RI News in Brief: November 13

RI’s bite-sized round-up of all the other news and links you need to know.

Ten UK universities have announced plans to divest a collective £72.4m (€102.3m) from fossil fuels. The largest commitment comes from the University of Oxford’s Wolfson College that is divesting £42m from thermal coal and oil sands, as are six other universities. Oxford Brookes University, the University of Surrey and the University of Arts in London have completely divested from fossil fuels.

Given the choice, UK millennials would allocate 40% of their portfolio to social finance products, according to a new study by BNY Mellon and Cambridge Judge Business School. However, 95% of millennials feel that pension funds and insurers provide limited, poor or no options for investing in social finance products. The report, Generation Lost: Engaging Millennials with Retirement Saving, surveyed millennials (those born between 1980 and the turn of the century) across six key markets – Australia, Brazil, Japan, the Netherlands, the UK and the US. Link to report

A U.K government report into women in finance, led by Virgin Money’s chief executive, Jayne-Anne Gadhia, has proposed that; remuneration packages (including the payment of bonuses) be linked to a firm’s gender balance, that companies appoint an executive responsible for gender, diversity and inclusion, and that companies report gender statistics publicly. The report says fewer women progress to senior levels in the financial services industry than in any other industry in the UK.

A round table on Responsible and Impact Investment in Buenos Aires, Argentina, the first of a series of meetings with key stakeholders to advance the subject, was hosted recently by Acrux Partners and Thomson Reuters. The debate, amongst top Argentine and international business schools, explored how to best incorporate the topics within the higher education curricular in the country, and better understand how Argentine Universities are positioning themselves. Demand for related studies is rising among students who see the issues as fundamental to business, boosted by a wave of corporate activity, regulation and reporting.

53 financial institutions now prohibit or limit investments in nuclear weapon producers, according to the Don’t Bank on the Bomb report published by Dutch peace organization PAX, a 150% increase compared to last year’s report. However, the report identifies 382 banks, insurance companies and pension funds which have made $493 billion invested in nuclear weapons producers since January 2012.
Link to report

Social Finance Israel and the Rothschild Caesarea Foundation have launched Israel’s first social impact bond (SIB). The SIB aims to reduce the drop-out rate and extend the studies of computer science students in Israel. The cost of the eight-year project is estimated at NIS 8m (€1.9m), and to be funded by the Rothschild Caesarea Foundation, Bank Leumi and the Beyond Impact Investment Company.

Big Society Capital, the UK social investment bank, has committed to greater transparency. It plans to publish data on the investments into charities and social enterprises twice yearly, including characteristics of each investment. It also plans to list what it calls ‘market-championing’ projects: http://www.bigsocietycapital.com/blog/transparency-next-steps

UK-based Gym Group backed by Phoenix Equity Partners and UK social impact investor Bridges Ventures has successfully sold shares equivalent to 50% of the company on the London Stock Exchange. The IPO now values the business at £250m (€352.3m).

S&P Dow Jones Indices has launched the Dow Jones Sustainability Europe Diversified High Beta High Dividend Index. The index is licensed to UBS for product development.

Fewer than a third of UK charities have debated the fossil-fuel issue, with only 4% adopting some form of fossil-fuel exclusion in their investment portfolios, according to the annual Newton Charity Investment Survey. It surveyed 94 UK charities with combined investment assets of almost £21bn. Link to report

The Bank of England has held an ‘Open Forum’, to look at how markets can have a “positive future”. At the event Bank of England governor Mark Carney said public faith in financial markets had been shaken by “widespread misconduct”.
Link to report

Towers Watson has issued a statement in response to recommendations issued by proxy advisory firms Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co. to reject the proposed $18bn merger with insurance broker, Willis Group Holdings. Towers and Watson contend that ISS and Glass Lewis “discount the significant long-term value creation potential of the proposed merger with Willis”.Samruk-Kazyna Invest, an unit of Kazakhstan’s sovereign wealth fund, founded in 2008, has signed a deal with private equity firm, United Green Group, to double the capacity of a solar power plant in the southern region of Kazakhstan to 100 megawatts at a cost of about $105.5m. Kazakhstan’s government has set tariffs for energy produced by renewables in a bid to get 3% of electricity from cleaner sources by 2020.

