In Brief

State Street launches active muni ESG fund

The fund will invest in investment-grade, tax-exempt municipal bonds

State Street Global Advisors has launched an actively managed exchange-traded fund that invests in municipal bonds according to environmental, social and governance standards, the SPDR Nuveen Municipal Bond ESG ETF.

The fund is designed to invest in municipal securities from issuers that are leaders in their sector at delivering environmental, social and governance outcomes or whose proceeds are used for positive environmental or social projects.

[More: MSRB ponders ESG disclosure for muni bonds]

The fund will trade under the ticker MBNE and will invest in investment-grade, tax-exempt municipal bonds that mature in two to 17 years.

SSGA Funds Management Inc. serves as investment adviser to the fund and Nuveen Asset Management serves as investment sub-adviser. Nuveen is a unit of TIAA.

[More: VanEck launches first sustainable muni ETF]

CalSTRS ramps up pressure on diversity and climate

The pension will vote against all-male boards and those not reporting in line with the TCFD

California’s teacher pension fund is the latest big investor planning to crack down on public companies that aren’t moving quickly enough on climate change or to increase their board diversity.

On Wednesday, the more than $318bn California State Teacher’s Retirement System (CalSTRS) announced it would vote against boards if their companies do not report Scope 1 and 2 emissions in accordance with the Task Force on Climate-Related Financial Disclosures.

The pension fund will also vote against entire boards of directors if those boards do not include at least one woman, and against directors on nominating committees for companies that do not have women representing at least 30% of the board, according to the announcement. The same is the case for nominating and governance committee members for Russell 1000 companies that do not publish diversity figures for their boards.

“As a global investor committed to the promise of a secure retirement for California’s public educators, we must act responsibly to ensure corporate directors are accountable for creating long-term value and managing long-term risks,” CalSTRS portfolio manager Aeisha Mastagni said in the announcement.

“We are sending a message that corporate directors must meet high standards in the critical areas of board diversity and climate change. If necessary, we will support a change in leadership to meet these standards.”

Apple’s green bonds invested in carbon-free aluminum

$550m of the company's 2019 green bond have been allocated among 50 projects

Apple’s green bond program has helped develop the world’s first commercially available low-carbon aluminum production, the company said in a recent update.

The company, which began its green bonds program in 2016, has to date issued $4.7bn among three bonds, about $3bn of which has been allocated, Apple stated in a March 24 green bond impact report.

Assets from the first two bonds, issued in 2016 and 2017, have been fully allocated, while about a quarter of the 2019 bond, or $550m, is now invested across 50 projects. Collectively, those projects are estimated to offset or mitigate more than 2.8m metric tons of carbon-dioxide equivalents and will include 700 megawatts of renewable energy capacity, the company stated.

One of the latest – and the one the company is touting – is its investment in Canada-based aluminum maker Elysis, through a 2018 partnership with Alcoa, Rio Tinto and the governments of Canada and Quebec. Apple purchased the first run of aluminum in 2019, which it used to make some of its laptops, the company stated.

Elysis, which uses hydropower in a “carbon-free” smelting process, recently built out a large-scale prototype that allows it to make “commercial purity primary aluminum at scale.”

“The breakthrough technology produces oxygen instead of greenhouse gases, and the achievement marks a major milestone in the production of aluminum, one of the world’s most widely used metals,” Apple stated in its report.

The company is now purchasing more of the aluminum, which it plans to use in making its new iPhone SE.

Other allocations made by the 2019 green bond support a reduction in its Scope 3 emissions, with a clean energy program for its suppliers, which includes training and policy advocacy in Japan, Vietnam and South Korea, the company stated.

“The energy used to manufacture Apple products represents over 70% of Apple’s comprehensive carbon footprint,” the company said. “That’s why we’re investing in programs that help suppliers reduce their energy use and transition to renewable energy.”

abrdn to push for DEI in portfolio companies

The firm will vote against companies lacking ethnic diversity

abrdn is planning to vote against boards that don’t have at least some racial or ethnic diversity, the company stated Monday.

In a statement, the company said it “formalized our intention to require boards of our investee companies in the S&P 1500 and Russell 3000 to have at least one racially or ethnically diverse member, otherwise we will vote against or withhold from the re-election of the nomination committee chair.

“In addition, we will continue to take voting action on all-male boards with a higher expectation of 25% female representation on large cap company boards. We will look to increase this expectation to 30% in 2023.”

The company, formerly known as Standard Life Aberdeen, noted companies with diverse workforces and cultures can attract top job candidates and thus lead to stronger productivity and financial performance.

BNY adds sustainable bond ETF

Fourth sustainable ETF in the company's lineup

BNY Mellon has added a sustainable ETF to its line, with the product launching March 22 on NYSE Arca.

The BNY Mellon Responsible Horizons Corporate Bond ETF (RHCB) is subadvised by Insight North America, a subsidiary of BNY firm Insight Investment. That firm, which specializes in fixed income and risk management, has a total of $1.2trn in assets under management, according to the announcement from BNY.

The product is BNY’s fourth ETF to feature sustainable investment and its sixth actively managed ETF, the firm stated.

“The ETF seeks to emphasize what Insight believes to be the best, and avoid the worst, performers on ESG issues, and to carefully consider the approach taken to investments in environmentally sensitive industries,” the company said in its announcement.

ISS adds water risk ratings

Measuring risk exposure and management

ISS this week began rating about 7,400 public companies on their water risk, a launch timed to coincide with World Water Day.

The ratings are based on 11 data points per company and are designed to assess its level of freshwater-related risk as well as its management of that risk, according to ISS. The water risk exposure classification is based on a company’s industry, geography and supply chain risks. The water risk management performance score, meanwhile, measures operational performance. Overall scores range from 0 to 100, indicating substantial or low and well-managed risks, the firm stated.

“Institutional investors can mitigate water risks across their investment portfolio by identifying industries and business activities that depend on or greatly impact water resources, and by actively engaging with company management to improve transparency with regard to water-related strategy and risk management,” the company said in its announcement on Tuesday.

The new rating will help investors “identify and manage freshwater-related risks in portfolios, build freshwater-focused portfolios, funds and indices, through to supporting their water-related stewardship and engagement programs.”