RI ESG Briefing, April 17: US Supreme Court makes judgment in Kiobel vs Shell case

The round-up of environmental, social and governance news


America’s wind energy sector grew by 28% in 2012, said the American Wind Energy Association (AWEA). Wind energy’s growth set a new installation record confirming its status as a mainstream energy source and boosting the US economy, said AWEA, which labelled 2012 as the “best year ever”. However, it’s thought that much of the $25bn investment, and a flood of projects in the fourth quarter, were driven by developers trying to meet the year-end expiration date of the US government’s Production Tax Credit incentive scheme.

Germany-based reinsurance giant Munich Re has released a study, produced in cooperation with the German Aerospace Center, showing that changing climatic conditions are having “considerable influence” on the increase in severe thunderstorm losses in the US.

A new report from the World Business Council for Sustainable Development (WBCSD) is urging companies to assess nature-related risks and opportunities. The paper Eco4Biz – Ecosystem services and biodiversity tools to support business decision-making, encourages companies to explore the tools that can help them better incorporate nature into business decision-making.


PGGM, the Netherlands-based giant with €133bn under management, reportedly plans to check the more than 2,800 companies in the FTSE All-World index in which it has invested against a specific ESG index to encourage the firms to improve their sustainability practices. Using an in-house model, PGGM has been assessing the companies’ performance based on 70 environmental, social policy and governance (ESG) criteria, IPE.com reported.

There is a strong link between corporates highly rated by research group EIRIS on environmental criteria and a reduction in worst-case-scenario risk, according to research by St Andrews University’s Centre for Responsible Banking and Finance. “This is exciting news for pension funds looking to manage assets over the long term and seeking data to minimise extremely negative environmental scenarios,” wrote Dr Andreas Hoepner and Virginia Jennings. The findings were based on data from an annually updated FTSE All World Developed universe of companies between 2005 and 2010 (24 countries and approximately 1,800 firms per annum) and their ratings by EIRIS on five different environmental criteria.h6. Governance

The US Supreme Court has finally ruled in the long-running ‘Alien Tort Statute’ case of Kiobel v. Royal Dutch Petroleum. The plaintiffs were Nigerian citizens who claimed that oil-exploration corporations assisted the Nigerian government during the 1990s in committing violations of customary international law. The case has been on the radar screen of a group of leading responsible investors (link). But Chief Justice Roberts affirmed a previous court of Appeal ruling, saying: “Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices.”

A number of Australian investors have filed a second class-action lawsuit against ratings agency Standard & Poor’s, claiming it misled them over derivatives ratings in the run-up to the financial crisis, according to a Reuters report. Claims firm IMF Australia said the group of 90 councils, churches and charities had lost more than A$200m in collateralised debt obligations (CDOs). S&P reportedly said the lawsuit was without merit, and that it would vigorously defend itself.

The Missouri-based Police Retirement System of St. Louis, has reportedly sued investment bank J.P. Morgan Chase over its 2012 “London Whale” $6.2bn trading losses scandal. The fund claims the bank and senior executives breached their duties to shareholders – and referred to 2011 warning letters to the bank from union-linked CtW Investment Group.

A group of investors in J.P Morgan including the American Federation of State, County and Municipal Employees (AFSCME), the Connecticut Retirement Plans and Trust Funds, Hermes Fund Managers and the New York City Pension Funds, have sought support from other investors on their proposal to split the CEO/chairman roles at the bank. An independent chair would eliminate a “structural conflict of interest” they said.

UK transport group National Express should strengthen its oversight and reporting of employment issues, according to the Local Authority Pension Fund Forum (LAPFF). The Forum, which represents pension funds with over £115bn (€134.2bn) in assets, will recommend that its members vote against the company’s report and accounts at the company’s annual meeting on May 9.

US SRI fund firm Zevin Asset Management has filed a shareholder resolution filed at US restaurant chain operator Darden on lobbying disclosure. Zevin is concerned over the firm’s lobbying on minimum wage and sick day policies.