Nacional Financiera S.N.C (Nafin), the Mexican state-owned development bank, has issued its inaugural green bond ($500m), the first green bond in Latin America to receive internationally recognised Climate Bonds Certification by the Climate Bonds Standard Board. The bond, which offers a coupon rate of 3.41% with a maturity of 5 years, was 5 times oversubscribed. The proceeds will be used to fund wind farms in Mexico and has been rated as A3 (Moody’s) and BBB+ (Fitch).

U.S. companies, anxious to avoid the cost, distraction and reputational damage of potential proxy fights, are conceding faster than ever to outspoken investors who are finding it easier to get seats on boards. Data from Activist Insight shows that in 2015 companies have settled within 56 days on average after an activist demands board representation, compared with 67 days in 2014 and 74 days in 2013. Activists were successful about 74 % of the time last year in getting companies to make at least some of the changes they requested.

The Global CCS Institute, founded to accelerate the development of carbon capture and storage (CCS) projects to combat climate change, has announced in a report that there are now 15 such projects in operation worldwide, capturing 28m tonnes of carbon dioxide emissions from coal and industrial plants. The International Energy Agency has estimated that 4bn tonnes of carbon dioxide emissions must be captured by 2040 to keep global warming at bay.

The National Australia Bank is to invest A$18bn (through to 2022) in renewable energy projects, including low-carbon property and transport. The Commonwealth Bank of Australia, Australia’s second biggest lender, said it would consider environment risks in loan and credit approvals whilst strengthening due diligence in “high-impact” sectors.

Greenpeace has called upon Indonesia’s plantation industry to adopt a four-step Fire Action Plan in order to effectively respond to the devastating forest fires caused by deforestation and peatland drainage by pulp and palm oil companies. Greenpeace says a lack of transparency in the sector is a major obstacle to fighting forest fires and related corruption.

Cisco Systems, the US tech firm, is the subject of increasing petitions ahead of its shareholder’s Annual Meeting on November 19 to vote in favour of a resolution on the Holy Land Principles, an 8-point corporate code of conduct for American companies operating in Israel-Palestine, which aims to promote fair employment. Cisco’s 2012 Corporate Sustainability Report acknowledged that while Arabs make up 20% of the population in Israel they are less than 0.4% of the high-tech industry workforce.

Goldman Sachs has announced an amendment to its by-laws to allow proxy access for shareholders. Citigroup and Bank of America have adopted similar plans, while J.P. Morgan Chase & Co. is reportedly considering allowing proxy access at its next regularly scheduled board meeting.

The National Philanthropy Capital (NPC), the London-based charity think-tank and consultancy, and the $10m KL Felicitas Foundation (KLF) have unveiled a new framework to enable impact investors to measure the social and environmental benefits of investments in the KLF portfolio.

Mirova, the French sustainable fund manager, has publishing its first engagement report setting out its ESG approach across the asset classes it manages. Link

Threshold Group, the US wealth manager, and Trucost, the sustainability research firm, have jointly published an assessment of the carbon risk exposures of the underlying assets in derivative investments (a market reportedly valued at $60trn). Researchers from both firms are developing a best-practice approach to measuring the greenhouse gas emissions associated with derivatives and are inviting collaboration and feedback from industry specialists. Link

Dirk Hoozemans, energy analyst at Dutch asset management firm, Robeco, has tempered the high profile warnings (including that of the Governor of the Bank of England, Mark Carney) over the potential risk of large losses associated with ‘stranded assets’. Hoozemans does not think energy companies will becomes victims of climate change in the medium term, arguing that the risk itself would be considered a part of any “investment decision” to include “reserves on the balance sheet”. He says the emergence of technological innovation driven by smaller ‘niche’ companies improving efficiency will buffer the speed of withdrawal from carbon heavy energy sources. Link