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RI ESG Briefing, September 29: VW, NZ Super, Zurich Insurance, PRI, Gates Trust

The round-up of the latest ESG news

Environmental

Volkswagen will be removed from the Dow Jones Sustainability indexes after the car giant admitted it cheated on emissions tests. It follows a review by S&P Dow Jones Indices and RobecoSAM which run the index series and removal will happen after the close of trading on October 5. VW would no longer be identified as an Industry Group Leader in the “Automobiles & Components” industry group. RI had reported earlier that VW’s status in the DJSI had been under review.

The New Zealand Superannuation Fund says it intends to reduce its 20% shareholding in Z Energy – the former Shell petrol station assets in the country – via an institutional book build closing tomorrow (September 30). The NZ Super Fund partnered with infrastructure firm Infratil in 2010 to purchase Z Energy. The fund has faced pressure from Friends of the Earth to divest fossil fuel investments, though the fund says its aim is to “realise further value from what has been a highly successful investment” and that it would continue its relationship with the firm.

The Climate Bonds Initiative, UNEP Inquiry and the World Bank have launched a briefing on an upcoming guide that will contain practical advice for policy makers to scale up green bond markets for sustainable development. A full version of the guide will be launched in November 2015 in time for the UN climate change conference in Paris. The project will also feed into an OECD report on green bonds, to be launched in 2016. Link

UK-based carbon management company Carbon Clear has released its annual report ranking FTSE100 companies on their carbon measurement and reporting; strategy and targets; emissions reduction, and how carbon reporting is used to engage stakeholders. BT Group tops the list, while insurer Aviva is in the top five.

Social

Zurich Insurance Group has today (September 29) announced plans to allocate around $100m of its private equity investments to impact investment by the end of 2015. This is around 10% of its private equity portfolio. Urban Angehrn, Chief Investment Officer, said: “Our hope is to help make this approach more mainstream over the coming years.”

The US Internal Revenue Service has announced that foundations’ mission-related investments should not be automatically taxed. The IRS taxes foundations on investment gains made when their investment officers do not use “ordinary business care and prudence” to protect a grant maker’s long-term financial needs. With its new rule, the IRS now holds that mission-related investments do not necessarily jeopardize a foundation’s financial future.

Edinburgh University has announced that it will not invest in firms that manufacture “controversial” weapons such as anti-personnel mines, biological weapons and cluster weapons. The announcement is included in its latest responsible investment policy.

There has been scrutiny on the holdings of the Welsh Assembly’s pension fund for parliamentarians with Friends of the Earth highlighting what it calls ‘morally indefensible’ investments in tobacco, gambling and fossil fuel companies. It has also criticised investments in chemical firm Monsanto and fashion firm Burberry which pulled a production plant from Wales in 2007. Link. Governance

Hermes Equity Ownership Services (EOS), the engagement arm of the asset manager ultimately owned by the BT Pension Scheme, has said it repeatedly raised concerns about aspects of Volkswagen’s corporate governance. “Following intensive engagement with Volkswagen on corporate governance issues between 2006 and 2009, including speeches at the Annual General Meetings in 2006 and 2007, we have repeatedly raised concerns about aspects of Volkswagen’s corporate governance,” it said. Hermes said it plans to attend VW’s Extraordinary General Meeting on November 9 on behalf of a group of investors to explain its concerns and suggest changes to the company’s corporate governance and culture.

Michigan’s City of St. Clair Shores Police and Fire Retirement System has reportedly launched what is believed to be the first shareholder case against VW. Bloomberg has reported the fund filed the case in federal court in Alexandria, Virginia, accusing the carmaker of scheming to defraud investors. The report cited law firm Bernstein Litowitz Berger & Grossmann partner Salvatore Graziano.

The Principles for Responsible Investment (PRI) has issued two new Requests for Proposals (RFPs). It is looking for help from organisations to deliver another signatory satisfaction survey later this year as well as the impact evaluation that it wants to do as part of its 10-year anniversary plans. The deadline for submissions for both projects is 19 October.

The Bill & Melinda Gates Foundation Trust has reportedly sued Brazilian energy giant Petrobras in an attempt to get back losses stemming from a corruption scandal. Reuters cited a complaint in federal court in Manhattan as saying a “pervasive” bribery and money laundering scheme caused the giant trust to lose tens of millions of dollars.

Allianz Global Investors is coordinating letters to exchanges, asking them to put in place voluntary guidance for issuers on reporting ESG information by the end of 2016. Institutions interested in signing up to the letters should contact Danielle.Chesebrough@unpri.org by October 7 with the following information: name of signatory, name of institution and company logo. (Amends from earlier version which referred to Allianz.)

Vietnam’s Hanoi Stock Exchange is to issue guidance to listed companies on ESG disclosure next year. It is in reaction to a call from the United Nations Sustainable Stock Exchanges (SSE) initiative of which the bourse is a member. Link

IFC, a member of the World Bank Group, and the State Secretariat for Economic Affairs (SECO), Switzerland has reportedly launched the East Africa chapter of the Africa Corporate Governance Program. The program covers Kenya, Uganda, Rwanda and Tanzania.

Sharan Burrow, General Secretary of the International Trade Union Confederation, has said trade union pension funds are collaborating on voting and speaking with one voice in the capital markets. Burrow was speaking at UK campaigner ShareAction’s annual lecture where she discussed workers’ capital in the 21st century.