RI ESG Briefing, April 16: BP climate resilience shareholder resolution gets 98.28% support

Environmental

The “Aiming for A’ climate resilience shareholder resolution at BP passed with 98.28% support at the oil major’s AGM today (April 16), according to Helen Wildsmith, the Head of Ethical & Responsible Investment at charity fund specialist CCLA, who coordinated the initiative. Just yesterday, Norges Bank Investment Management confirmed it would vote in favour of the resolution at BP (and Shell). “As a long-term investor, we believe that the identification of future scenarios for climate regulation, carbon pricing, and environmental conditions is a useful tool to support strategic decision-making and we thereby support these resolutions,” said Chief Investment Officer Equity Strategies Petter Johnsen.

Investors who divested from coal, oil and gas companies have outperformed those that remained invested in the firms since 2010, a new study by ESG research firm MSCI reflects. According to MSCI, fossil fuel free-investors earned 13% annually over the last five years compared with 11.8% for investors that remained in the sector. MSCI said that one key reason for the underperformance was the drop in oil prices since June of last year, which has depressed oil companies’ shares.

After two consecutive years marked by decline, global investment in renewable energy rebounded last year, rising 17% to $270bn (€254bn), a new report released by the United Nations Environment Programme (UNEP) says. The lion’s share of renewable investment, or $83.3bn, was in China, the report said. The US took second place with $38.3bn and Japan third with $35.7bn. The report added that as a result of the investment, 103GW of new renewable energy capacity was installed around the world.

Mellon Capital Management, the US asset manager, has unveiled a white paper stating that investors can reduce their exposure to heavy emitters of greenhouse gases without the need for divestment. Rather than divesting, the paper, entitled “Green Beta,” recommends that investors simply underweight companies in sectors known for high carbon intensity. As an example, the paper cited the very broad Russell 3000 stock index. It said that while power utilities as well as energy and material companies accounted for 75% of the index’s carbon emissions, the firms only made up 16% of the index’s members.

Social

The board of trustees at Stanford University has rejected a call to divest companies with links to Israel from a student group called ‘Stanford Students for Justice in Palestine’. It said in a statement: “The Board concluded that the university’s mission and its responsibility to support and encourage diverse opinions would be compromised by endorsing an institutional position on either side of an issue as complex as the Israel-Palestine conflict.”

Fifty-three religious institutional investors in Canada, with combined assets of more than C$2bn, have released a letter written to federal Finance Minister Joe Oliver to ask that the Government of Canada establish mechanisms to set a “clear, reliable and effective” price for carbon emissions with the goal of reducing greenhouse gas emissions and limiting climate change.

Social investment group Oikocredit is celebrating its 40th anniversary this year. Over its history, the Netherlands-based cooperative has disbursed over €2.1bn of development financing from investors – over half of this in the last five years. In 2015, the aim is for Oikocredit to raise £2.5m in investment in the UK.h6. Governance

The International Brotherhood of Teamsters, the US union, has succeeded in getting a shareholder proposal included in Walmart’s proxy materials which bars the chief executive from serving as the US retailer’s chairman and which insists that the chairman be “independent.” In a response to Walmart’s request for non-enforcement, the Securities and Exchange Commission (SEC) said it did not agree with the firm’s view that the Teamsters’ proposal was either too vague or indefinite. As a result, the proposal will be voted on at Walmart’s annual meeting on June 5.

The $30m (€28.3m) reserve fund for members of the AFL–CIO, America’s biggest union, has filed shareholder proposals at Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley, to get them to disclose the value of “golden parachutes” they give executives who resign to take government jobs. According to the AFL–CIO, the four Wall Street banks are the only companies that provide severance pay in the form of vested stock options. “We are unaware of any other industry where accelerated vesting of equity is permitted outside of a change-in-control, nor is this prerequisite provided at certain bank competitors like Wells Fargo,” the union wrote in a letter to fellow shareholders in the banks. The AFL–CIO is urging them to support its proposals.

It’s emerged that JØP, a DKK65bn (€8.7bn) Danish pension scheme for lawyers and economists, was an investor in Oak Finance, the Goldman Sachs-arranged special purpose vehicle. JØP, however, has no plans to join the lawsuit brought by the New Zealand Superannuation Fund. JØP Chief Executive Torben Visholm told RI: “We were an investor in Oak Finance but sold the position nine months ago. We therefore have no economic interest in joining the lawsuit.”

Sweden’s Tredje AP-fonden (AP3) has said it voted to reduce the board to eight members instead of the proposed nine members at SCA’s annual meeting on April 15. It voted against the re-election of Anders Nyren to the board of the forestry products firm in the wake of the private jet scandal earlier this year.

US proxy firm giants Glass Lewis & Co and Institutional Shareholder Services (ISS) are recommending that shareholders in Canadian mining firm Barrick Gold vote against a $13m (€12.2m) pay package for the firm’s chairman, John Thornton. According to the Wall Street Journal, the firms feel that Thornton’s pay package for 2014 is inappropriate given that Barrick’s share price has underperformed its peers. A Barrick spokesman defended Thornton’s pay package, saying that he held the important job of “executive chairman” and was currently implementing a “transformational strategy.” Barrick’s annual shareholder meeting is scheduled for April 28.

An institutional investor has filed a legal complaint against US drugs retailer Walgreens, charging that the company provided false statements last summer about the benefits of its merger with UK peer Alliance Boots. The complaint alleges that Walgreens overstated the earnings it expected from the merger by as much as $2.3bn (€2.15bn). Although the overstatement initially boosted Walgreens’ stock, its shares fell sharply in early August after the firm was forced to admit that it had been too optimistic. The firm’s chief financial officer also resigned. Robbins Geller, the law firm that filed the suit, said other investors who suffered losses as a result of Walgreen’s statements about Boots, could join the action.