Opec+ switches to online meeting as market expects cuts to continue

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ESG funds are leaking money for the first time

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Norway’s oil fund takes on ExxonMobil over climate lawsuit

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Wood Group rejects third offer from Sidara

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Engineering and consulting company John Wood Group has rejected a third takeover offer from Dubai-based Dar Al-Handasah, known as Sidara, as continuing to “significantly undervalue” the company and its prospects.

Aberdeen-based Wood, founded by Scottish billionaire Ian Wood in 1982, said on Friday it had turned down the unsolicited cash offer from engineering and consulting group Sidara of 220p a share.

The approach was sweetened from its most recent offer of 212p, which was raised from an initial bid of 205p. Wood’s shares were trading at 182.7p on Friday morning, having risen 1.5 per cent.

Wood said it had carefully considered the latest proposal from Sidara but concluded that it continued “to significantly undervalue the group and its prospects”. Sidara has until June 5 to make a firm offer.

The approach comes a year after US private equity firm Apollo Global abandoned an attempt to buy Wood, after a months-long pursuit. Apollo walked away from its bid of 240p a share shortly after Wood decided to engage, having rebuffed several previous preliminary bids.

Wood is in the midst of a turnaround plan, and is facing activist pressure to consider a sale in order to boost its share price performance, or move its listing to New York. Activist investor Sparta Capital Management said last month: “If the UK public markets are unwilling or unable to engage in Wood’s story, we believe you should undertake a strategic review and actively seek alternative solutions.”

Wood insisted in a trading update earlier this month that its “simplification process” was progressing well and that it was on track to generate annualised savings of about $60mn from 2025, with about $10mn coming this year.

At the time it reported a 6 per cent drop in first-quarter revenue year on year, in part reflecting a change in its strategy that focuses on businesses with higher margins. Earnings before interest, taxes, depreciation and amortisation increased 4 per cent, as improved margins offset lower revenue.

Wood said it would boost profitability and deliver “significant free cash flow” in 2025.

Alibaba raises $5bn for share buybacks as it warns of AI challenges

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Take Five: Bound by Destiny

A selection of the major stories impacting ESG investors, in five easy pieces. 

Public and private sector coordination provides the theme – and events of Nairobi, London and Rio de Janeiro the backdrop – for this week’s digest.

Natural allies – Just ahead of this year’s UN International Day for Biological Diversity, delegates gathered in Kenya for the first review of the implementation of the Global Biodiversity Framework (GBF) since its adoption at COP15 in December 2022. A key task during the nine-day summit is to assess how well parties’ national biodiversity strategies and action plans (NBSAPs) support the 23 targets of the GBF. For the record, just nine countries, plus the European Union, have submitted updated NBSAPs since all 196 parties committed to the framework in Montreal. “The challenge is to ensure that the global aims are translated into nationally relevant targets that consider the context and the biophysical realities of each country,” said David Cooper, Acting Executive Secretary of the UN Convention on Biological Diversity. Delegates will also discuss the means of implementing the GBF, including capacity-building, technical and scientific cooperation, and resource mobilisation – the last of these being the trickiest given an estimated annual biodiversity finance gap of US$700 billion. Investors will be paying close attention to progress on the GBF’s fourth over-arching goal, the alignment of financial flows. According to a recent blog by Emine Isciel, Co-chair of the Finance for Biodiversity Foundation, a critical factor will be reducing existing harmful financial flows. As well as robust private-sector disclosures, via standards such as those outlined by the Taskforce on Nature-related Financial Disclosures, this requires public policy reforms to redirect US$542 billion in annual agricultural, fishing and forestry subsidies that damage nature, while also misdirecting private investment. “By fostering innovations, aligning incentives and setting clear boundaries, [finance ministers] can steer sectoral pathways towards reducing negative impacts, increasing positive impacts and catalysing private finance at scale,” she said.

Two figs – Alignment of finance flows with nature goals was also front of mind at the City Week event in London, with Karen Ellis, Chief Economist of the World Wide Fund for Nature UK, flagging two areas of opportunity. To avoid the nascent market for biodiversity credits making the same mistakes as the voluntary carbon markets, she said, governments could grasp the chance to create compliance markets. These could link the supply of financial incentives to the private

Focus on Outcomes

David Byrns, Portfolio Manager at American Century, explains why transition investing is fundamental to achieving net zero.

While global sustainable investments reached US$30.3 trillion in 2022, at the same time greenhouse gas (GHG) emissions have hit an all-time high. According to the World Meteorological Organization, global averaged concentrations of carbon dioxide, the “most important GHG”, were a full 50% above the pre-industrial era for the first time…

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Private equity giant Hg to acquire risk platform AuditBoard for $3bn

London-based private equity giant Hg has agreed to acquire AuditBoard, a cloud-based platform for audit, risk, compliance and ESG management, in a transaction valued at over $3bn including debt. 

