RI ESG Briefing, April 3: New EU audit rules OK’d by European Parliament

The round-up of ESG news


The use of commercially feasible advanced biofuels, that’s to say derived from non-food crops, may help to reduce climate risks and avoid environmental and social conflicts associated with conventional food crop based biofuels, according to a new report. It has been compiled by ESG research firms EIRIS and its German partner imug. The EIRIS imug Biofuels Report is available here.

Hannon Armstrong, the New York-listed sustainable infrastructure investor, has agreed to provide $42m in debt to help finance Nasdaq-listed solar panel firm SunPower’s residential solar lease program. Late last year Hannon Armstrong issued a $100m asset-backed ‘Sustainable Yield Bond’, securitizing cash flows from over 100 individual wind, solar and energy efficiency installations.

The Principles for Responsible Investment (PRI) says it is in the early stages of an engagement focused on improving the management of water risks in company supply chains. “Global listed companies in the food, beverage and textile sector, who are significant users of water, are the target of this engagement,” the body says. Meanwhile, the PRI has released research findings that show global oil and gas production and servicing companies currently provide very limited disclosure of the risks and impacts associated with their hydraulic fracturing (fracking) activity.


Mark Campanale, founding and executive director of Carbon Tracker Initiative, the environmental data NGO, is in the running for the Guardian Sustainable Business leader of the year. He is up against round-the-world sailor Ellen MacArthur (founder of the foundation of the same name), Unilever CEO Paul Polman, and Ecotricity founder Dale Vince. The winner will be announced at a ceremony on May 14 and voting closes tomorrow (April 4).

CalPERS, the $287.7bn California Public Employees’ Retirement System, has released a study finding that it generates more than $30bn in economic activity. The CalPERS Economic Impacts in California report highlights the “vital role” CalPERS plays in the California economy. “This study clearly illustrates that public pensions are one of the most powerful engines that drive California’s economy,” said CEO Anne Stausboll.h6. Governance

The European Parliament today (April 3) backed proposals put forward by the executive Commission on new rules to improve the quality of statutory audit. It adopted the amended Directive on Statutory Audit and the Regulation on specific requirements regarding the statutory audit of public-interest entities. It’s hoped the new rules will considerably improve audit quality across the European Union and will ensure that auditors are key contributors to economic and financial stability.

US burger chain McDonald’s has been able to omit a shareholder proposal from Harrington Investments, a US socially responsible investor with $160m (€116m) in assets, that called on it to disclose more about its corporate social responsibility (CSR) activities. In a request to the Securities and Exchange Commission, McDonald’s claimed the proposal had already been implemented and that it only related to its “ordinary operations.” The SEC agreed. McDonald’s AGM is on May 22.

A call for more women in leadership roles in business has come from Ruth Porat, Chief Financial Officer at investment bank Morgan Stanley. She said the number of women in top positions at US firms was an “embarrassment” according to reports. She supports a law proposed by New York Senator Kirsten Gillibrand to set up national paid family leave, and help women to have children without leaving work, the reports added.

Board directors in the US are staying longer, according to a Wall Street Journal report citing governance research firm Institutional Shareholder Services. It said the average tenure of board members at companies in the S&P 1500 index rose to 10.8 years in 2013 – up from 10.3 years in 2012. Average tenure was just 8.7 years as recently as 2007.

Some 89% of global investors report non-financial performance information played a “pivotal role” at least once in decision-making in the last 12 months, according to a survey of 163 institutional investors conducted on behalf of consulting firm Ernst & Young. It also found that two-thirds of those investors are using “some kind of technique” to evaluate non-financial disclosure, though of this group just half have a structured evaluation or have a process in place.