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RI Briefing, April 6: FTSE launches ESG ratings service

RI’s regular round-up of responsible investing news

Index firm FTSE has launched an ESG ratings service that builds on the FTSE4Good index series, according to a report in the Financial Times. The FT said the service would give more detailed analysis of how global companies compare on governance and social and environmental practices. Company ratings are re-assessed twice a year by research firm EIRIS.

Société Générale’s corporate and investment banking arm has launched the group’s first Socially Responsible Investment Exchange Traded Note (SRI ETN) on the London Stock Exchange and is donating the management fees to charity. The bank said the launch followed a report published by its broker research team on the growing importance of integrating Environmental, Social & Governance (ESG) metrics into investment research to gauge a company’s management quality and risk governance.

California’s giant pension funds CalSTRS and CalPERS have launched the Diverse Director DataSource (or “3D”) – a tool to identify corporate director candidates. “The Diverse Director DataSource project is aimed at bringing a new range of skills and experiences to complement existing resources on corporate boards,” said CalSTRS’ CEO Jack Ehnes. The funds have commissioned governance firm The Corporate Library to develop the service, which should be running by mid-2011.

Spain’s new sustainable economic law entered the statute books last month. It means state-backed firms will have to file annual corporate governance and sustainability reports in accordance with generally accepted standards, with a focus on gender equality and the integration of people with disabilities.

The Responsible Investment Association Australasia (RIAA) has welcomed some new members. They include: asset managers Lend Lease Investment Management and Pathfinder Asset Management; Sustainalytics and Citi Investment Research & Analysis; Community Sector Banking and individuals Michelle Segaert and Sam Morse.The 30 companies listed on Germany’s Dax index have said they would set targets to promote more female managers, according to a report in the Guardian. It said the government has indicated that the companies would aim to raise female representation on their boards by 30% by 2013.

UKSIF, the UK’s sustainable finance association, has opened its membership to charities with large investments. The group has launched a new “Charity Affiliate” category of membership, open at no charge to major charitable foundations and other charities with significant investment assets. Link
TIAACREF, the US investor with more than $400bn in pension assets, is to invest $1bn in a new group that will manage money for nonprofit organisations. The new arm will be called Covariance Capital Management and be based in Houston.

The Norwegian Ministry of Finance has awarded contracts to consultancy firms Mercer, McKinsey and MSCI Barra to help it oversee the NOK3trn (€385bn) Government Pension Fund, according to a report in Global Money Management.

The World Bank has adopted a strategy to “guide future engagement” in the global palm oil sector. It was developed following consultations with environmental and social NGOs, farmers, indigenous communities, private sector companies and governments. “Even though the World Bank is a small player in the palm oil sector, we can make a contribution to strengthening the sector’s sustainability,” said the bank’s vice president for Sustainable Development, Inger Andersen.

The UK’s Accounting Standards Board has published a report, Cutting Clutter: Combating clutter in annual reports, arguing that “clutter” in company reports obscures relevant information and makes it harder for users to find salient points. It is seeking feedback on the report by September 30, saying: “All of those involved in regulating, reviewing, preparing and using annual reports have to change their behaviours if we are to remove clutter and improve corporate reporting.”