Responsible Investor

RI August round-up

The RI round-up of August’s most important responsible investment news.

The UK Pension Protection Fund (PPF), which runs assets worth £1.5bn to compensate DB pension fund members in case of company insolvency, has taken a major step in its responsible investment strategy by hiring F&C Investments to provide voting and engagement services for its UK equities portfolio. F&C will also advise the fund on extending the RI strategy to other asset classes. The PPF will also make public its UK voting records and said it expected to report on engagement activities with companies in its portfolio. F&C will lobby companies on the PPF’s behalf to adopt best practice on issues including corporate governance, transparency and climate change. Martin Clarke, director of financial risk at the PPF, said: “These moves will help make sure that we build on our commitment, set out in our investment principles, to take account of ESG considerations when deciding where to invest. We believe that encouraging good practice in this area can reduce market risk and preserve shareholder value over the long-term. The PPF, which has signed up to the United Nations Principles for Responsible Investment (UN PRI) said it also monitored the extent to which its fund managers addressed ESG issues.
Dow Jones Indexes has teamed up with the Chicago Climate Exchange (CCX), to launch two new indices for investors seeking exposure to the European Union Emissions Trading Scheme and Kyoto Protocol Clean Development Mechanism (CDM). The two – the Dow Jones/CCX European Carbon Index and Dow Jones/CCX Certified Emissions Reductions (CER) Index – are the first in a series of joint global emissions indices. The Dow Jones/CCX European Carbon Index is composed of

actively traded European Union Allowances (EUA) futures contracts on the European Climate Exchange. It measures the present discounted value of EUAs—the carbon credits issued in the European Union Emissions Trading Scheme, across different maturities. The Dow Jones/CCX CER Index measures the present discounted value of CERs—the carbon offset allowances issued by the United Nations under the Kyoto Protocol Clean Development Mechanism, across different maturities.
Over a dozen leading UK, North American and European institutional investors, including F&C, the UK fund manager, have written to the Brazilian securities regulator, the Commissão de Valores Mobiliários (CVM), urging greater legal protection for minority shareholders. The action was triggered by a bid launched on August 6 by Votorantim Celulose e Papel (VCP), for control of Aracruz, a fellow pulp and paper producer. The investors said they have no objection in principle to the combination, but warned that it could come at the expense of minority investors in Aracruz’s voting and non-voting stock. As significant investors in the broader Brazilian market, the institutions said they feared the deal could bring damaging effects on both the value of their other Brazilian holdings and on confidence in the Brazilian market as a whole. The concerns have been echoed by institutional investors within Brazil, including the Capital Markets Investors Association (AMEC).
A report from WWF and Co-operative Financial Services has called on governments to halt licenses given to oil companies to extract oil products from tar-soaked shale or sands, claiming it creates up to eight times as many carbon dioxide emissions as conventional oil production.

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