, and fossil fuels. Manufacturing tops the water security initiative, beating retail and fossil fuels. Retail, food, beverage and agriculture, and manufacturing top the deforestation brigade’s demands.

Some companies, however, have argued that investors don’t really care about environmental reporting. In response, Kreps said the campaign’s mission proves the opposite. “Investors are asking for this information and using it—for corporate engagement, selecting stocks and building investment products,” she said, noting that 7,000 firms are already disclosing their procedures through the project and providing the market with appropriate information.

She said it’s time investors put an end to the “vow of silence” from transparency-averse companies.

According to the project, companies targeted in last year’s campaign were more than twice as likely to disclose than non-selected businesses.

New York Comptroller Aims to Double Pension Plan’s ESG Funding

Washington State Investment Board Commits More than $2 Billion to Private Equity

Tags: Carbon Disclosure Project, Climate Change, ESG, Group of 88, Pension

Illinois Gov. J.B. Pritzker has reversed course on a salary cap offering that intended to inhibit “pension spiking” practices, where school district employees would boost their salary to the maximum amount permissible just before retiring to increase their retirement benefits. The state’s teachers’ retirement system calculates retiree benefits by discerning the average amount of an employee’s highest four consecutive years of salary within the final 10 years of their career.

The state legislature approved a 6% end-of-career salary cap to state district employees 14 years ago, in an effort to stem the tide of pension spiking. Any increases above 6% would mean that taxpayers would have to pay increased contributions—so the employees decided to max out that 6% every year before their retirement

The issue led to lawmakers in the state slashing the salary cap limit down from 6% to 3% in last year’s budget proposal. However, the new budget brought it back up to 6% again.

A representative for the TRS told CIO that it was “not too consequential of a decision,” and didn’t influence the overall funding level of the pension fund much. In fact, the pension fund did not even have a chance to implement last year’s 3% threshold on salary cap adjustments.

For more stories like this, sign up for the CIO Alert newsletter. 

Advocates for the removal of the 3% say that the 6% cap makes Illinois an attractive job market for those in the educational industry. “Restoring the 6% threshold means we are allowing districts to attract the best and brightest to their schools,” Illinois Education Association President Kathi Griffin said in a prepared statement.

The IEA asserts that the law penalized veteran educators on an unjust basis, and had the potential to significantly reduce lifetime earnings for all teachers in the state.

“The 3% was simply a cost shift putting the financial burden on local taxpayers and college students instead of the state,” the IEA wrote in a statement on the issue.

Tags: Illinois, J. B. Pritzker, Pension