Federated Hermes is under increasing pressure to defend its backing for a group of major US political officials who reject climate change action.
Three Danish pension fund clients of Federated Hermes want to know why the business decided to be a gold sponsor for the State Financial Officers Foundation, a Republican organization that has threatened to pull state pension funds from financial institutions that do not support the fossil fuel sector, The Financial Times reports.
The foundation, which has the support of senior elected financial officers from 23 US states, has been lobbying hard against policies of the Biden administration that would slow down global warming and against plans by US regulators to make institutional investors more aware of climate risk.
Opinions regarding ESG differ in the US and EU
The conflict illustrates a gulf in opinions regarding environmental, social, and governance standards on both sides of the Atlantic. In Europe, corporate sector support for tougher ESG standards has been far greater than in the United States, where Republican party members are largely opposed to climate change action.
The reputation of Federated Hermes as a leading proponent of ESG investment is well-deserved. The fund manager, with headquarters in Pittsburgh has a well-regarded stewardship team based in London. This team offers advice to institutional investors with total assets exceeding $1.6 trillion on environmental, social, and governance issues, as well as other shareholder concerns.
Clients not satisfied with the fund’s explanation
This week, in response to growing criticism of Federated Hermes’s sponsorship of SFOF, the company emphasized that the link “does not serve as an endorsement of any organization’s specific viewpoint on any issue.”
Because it did not explain why Federated Hermes had decided to become a gold sponsor of the foundation or clarify whether the sponsorship would be dropped or reduced in response to SFOF’s anti-climate change statements, Anders Schelde, chief investment officer of the Danish pension fund AkademikerPension, deemed the response to be “unsatisfactory.” This was the opinion of the chief investment officer of the Danish pension fund, AkademikerPension.
