RI ESG Briefing, April 13: Yale Endowment, BMO Global Asset Management, Eurosif, Gates Foundation

The round-up of the latest ESG developments


The Yale Endowment is starting to divest from fossil fuels, according to a Yale Daily News report citing a letter from Chief Investment Officer David Swensen. It said the letter reported that after talking with the university’s external investment managers about the potential risks associated with investments in coal, oil, around $10 million of the endowment has been removed from two publicly-traded fossil fuel producers. “A few managers held positions we felt were inconsistent with our principles,” Swensen was quoted as writing.

Climate change is on the global investor agenda in a “markedly changed way” according to BMO Global Asset Management. It said its Governance and Sustainable Investment team entered into intensive discussions at a board or senior executive level with many of the global oil & gas majors. Overall in 2015, it engaged with 1,376 companies, in 58 countries, “achieving 241 instances of change”, according to the annual responsible investment report from its Europe, Middle East and Asia arm, formerly F&C Asset Management.

CalPERS has continued its support for shareholder proposals on climate change reporting, this time at Occidental Petroleum. It said it would be voting FOR shareowner proposal number five at the company’s April 29 annual meeting. The $301bn fund has just under 4m shares in Occidental. The proposal was filed by the UMC Benefit Board and calls for an annual assessment of long-term portfolio impacts of public climate change policies. There are other shareholder resolutions on the agenda, including one on methane emissions and another on public policy on climate.


Eurosif has welcomed the European Commission’s proposal on disclosure of income tax information by multinational corporations. “Although not immediately obvious, the issue of corporate taxation features high on the agenda of the investors’ community, particularly of those long-term focused investors,” the European Sustainable Investment Forum said. Executive Director Flavia Micilotta said public country by country reporting would “provide investors with a useful source of information to assess companies’ approaches to tax management and the associated long-term risks that this might bring.”

Shares in listed hedge fund firm Och-Ziff Capital Management reportedly fell 24% to a record low following news it may have to plead guilty to bribing government officials in Africa. The Wall Street Journal reported US regulators were seeking a fine of as much as $400m from Och-Ziff over claims the firm bribed Libyan officials to win an investment mandate from the country’s state wealth fund. There are other allegations it funded illegal payments to the government in the Democratic Republic of Congo. Och-Ziff declined to comment to Reuters.h6. Governance

The six board members at Swiss chemicals firm Sika who oppose its takeover by France’s Saint Gobain were re-elected at its annual meeting yesterday (April 12). Ahead of the meeting, a group of shareholders including the Bill & Melinda Gates Foundation, Fidelity International and Columbia Threadneedle Investments wrote to Chairman Paul Hälg reaffirming their commitment to the board and business amid the ongoing boardroom wrangle over the company’s fate. They hailed the “determination and character” of Sika amid difficult market conditions and “persistent distractions from those pursuing a different agenda”.

The $178.7bn California State Teachers’ Retirement System has released its 2015 Corporate Governance Annual Report highlighting a successful engagement plan, which resulted in 375 companies adopting a majority vote standard. “In 2010, CalSTRS’ Corporate Governance program implemented an engagement plan focused on 26 smaller cap companies,” said CalSTRS Director of Corporate Governance Anne Sheehan. “And, as a result of the effort, 80% of those companies moved from a plurality to a majority vote standard.” In 2015, 90 small cap companies were engaged, 89 of which moved to adopt a majority vote standard.

A shareholder resolution filed by Chicago-based Pekin Singer Strauss Asset Management, advisor to the Appleseed Fund has yielded a commitment from Titan International to increase its board diversity. Pekin Singer requested that Titan, which makes off-road wheels and tyres, issue a report outlining the steps being taken to increase diversity among its board of directors. In advance of Titan’s annual shareholder meeting to be held in early June, the company agreed to amend its board nominating committee charter to include a commitment to seek out diverse candidates in director searches. As a result, Pekin Singer, which manages $800m, withdrew the resolution. “We achieved our goals with this resolution and expect that a more diverse board will be better-positioned to steer the company going forward,” said Matthew Blume, manager of shareholder advocacy.

Proxinvest, the France-based governance advisor, says its research partner Manifest has given BP a remuneration rating of E, adding “we recommend shareholders oppose to this excessive remuneration”. It said CEO Bob Dudley’s £16m remuneration was “potentially excessive” and the linkage structure of remuneration policy is an issue as it “pretends to establish a strong link between current Company strategy and executive remuneration opportunities”. “While it incorporates extra-financial targets (including the number of oil spills) into its incentive arrangements it has no basis in overall company profits and limited relation to shareholder returns,” the analyst said.