The week in investor relations: A side of shares for retail investors, banks on ESG and a $500 mn impact investment
– Deliveroo said shares worth £50 mn ($70 mn) would be earmarked for customers in its upcoming flotation, with the offer branded ‘Great food with a side of shares’, reported Reuters. Founder and CEO Will Shu said Deliveroo’s customers had supported the company’s growth and he wanted to give them the chance to share in the next stage of its journey. The firm’s London listing, with a potential value of $7 bn, could be the biggest the city has seen in three years.
– CNN reported that Wells Fargo is setting a goal of net-zero greenhouse gas emissions – including from the companies and projects it finances – by 2050. The bank has long been a major backer of oil, natural gas and coal projects that climate activists warn threaten the planet. ‘This transition to a lower-carbon economy is real. And we want to be leaning into it, financing it and helping our clients through it rather than ignoring it,’ said Jon Weiss, CEO of corporate and investment banking at Wells Fargo. It joins an array of big banks setting net-zero goals, following similar pledges made by Goldman Sachs and Citigroup. Bank of America, Morgan Stanley and JPMorgan Chase have also rolled out plans to align their financing activities with the Paris climate accord.
– In other banking and sustainability news, HSBC gave in to investor pressure and announced plans to phase out support for the coal industry, according to Reuters. The bank will end support for the coal industry in the developed world by 2030 and in the developing world by 2040. Investors managing around $2.4 tn in assets filed a resolution looking to bind the bank to stronger sustainability commitments earlier this year, but have withdrawn the motion in what the news agency says is a sign they have reached a compromise with Europe’s biggest bank.
– Shell appointed former BHP Group executive Andrew Mackenzie as chairman this week, reported Bloomberg, and said its board would have as many women as men on it for the first time. While much of Mackenzie’s tenure was ‘overshadowed by the disaster at BHP’s Samarco iron ore joint venture in Brazil, where a dam collapse killed 19 people’, Bloomberg added that he also put BHP on course for ‘many of its most ambitious targets’, introducing a pledge for women to account for half its workforce in 2025 and being one of the first major miners to set goals to curb customer emissions.
– The Wall Street Journal (paywall) reported that new EU rules came into effect on Wednesday that seek to regulate the sustainable-finance industry for the first time. Managers of funds that invest in line with ESG considerations now have to put forward a tangible, measurable plan for how they will do so. This will apply to all asset managers that raise money in the EU, whether they are based within its borders or not. The Sustainable Finance Disclosure Regulation addresses a long-running concern for the industry that there is a lack of supervision of ESG. There is no hard definition of what constitutes a sustainable investment and no watchdog to enforce it.
– Temasek, the $214 bn Singapore state-backed investment company, made a $500 mn allocation to Leapfrog Investments, in a partnership that marks the largest single commitment to a specialist impact-investment manager, according to the Financial Times (paywall). Interest among institutional investors is growing in strategies that combine attractive financial returns with specific social or environmental goals. So-called impact-investment assets reached an estimated $715 bn at the end of 2019, according to the Global Impact Investing Network, an industry body, noted the paper.
– The ETF industry made its fastest ever start to a year with a new record of $139.5 bn in monthly inflows in February as investors, betting on a strong economic rebound in 2021, used ETFs to pour cash into equities, reported the FT. The paper separately wrote that ETF ownership of Tesla climbed to 7 percent after it joined the S&P 500. Assets invested in Tesla through ETFs rose to $48.5 bn by the end of December, with 518 ETFs holding Tesla shares, it reported.