RI ESG Briefing, April 30: US non-profit group introduces green bond evaluation tool

The round-up of the latest environmental, social and governance news

Environmental

A new metric for evaluating bond investments in US-based energy-efficiency and renewable-energy projects has been launched. CarbonCount was developed by the Alliance to Save Energy, a non-profit organization that which is led by a bipartisan board of directors comprised of members of Congress and corporate and nonprofit executives. CarbonCount recognizes that “investors will not – indeed, cannot – properly value carbon impacts until they are confident that those impacts have been estimated impartially and consistently”. CarbonCount combines forward-looking project data already used for credit ratings, emissions modeling software, and clearly documented assumptions to produce a quantitative score tailored for finance professionals. The Alliance says it “aims to increase financial flows toward, and justify favorable capital pricing for, projects that promise superior climate benefits”.

The G20 have reportedly launched an investigation into global financial risks posed by fossil fuel companies investing in costly ventures that clash with international climate goals and which may prove unviable. The Daily Telegraph said the G20 has asked the Switzerland-based Financial Stability Board to convene a public-private inquiry into the climate “fall-out” faced by the financial sector. The report, citing diplomatic sources, said the investigation is being championed by France and that it is modelled on a review that was launched by the Bank of England in 2014.

Japan’s ORIX Corporation, the parent firm of fund firm Robeco, has said it plans to build a 54.6 MW large-scale solar power plant (mega-solar) in Yotsugoya, Nishi-ku, Niigata City. This project will become the largest mega-solar power plant in Niigata Prefecture, ORIX said. Construction will start in June this year, with operations due to start in June 2018.

Social

Triodos Investment Management has teamed up with financial inclusion pioneer Accion and the Dutch development bank FMO to invest in and expand Dawn Microfinance, one of the earliest microfinance institutions (MFIs) established in the Republic of Myanmar (Burma). The $6.85m investment is intended to establish the newly incorporated MFI as a “premier institution that can serve as a model for the country’s nascent microfinance industry and influence the development of the sector”. Originally launched in 2002 as a program of Save the Children, Dawn is now a licensed microfinance institution, today serving approximately 30,000 clients with loans ranging from $50 to $250. Link

EIRIS, the UK-based ESG research house, has again been certified as compliant with ARISTA 3.0, an independent verification scheme designed to enhance the quality, accountability and transparency of responsible investment research. EIRIS was initially certified in 2009. The audit assessed EIRIS research methodologies, products and services, and quality management systems against the standard. ARISTA 3.0 requires research groups to establish and monitor quality improvements, as well as to publish an externally verified Transparency Matrix to provide confidence in a research group’s methodology. It is an initiative of ARISE (Association of Responsible Investment Services).h6. Governance

The Securities and Exchange Commission has voted to propose rules to require companies to disclose the relationship between executive compensation and the financial performance of a company. The proposed rules, which would implement a requirement mandated by the Dodd-Frank Act, would provide greater transparency and allow shareholders to be better informed when they vote to elect directors and in connection with advisory votes on executive compensation. The comment period for the proposed rules will be 60 days after publication in the Federal Register.

An activist investment exchange-traded fund (ETF) has been listed on Nasdaq. The new offering, the Global X Guru Activist Index ETF, began trading yesterday (April 29) under the ACTX symbol. Developed by ETF group Global X Funds, ACTX seeks to provide investors with access to 50 of the top equity holdings of major activist investors in the US. “With the launch of ACTX, investors can now participate in activist campaigns, but without a 2 and 20 fee structure and with the liquidity and transparency of an ETF,” said Jay Jacobs, Research Analyst at Global X Funds.

Ahead of the vote in European Parliament on 7 May 2015 on the Shareholder Rights Directive, the International Corporate Governance Network (ICGN) has issued a new report challenging the introduction of differential ownership rights as a tactic to encourage greater long-term thinking by institutional investors. The ICGN, whose members represent $26trn in assets under management, says it has “significant concerns” about a report by ‘rapporteur’ Sergio Cofferati, which proposed the introduction of differential ownership rights. The ICGN has also issued a new Viewpoint on ‘Human rights through a corporate governance lens’. Link

Sixty-four institutional investors, represented by Deminor Recovery Services, are seeking €174.2m in damages from Italian oil services company Saipem, according to media reports. They want to cover losses caused by the firm’s alleged failure to inform investors about revenues and costs on pending contracts, Reuters reported. Saipem, 43% owned by oil major Eni, said it would challenge the claim in court, the report added.

The Australian Council of Superannuation Investors (ACSI) reckons one in three companies in the country are “still not getting the message” about sustainability disclosure. It said that 33% of S&P/ASX200 companies still rate in the two lowest categories of its latest annual review of corporate sustainability disclosure. ACSI’s sustainability reporting research, now in its eighth year with this 2015 report, assesses the level of public reporting by Australia’s largest listed companies with the goal of promoting continuous improvement in reporting standards and practices across the market.

Law firm Davis Polk has analysed ‘proxy access’ proposals at US companies and found that at the 10 companies where shareholders have cast votes on such proposals this AGM season, four have received more votes in favor of the proposal than against it, while a majority of shareholders did not support the proposal at six companies. It said that, counting only “for” and “against” votes, Arch Coal’s proposal received the lowest support at 36%. Arch had previously adopted bylaws allowing shareholders with at least 5% of shares for three years to nominate director candidates.