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RI ESG Briefing, April 21: VicSuper, We Mean Business, Rhode Island, Theranos, Hermes EOS

The round-up of the latest ESG developments

Environmental

VicSuper, the Australian superannuation fund with A$15bn (€10.3bn), in assets, has set up a ‘Climate Change and Investments Steering Committee’ to be headed by Michael Dundon, the scheme’s Chief Executive. In a statement to VicSuper members, Dundon said the purpose of the committee was to “establish our approach to the management of climate change risk across the investment portfolio.” The committee would also devise a “clear public position on climate change that is consistent with our investment objectives and activities, supplemented with transparent progress reporting,” Dundon said. Beyond Dundon, the body will consist of officials from VicSuper’s investment, risk management and marketing teams.

A new analysis, ‘What Paris means for business’ has been published today just ahead of world leaders convening at the United Nations to sign the Paris Climate Agreement. The report from the We Mean Business grouping highlights market opportunities worth trillions of dollars arising from the agreement and urges the private sector to take action now and bring clean energy and prosperity to all. Fifty one new leading global companies, making sixty two separate commitments, including Aveda, Peugeot Citroen, Bloomberg, Tiffany & Co, Ferrovial, Sky, HP, Toyota and many more, have joined the We Mean Business coalition in the immediate aftermath of the agreement.

Six heads of state and government, two city and state leaders, and the heads of the World Bank Group, the International Monetary Fund and the OECD have agreed on an ambitious global target for putting a price on carbon pollution. The leaders, who are all members of the Carbon Pricing Panel, were convened by World Bank Group President Jim Yong Kim and IMF Managing Director Christine Lagarde. They challenged the world to expand carbon pricing to cover 25% of global emissions by 2020 – double the current level – and to achieve 50% coverage within the next decade. Announcement

Social

NN Investment Partners (NN IP) has published a new study showing the links between various ESG factors and investment performance. The research, in partnership with the European Centre for Corporate Engagement (ECCE) at Maastricht University, evaluated data from more than 3,000 listed companies worldwide. The study challenges the idea that absolute ESG scores are a good indication of what to expect from a company in terms of investment performance. Rather, the shares of those companies with the highest ESG scores tended to underperform lower-scoring counterparts. It demonstrated “a clear positive relationship” between incremental changes (‘momentum’) in a company’s ESG scores and investment performance.

North American impact investment advisory firm Purpose Capital has acquired consulting business Finance for Good, a Canadian-based social finance intermediary. Purpose Capital says the new partnership will allow it to serve growing demand for pay-for-performance models of financing, such as social impact bonds. Purpose Capital is currently hiring for a Director of Impact Advisory.h6. Governance

Rhode Island’s $7.5bn pension fund will reportedly vote “no” any time an investee company nominates a slate of board nominees that would cause fewer than 30% of directors to be women or racial minorities. ABC News cited State Treasurer Seth Magaziner as saying it would be just the second state pension fund using its power to press for greater gender and racial diversity on boards. “Even if little Rhode Island isn’t necessarily going to tip the scales in a lot of these votes, I think by being a thought leader and by being a vocal advocate, we can make a difference,” he was quoted saying at a news conference.

Dr Hans-Christoph Hirt, Co-Head of Hermes Equity Ownership Services, has discussed how this voting season is likely to highlight that boards and remuneration committees need to raise their game. It comes after the majority vote of shareholders against BP’s remuneration report at the company’s AGM last week. “We at Hermes EOS believe this voting season is a crucial test of how the UK remuneration law works in practice and, importantly, is likely to highlight that boards and remuneration committees in particular need to raise their game,” he says.

US law firm Kessler Topaz Meltzer & Check says that on behalf of the firm’s investors, it has launched an investigation of Theranos Inc., a California-based firm that has marketed a blood-testing device. The investigation follows a separate criminal probe of Theranos by US authorities, including the Securities and Exchange Commission. The SEC is trying to determine whether Theranos misled investors about the quality of its blood-testing device. That device has been found to have 43 deficiencies, leading “federal health regulators to propose banning Theranos founder Elizabeth Holmes from the blood-testing business for at least two years,” the law firm said.

The Global Reporting Initiative (GRI) is seeking comment from the public on its ‘Sustainability Reporting Standards’ (GRI Standards) for the next 90 days. According to the GRI, the new standards include the same concepts and relevant disclosures from its last set of standards (G4), but with an “improved structure, format, and presentation.” The three standards applicable to all organizations are the Foundation Standard, which includes the reporting principles; the General Disclosures Standard, which covers organizational profile, governance, stakeholder engagement, reporting practice, strategy and analysis; and the Management Approach Standard from G4.

Canadian oil firm Suncor Energy has promised to provide more information on its plans for investing in a low-carbon economy in response to a shareholder proposal from NEI Investments, the Globe and Mail reports. Suncor said the information would be included in its sustainability report due in July. The Globe and Mail also reported that Suncor is urging its shareholders to reject a separate shareholder proposal from a watchdog organization asking it for detail on its lobbying expenditures. The newspaper said Suncor would only name trade associations to which it pays membership dues greater than C$50,000 (€34,800) a year.