Canadian regulator accuses fund manager of greenwashing

The Ontario Securities Commission (OSC) has accused Canadian asset manager Purpose Investments of making “misleading, untrue” statements in sales communications about its consideration of ESG factors. The OSC said this was “in conflict” with the prospectuses of the funds managed by Purpose Investments, and has alleged that the manager made 19 “false or misleading” statements between September 2019 and March 2023. The statements said Purpose considered ESG factors when making investment decision for “most or all” of its funds, embedded ESG principles across its entire investment process, and applied ESG data “effectively and in a nuanced way” across the full range of industry sectors. They also said ESG was a “core, key, fundamental and meaningful consideration” for all Purpose’s funds.

“In reality, Purpose did not consider ESG in making investment decisions for many of the funds it managed,” the OSC said,adding that the manager did not implement any formal policy and did not have documented procedures relating to the consideration of ESG by its portfolio management team. “Instead, consideration of ESG during the material time was ad hoc.” The regulator said that, until autumn 2020, there were “significant gaps” in the amount and quality of ESG data accessible by Purpose personnel, and prior to April 2022, prospectuses filed for its funds “generally did not refer to ESG” as part of the investment objectives or strategies. Purpose Investments has been contacted for comment. The fund manager said in a statement that it will “vigorously contest” the enforcement action. “The company believes the tribunal process will provide Purpose with an opportunity to show how its ESG integration methodology was developed transparently and in good faith to benefit Canadian investors,” it said.

The European Commission has defended the processes undertaken in preparing its legislative package to simplify the bloc’s corporate sustainability reporting and due diligence rules in response to an inquiry from the European Ombudsman. The Ombudsman, which opened an inquiry in May, asked for “detailed explanations” on why a series of procedural steps were not carried out for the sustainability Omnibus package, and the reason behind the critical urgency of the proposal. In response, Commissioner for Economy and Productivity Valdis Dombrowskis said the Commission’s better regulation guidelines are not legally binding requirements and must be applied “proportionally”. He added that impact assessments and public consultations are “substantial exercises” requiring a significant amount of time and resources. Dombrowskis said the Commission was not able to conduct a full impact assessment due to the “urgency” of this proposal, which should be considered against the economic climate that had “deteriorated dramatically” since the adoption of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). It noted that, despite the urgency, the executive managed to conduct “multiple” consultation activities. The Ombudsman is analysing the Commission’s reply and will take next steps in the inquiry once this is completed.

Norges Bank Investment Management (NBIM) has excluded French mining company Eramet due to “unacceptable risk” that the company contributes to or is responsible for “severe environmental damage and human rights violations”. The decision is based on a recommendation from the Council of Ethics made in March, which is centered around Eramet’s participation in the PT Weda Bay Nickel joint venture, which is extracting nickel on the island of Halmahera, Indonesia. NBIM said it has not independently assessed all aspects of the recommendation, but finds it “sufficiently substantiated” that the exclusion criteria have been fulfilled. It added that it considers that other measures, including active ownership, are not appropriate in this case.

A spokesperson for Eramet said the company “deeply regret[s]” the exclusionary position taken by the council, and the resulting decision by Norges Bank, adding that it is currently reviewing their report “in detail”. “As a minority shareholder [in PT Weda Bay Nickel], Eramet strives to promote best practices in mining, environmental stewardship, and social responsibility with its partners, in line with the Group’s values and commitment to responsible mining,” the spokesperson said. “Since 2017, Eramet has consistently exercised its role as minority shareholder with transparency and high standards, aiming to positively influence and make constructive proposals.”

T Rowe Price has launched a blue bond emerging markets strategy in partnership with the International Finance Corporation (IFC). The Article 9 fund will invest in bonds issued by corporates and financial institutions in emerging markets that meet Blue Impact Investment Guidelines developed by T Rowe Price and IFC. Eligible projects will focus on areas including marine ecosystem conservation, wastewater treatment, coastal climate adaptation and clean water infrastructure. At launch, the fund has more than $200 million in commitments from T Rowe Price, IFC and investors including global water solutions company Xylem and Builders Vision, a team of investors and philanthropists accelerating promising solutions across food and agriculture, energy and oceans. T Rowe Price’s Samy Muaddi, head of emerging markets fixed income, and Matt Lawton, head of impact fixed income, will serve as co-portfolio managers.

The Institutional Group on Climate Change (IGCC) has said the Australian government’s new national adaptation plan “falls short” of crucial commitments to legislate requirements for regular updates to the national climate risk assessment and adaptation plan. The government on Monday released the country’s first climate risk assessment, which sets out 15 new national data sets on climate risk. The IGCC said that while it provides a framework for future actions, it does not include any new resourcing towards an action agenda, expected by the end of 2026. IGCC said investors will want to see “continued improvement” of the adaptation plan, including “adequate resourcing” for priority actions and amendments to the Climate Change Act that require “key adaptation measures” and regular updates to the risk assessment and adaptation plan.

IGCC has called for the government to provide funding for key actions, including developing an adaptation finance strategy and plan with the treasury to attract private investment into priority adaptation and resilience projects, to finance eligible government funded climate adaptation projects through Green Treasury Bonds, and to expand the Australian sustainable finance taxonomy to include adaptation and resilience. IGCC has recommended for investors to integrate the information in the climate risk assessment and 15 new national datasets into their investment processes. It has also said that should align their portfolios to the national resilience objective and plans, through target-setting and continuing progress.

Robeco has launched a fixed income ETF providing exposure to euro government bonds through a climate transition-focused investment strategy. The investor collaborated with FTSE and ING to develop the Climate Euro Government Bond ETF, the methodology of which scores countries based on their emission targets, climate policies, and evidence of decarbonisation, drawing on climate indicators from the Assessing Sovereign Climate-Related Opportunities and Risks (ASCOR) tool. Robeco said the evidence pillar will “carry increasing weight” as the net-zero deadline approaches.

The Securities and Exchange Commission of Brazil (CVM) has released an FAQ clarifying the role of the securities market in its regulated and voluntary carbon markets. The regulator has clarified that both the Brazilian emission quotas and certificates of verified emission reduction or removal are considered securities when traded in financial and capital markets, meaning that CVM has the authority to regulate and supervise these assets once they begin to be traded on organised markets. Similarly, carbon credits from the voluntary market are also considered securities. The document covers what the Brazilian greenhouse gas emissions trading system (SBCE) is, which assets are traded and whether they are considered securities, and what CVM’s role is in the market.

Danske Bank Asset Management has found that 65 of its large Nordic holdings have business activities with potentially high or very high water dependencies. The investor published analysis on the water dependency risk of 319 Nordic listed companies with a market cap above DKK 4 billion, their exposure to water stressed areas and how they are responding to water-related risks. It said those with the high or very high dependencies represent 75 percent of total revenues generated by the more than 300 companies, highlighting “the financial significance of water as a production input”. Furthermore, just under 40 companies were found to have operations located in high or extremely high water-stressed regions, primarily in the US and India. Fewer than half of these firms had disclosed whether they are taking any steps to measure, mitigate or prepare for water risks.