RI ESG Briefing, April 29: End of the road for pioneering UK social impact bond

The round-up of environmental, social and governance news

Environmental

Deutsche Bank Securities is providing C$115m (€75.9m) in construction financing to SunEdison for 33MW of utility solar projects in Ontario, Canada. New York-listed SunEdison will manage the construction of the two plants, which are both planned to be operational by the end of 2014. Announcement

New Forests, the Australian forestry fund manager, has agreed to buy some 100,000 hectares of Tasmanian land and other forestry assets from Gunns Ltd., which is in liquidation. The deal should be complete by the end of June and a new management company will be formed to manage the forestry portfolio and employ existing staff. New Forests said: “As an investor we want to be a positive force in the community [and] create an environment of stability.”

GE Energy Financial Services says it has exceeded $10bn in renewable energy investment commitments worldwide and is now “one of the industry’s leading investors”. The group said it expects it will continue to invest more than $1bn annually in wind, solar, and other renewable energy projects. For example, GE is backing the 550MW Desert Sunlight solar power project in Southern California. GE has also announced a $24m investment into the Neemuch 151MW solar project developed by India’s Welspun Renewables Energy in the Indian state of Madhya Pradesh. Link

Social

The third tranche of the pioneering Peterborough Prison social impact bond (SIB) pilot scheme is to be replaced by an alternative arrangement. The UK Ministry of Justice is to replace the scheme – which works with offenders leaving the prison and which has been held up as a social finance innovation – with a new funding scheme that would not be a SIB. Social Finance, the not-for-profit body which helped develop the SIB, said support to prisoners in the second cohort will continue to be funded by social investors as anticipated until June 2015. The investors would qualify for outcomes payments on the same basis as the first cohort.

Calvert Investments, the sustainable fund management specialist, is considering a recommendation to remove SPX Corporation, the New York-listed industrial group, from its Calvert Social Index. SPX has recently been reviewed and no longer meets the index’s standards for nuclear power. If approved, the deletion will take place in June. Calvert also said that changes to the index would only be made public on its website in future.h6. Governance

A group of UK-based institutional investors, including the Universities Superannuation Scheme (USS), are reported to be about to begin a legal challenge against bank group RBS relating to its £12bn (€14.6bn) issue of shares in 2008. The group also includes Legal & General Investment Management (LGIM), Standard Life, Prudential and Aviva Investors, the reports said. The investors are expected to file the case with the UK High Court on April 30, it is believed.

Brazilian exchange BM&FBOVESPA is backing Integrated Reporting (combining sustainability and financial reporting). Its ‘report or explain’ requirement for sustainability for listed firms will be re-named “Report or Explain for Sustainability or Integrated Reports”. It said: “In this way, BM&FBOVESPA expresses support for the International Integrated Reporting Council (IIRC), whose mission is to create a globally-accepted model for integrated reporting.”

Trade bodies for the asset management industry are reportedly concerned that the revised European Shareholders’ Rights Directive, a bid to improve investors’ rights in the companies they hold, will shed light on how institutional investors pay their asset managers. The Financial Times said the likes of the UK’s Investment Management Association and German fund association, the BVI, were “deeply unhappy”.

US pension funds the Carpenters Pension Trust Fund of St. Louis and the St. Clair Shores Police & Fire Retirement System have got the go-ahead to pursue a lawsuit accusing Barclays of causing them losses Libor manipulation. Reuters reported the Second US Circuit Court of Appeals in New York, reversing an earlier ruling, as saying shareholders presented a “plausible claim” that a massive fall in the price of their American depositary shares on June 28 2012 was the result of misrepresentations made by top Barclays executives.

The AFLCIO [American Federation of Labor and Congress of Industrial Organizations], the US labor union federation, has released its ‘key votes’ for the current company annual meeting season, according to industry site CorpGov.net. Link