RI ESG Briefing, April 5: Swiss responsible investment body appoints GES as engagement provider

Environmental

Campaign group Follow This says €20bn Dutch asset manager Blue Sky Group, the independent pension administrator that had its origins in the KLM pension fund, is now supporting its sustainability resolution at Royal Dutch Shell. The proposal calls for Shell to set and publish targets for reducing greenhouse gas emissions that are aligned with the goal of the Paris Climate Agreement to limit global warming to well below 2°C. Other investors that have already expressed support include ACTIAM, MN, and Ecofi Investissements.

€14bn of the earnings of European utilities are at risk if the industry does not implement more forward-looking climate strategies, according to a new report from CDP. The think-tank, formerly known as the Carbon Disclosure Project, assessed 14 major utilities in Europe, based on a carbon price of €30. It found that Austria’s Verbund, Spain’s Iberdrola, Finland’s Fortum and Italy’s Enel were the best-performing of the bunch in relation to carbon, while Germany’s RWE, the Czech Republic’s CEZ and Spain’s Endesa were the worst.

Canadian pension fund Borealis Infrastructure and Kuwait’s Investment Authority (KIA) have reportedly bought a 26% stake in UK Thames Water’s holding company Kemble Water from Australian infrastructure giant Macquarie.

Dallas-based financial services group ORIX USA, part of the Japan-based group that owns Robeco, has announced a partnership with IGS Solar, a US commercial and residential solar provider to jointly expand solar investment and operations across the US.

Social

The United States District Court for the Southern District of California has granted final approval of a $25m settlement in the Trump University Case. The settlement reached by Robbins Geller Rudman & Dowd LLP attorneys after seven years will see eligible former students of the now defunct Trump University receive a recovery of “90% or greater”.

The UK’s House of Lords select committee on charities has said the government’s focus on social impact bonds is disproportionate to their potential impact. The comments come following months of inquiry into the UK charity sector, including the social investment sector. In a newly-released report Stronger Charities for a Stronger Society, the committee says while social impact bonds can be a useful tool for charities and the public sector, the expectations placed upon them have yet to materialise and that the government’s focus on them has been disproportionate. The report also calls for action on high transaction costs and for more realistic expectations of the potential for returns.

The inaugural Corporate Human Rights Benchmark (CHRB) results were unveiled in London last month; 98 of the world’s largest publicly traded companies from the agricultural products, apparel and extractives industries were ranked on 100 human rights indicators, in the first public wide-scale ranking of corporate human rights performance.

McDonald’s Corp’s shareholders are reportedly set to vote on an ambitious proposal – thought to be the first of its kind – to allow franchisees to elect a member of the board at the US fast-food chain.h6. Governance

The Swiss Association for Responsible Investments (SVVK– ASIR) has appointed GES as its engagement provider to conduct dialogue with companies from its members’ investment portfolios. The engagement will cover a selection of companies in breach of sustainability norms as determined by the Federal Constitution and/or international norms and conventions such as the UN Global Compact. SVVK–ASIR was founded in 2015 by a group of major institutional investors – BVK (canton of Zurich), compenswiss (the umbrella organisation for the Swiss first pillar scheme AHV/AVS), comPlan (Swisscom), Pensionskasse Post (postal service), Pensionskasse SBB (Swiss Federal Railways), PUBLICA (Swiss Federal Pension Fund) and Suva (accident insurance fund).

The California State Teachers’ Retirement System (CalSTRS) has worked with a California bank on board diversity. Banc of California has added Mary Allis Curran and Dr. Bonnie Guiton Hill to its board, with CalSTRS working with investment partners Legion Partners Asset Management and the bank to identify the best board candidates. Curran is a retired executive vice president at Union Bank and Hill is president of B. Hill Enterprises. “The addition of Ms. Curran and Dr. Hill to Banc of California’s board showcases the progress that shareholders can make on governance issues — like board diversity — through collaborative, strategic engagement with company management,” said CalSTRS Director of Corporate Governance Anne Sheehan.

The International Corporate Governance Network (ICGN), the group representing over $26trn is cautious about the long-term effects of Brexit on corporate governance in the European Union. The ICGN Viewpoint: “Brexit: what are the governance implications for the EU and the UK?” was published shortly after UK Prime Minister Theresa May presented EC Council President Donald Tusk with a letter triggering Article 50 of the Lisbon Treaty to set in motion the UK’s exit from the European Union.

The Investment Association, a UK fund management trade body representing over 200 UK investment managers with £5.7tn under management, has written to FTSE Russell, MSCI Global, and S&P Dow Jones Indices highlighting that its members do not want them to include companies that do not have any listed voting shares.

Shareholders at US food chain Chipotle Mexican Grill have reportedly withdrawn a proposal, filed by Amalgamated Bank and CtW Investment Group, to split the Co-Chief Executive and Chairman roles currently held by Steve Ells and institute an independent Chair.

Reuters has reported that US proxy advisory firm Institutional Shareholder Services’ (ISS) support for activists in proxy fights has fallen by 10% since Cristiano Guerra formally took over in January as Head of ISS’ Special Situations Research – falling from 60% to 50% since last year. Link

US law firms Grant & Eisenhofer and Bernstein Litowitz Berger & Grossmann have filed a motion for re-argument at the Delaware Supreme Court in response to a ruling on the materiality standard in case brought by a Miami pension fund against oilfield services company C&J Energy. The law firms reportedly argue that the ruling sets the criteria for the materiality standard so stringently high that the Court has effectively abandoned it. The materiality standard is the established precedent that boards must tell investors about credible bids received after a company announces a merger and acquisition deal.