Key Takeaways
- • Taiwan's Bureau of Labor Funds (BLF) awarded mandates for Asia's first climate change-focused fund, worth a total $2.3 billion, to five managers, according to Reuters reporting on June 24, 2022.
- • HSBC Asset Management and Morgan Stanley were among the winners, joined by Legal & General Investment Management, Schroder Investment Management, and Wellington Management, with each manager receiving about $460 million.
- • The mandate is benchmarked against the MSCI ACWI Climate Paris Aligned Index and requires managers to hold index constituents, with quarterly and annual reviews to monitor climate commitments.
- • HSBC's selection followed a controversy over remarks by Stuart Kirk, its global head of responsible investing, who said "climate change is not a financial risk we need to worry about" and was suspended pending an internal probe.
Summary
Taiwan's Bureau of Labor Funds (BLF), the country's largest pension manager, has selected five asset managers to run Asia's first climate change-focused fund, with a total of $2.3 billion in assets, Reuters reported on June 24, 2022. The fund management arms of HSBC and Morgan Stanley were among the winners, alongside Legal & General Investment Management, Schroder Investment Management, and Wellington Management. Each manager will oversee $460 million, the BLF said on Friday.
The BLF manages roughly Taiwanese $5.8 trillion ($190 billion), about half of which is invested offshore through global managers including BlackRock, Fidelity Investments, and PIMCO. According to Liu Liju, the fund's deputy director general, the BLF shortlisted about 10 managers, including HSBC, from more than 40 global applicants last month.
HSBC's inclusion came weeks after Stuart Kirk, global head of responsible investing at HSBC Asset Management, told a conference that "climate change is not a financial risk we need to worry about." The remarks led HSBC to suspend Kirk and open an internal probe. The BLF commissioned an independent consultant to assess whether HSBC remained qualified. The consultant concluded that Kirk's remarks were "a reflection of the executive's personal emotion" and that HSBC met the requirements on track record, investment process, and investment philosophy, Liu said. Liu added that she expected HSBC to handle the incident discreetly, warning that otherwise "the market will give it a very cruel judgement."
Liu described the mandate as a key regional milestone. Managers will face quarterly and annual reviews by the fund and its consultants to verify they keep to their climate risk commitments. The portfolio is benchmarked against the MSCI ACWI Climate Paris Aligned Index, and managers must select fund holdings from index constituents. HSBC Asset Management did not immediately respond to Reuters' request for comment.
The BLF manages roughly Taiwanese $5.8 trillion ($190 billion), about half of which is invested offshore through global managers including BlackRock, Fidelity Investments, and PIMCO. According to Liu Liju, the fund's deputy director general, the BLF shortlisted about 10 managers, including HSBC, from more than 40 global applicants last month.
HSBC's inclusion came weeks after Stuart Kirk, global head of responsible investing at HSBC Asset Management, told a conference that "climate change is not a financial risk we need to worry about." The remarks led HSBC to suspend Kirk and open an internal probe. The BLF commissioned an independent consultant to assess whether HSBC remained qualified. The consultant concluded that Kirk's remarks were "a reflection of the executive's personal emotion" and that HSBC met the requirements on track record, investment process, and investment philosophy, Liu said. Liu added that she expected HSBC to handle the incident discreetly, warning that otherwise "the market will give it a very cruel judgement."
Liu described the mandate as a key regional milestone. Managers will face quarterly and annual reviews by the fund and its consultants to verify they keep to their climate risk commitments. The portfolio is benchmarked against the MSCI ACWI Climate Paris Aligned Index, and managers must select fund holdings from index constituents. HSBC Asset Management did not immediately respond to Reuters' request for comment.
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