RI Briefing, August 24: €3.6bn UK fund criticised over tobacco holdings

RI’s regular round-up of responsible investment news

Kent County Council in southeast England has been criticised over its £3.2bn (€3.6bn) pension fund’s £24m investment in four tobacco companies. The BBC reported the fund has stakes in Altria, Philip Morris, Imperial Tobacco and Japan Tobacco. A spokesperson said it has a “financial responsibility to obtain the best possible return on investments of the pension fund” but campaign group FairPensions said this reflected a common misinterpretation of investors’ legal duties.

Companies with better corporate social responsibility performance can have better access to capital, according to a 45-page working paper from Harvard Business School researchers. “We provide evidence for a mechanism through which CSR can create value in the long-run: firms with better CSR performance are better positioned to obtain financing in the capital markets, which positively affects their ability to undertake major strategic investment decisions and therefore, their subsequent stock returns,” write researchers Baiting Cheng, Ioannis Ioannou and George Serafeim. Their paper – Corporate Social Responsibility and Access to Finance – is available here.

Analysis by the Observer newspaper has found that the number of female board appointments in the UK has doubled, ahead of a deadline set by the Davies Review. It found that 18 women (31%) have been appointed to Britain’s largest boards since 24 February this year – in contrast to 18 (13.3%) appointed in the whole of 2010. Meanwhile, boardroom diversity leader Norway has announced plans to extend its current 40% female boardroom quota beyond listed companies to include large unlisted companies. The new legislation could begin as early as next year. Link

The International Labor Organisation (ILO) has published a report looking at the role of freedom of association in fostering and maintaining sustainable development. The publication examines how respect for freedom of association can contribute to development outcomes by looking at the benefits it provides in four key areas: inclusive economic growth and poverty reduction, a positive business environment, crisis response, and democracy and governance.The UNPRI Academic Network is holding its annual Academic Conference on September 27-28 in Sigtuna, Sweden. Speakers include Meir Statman of Santa Clara University, a pioneer in research on behavioural finance. The conference aims to present research that can demonstrate how responsible investment strategies can be used to make more profitable and more resilient investments. Registration

Spills and Spin: The Inside Story of BP is a new book by oil industry reporter Tom Bergin on the Gulf of Mexico oil spill last year. “What I also found was that BP continually developed narratives to offer to investors, analysts and journalists that were helpful to advancing its business but really on closer examination didn’t hold a lot of water,” Bergin says in an interview with Reuters here

The growth prospects for microfinance institutions (MFI) slowed in 2010, according to the 2011 Global Microfinance Valuation Survey conducted by J.P. Morgan and the Consultative Group to Assist the Poor (CGAP). The report – Discovering Limits – found MFI valuations have reversed a four-year growth path with book value multiples falling slightly.

The Co-operative and aid agency Care International have launched a three-year partnership to support female entrepreneurs in the developing world. The initiative, lendwithcare.org, aims to channel £1.5m (€1.7m) by getting donors to lend money to the entrepreneurs who repay the lender using the income from their growing business.

Strengthening the social investment market could a requirement for the UK’s Big Lottery Fund in the future, according to a consultation document from the government. It calls for the fund to, over time, increase “the capacity of the social investment market for supporting public benefit and social action”.