The acquisition is being led by Hg’s San Francisco-based office, which opened in 2022. 

AuditBoard was founded in 2014 and serves more than 2,000 enterprises, including nearly 50% of the Fortune 500, according to a press statement. The California-based company reached $200m in annual recurring revenue late last year. 

Scott Arnold, CEO of AuditBoard, described the acquisition as “further validation of our practitioner-first focus”. 

Alan Cline, Head of North America at Hg, added that AuditBoard was “exactly the type of business we partner best with – one that truly knows its customers and innovates to bring them the best possible products”. 

Goldman Sachs & Co and Cooley are advising AuditBoard. 

Climate Data in the Investment Process

Despite imperfections, investors should not wait for regulation to offer more comprehensive solutions, says David von Eiff, Director of Global Industry Standards at the CFA Institute.

Climate change impacts, through direct and indirect channels, present us with tremendous economic risks and opportunities. While their complexity makes estimation difficult, cost estimates are generally staggering. A 2022 analysis by Deloitte projected that an increase in global warming to 3C could lead to global economic losses of US$178 trillion over the next 50 years. However, the study estimates that US$43 trillion of economic gains could be realised through a successful transition to a low-carbon economy in the same time frame.

Governments worldwide have begun adopting policies and regulations to fund the transition to net zero economies and address climate-related risks. Further, companies have begun evaluating physical and transition liabilities and opportunities. Banks and insurers are altering their businesses to address better climate change-related liability risk in their lending and underwriting decisions. Asset owners are seeking to understand how climate change may affect the value of their assets, and asset managers are increasingly analysing their investments’ climate risks and opportunities.

This increasing focus on climate-related risks and opportunities has highlighted the significance of having accessible, reliable, climate-related data to measure and analyse, which is key to understanding and effectively utilising climate data as a component of investment strategies.

Applications of climate-related data

Climate-related data are integral to investment processes, serving purposes such as risk assessment, asset valuation, and shareholder engagement. It is collected, analysed, and used not only by asset managers or lenders but also by the ecosystem that provides services to them:

Credit rating agencies, which incorporate climate risk exposure into creditratings; Index providers, which provide climate-themed indexes and often calculate climate-related metrics for conventionalindexes; Valuation service providers, which may incorporate climate considerations when valuing privateassets; ESG rating providers, which often incorporate climate-related data and opinions in their ESG ratings andscores; Sell-side research providers, some of which are integrating climate-related information into theiranalyses; and Climate-related data and research providers, which produce a wide range of company and sector-specific climate-related information, as well as a comprehensive range of market research, market intelligence, and thought leadership on climate-related

In 2022, PwC found that the data used as inputs for climate analysis as well as the level of incorporation differed significantly between service providers. This variability, coupled with limited transparency, makes comparisons difficult.

Challenges in

Human Rights as a Basis for Climate Litigation

Olga Hancock, Head of Responsible Investment, Church Commissioners for England, explores the implications for investors of the EHCR decision on Swiss government inaction.

In November 2023, I wrote about the links between human rights and climate change for investors. Since then, there have been significant developments. One in particular stands out.

Last month, the European Court of Human Rights (ECHR) determined that the Swiss government had violated its citizens’ human rights, due to its lack of action on climate change. The case – Verein KlimaSeniorinnen Schweiz v Switzerland – was brought by four women and a supporting association who were concerned about the consequences of climate change on their living conditions and health.

The ECHR ruling is significant because it makes the link between human rights and climate change material for investors – and establishes a legal precedent for climate litigation on the basis of human rights law. And so this ruling inevitably raises the pressure on governments to be more ambitious on climate change. The case is also important for investors because of the implications for private legal actions.

So what happened?

To simplify: the ECHR ruled that the Swiss government had not adequately addressed its climate change obligations and needed to take measures to do so. Significantly, these obligations were defined as alignment around 1.5°C, adequate intermediate reduction targets, and a goal of net zero by 2050. For the 46 member states of the ECHR, that effectively imposes obligations to enhance climate mitigation policies.

Engagement with governments

The decision hands investors an important weapon as they engage with governments to enhance climate ambition. Investor engagement with governments is an increasing area of focus, as investors move from a stewardship approach focused on company engagement to collaborative engagement with governments to address systemic risk – and thus create an enabling environment for sustainable investments.

Governments have to date been able to respond to investors by saying that their requests to create a Paris-aligned enabling environment form part of a broader political process. Now there is a judgment which requires ECHR member governments to comply with the ambition of the Paris Agreement.

This decision will no doubt guide other judicial bodies’ thinking around the world, when considering human rights as the basis for climate litigation. The jurisprudence in EHCR rulings, whilst not binding, is considered ‘persuasive authority’ in other jurisdictions, so the case is also important for engaging with governments outside