RI ESG Briefing, August 14: Rabobank issues ‘ESG Leader’ money market paper

Environmental

Rabobank says it has become the first issuer to launch an “ESG Leader” Commercial Paper and Certificate of Deposit Programme in the money market. The Dutch bank said the ‘ESG Leader Programme’ offers short-term investments in Rabobank as a leader in ESG, providing investors with more “diversified investment opportunities and contributes to capital being channelled to more sustainably operating companies”. It said the first launch, amounting to €1.2bn, was “highly successful” with “immediate acceptance by the buy-side” of the market. The size of the program is €5bn maximum.

The Ontario Municipal Employees Retirement Scheme (OMERS) is in “advanced discussions” with Indian renewable energy producer ReNew Power to raise $300m in funds, according to media reports. The news confirms that ReNew Power is exploring fresh funding options following the delay of its Goldman Sachs-backed IPO, the proceeds of which it planned to use for redemption of green bonds, and funding acquisitions and other strategic initiatives.

Investors with over $2trn in AUM are calling for a redesign of a proposed energy policy in Australia to avoid “losing another decade to policy paralysis and the increasing costs of climate change”. The National Energy Guarantee, proposed in late 2017 to combat rising energy prices in the country, would oblige energy retailers to reduce emissions and supply sufficient quantities of “reliable” power to the market. But the Investor Group on Climate Change (IGCC) says it fails to provide the “policy certainty on climate change and energy policy” needed by investors – urging all parties to increase emissions reduction targets in line with the Paris Agreement and explain how the targets could be reviewed in the future.

Social

The first impact bond designed to reduce extreme poverty in rural sub-Saharan Africa – The Village Enterprise Development Impact Bond (DIB) – has closed its initial round of funding. Village Enterprise, a nonprofit working to end extreme poverty in rural Africa, announced it has raised $3.5m from private investors and philanthropic sources to provide first-time entrepreneurs in rural Kenya with seed capital, training and mentoring to start more than 4,600 businesses.

Community Development Financial Institution (CDFI) INSIKT has announced it has completed 15 private market social bond securitisations totalling $247m over two years. Proceeds from the bonds will be used by INSIKT to make small-dollar, affordable loans to low-income communities to tackle the predatory lending industry.

State-run Korea Land & Housing Corp. has reportedly debuted a social bond to finance rental homes for low-income communities. It is a 100 million Swiss francs, five-year duration, security. Sustainalytics analysed the bond and HSBC Securities acted as bookrunner.h6. Governance

RSPO, the trade body representing stakeholders in the palm oil sector, is facing investor calls to strengthen its policies and guidelines in what is being called an opportunity for the body to “build credibility”. A group of more than 90 institutional investors, with more than $6.7trn in assets, responded to an open public consultation organised by the RSPO to review and update its Principles and Criteria for the next five years. To remedy the “significant shortcomings that materially weaken the P&C”, the investors supported adoption of more stringent language to protect High Carbon Stock (HCS) forests and land, mandated disclosure of concession maps and consistent sanctions of member companies who violate the P&C. The investor group is coordinated by Ceres.

Investors have withdrawn a resolution aimed at bolstering opioid-related oversight following a productive engagement with major opioid distributor Cardinal Health. The resolution, filed by ten members of the Interfaith Center on Corporate Responsibility (ICCR) for the 2018 proxy, requested reporting related to risks posed by the US opioid crisis. Cardinal Health agreed to report to shareholders on governance measures implemented since 2012 to monitor and manage financial, legal and reputational risks related to the crisis by 30 March 2019. Link

Investor concern about board diversity seems to be spreading to the US, as Columbia Threadneedle Investments puts in place a policy targeting directors in businesses where women are under-represented, the Financial Times has reported. The policy at the $482bn asset manager sees it refuse to support the re-election of committee chairs, who are charged with hiring new directors, where women account for less than 15% of board members. According to data from State Street Global Advisors, one in four of the 3,000 largest listed US companies did not have a woman on their board in 2017.

The $143m Sunrise Firefighters’ Pension Fund in Florida has sued Oracle, according to law firm Bernstein Litowitz Berger & Grossmann (BLBG). The complaint alleges that the software giant violated the Exchange Act by issuing false and misleading press releases and SEC filings about the prospects for its ‘Cloud’ computing services. BLBG said Oracle drove sales of cloud products using “threats and extortive tactics”. And Oracle spokesperson was quoted by Pensions & Investments as saying the suit has “no merit” and that it would vigorously defend against the claims.