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RI ESG Briefing, April 8: Climate Change Capital, NZ Super, MIT, CDP, Nordea, ACCR

The round-up of the latest ESG news

Environmental

Agricultural trading group Bunge reportedly plans to shut its asset management business – mostly comprising sustainable fund firm Climate Change Capital – in a bid to improve returns. The Financial Times quoted New York-listed Bunge as saying it had opted to “significantly scale down” its global asset management business. The firm, which acquired CCC in 2012, added it aimed to close all its regulated activities “when the right opportunity presents itself”. A spokesman told RI: “Bunge has decided to significantly scale down our global asset management business to focus more on partnerships with industrial and strategic financial investors tied to its existing industrial footprint. As a consequence, we will no longer require an arm’s length asset management platform.”

A residential solar firm backed by the New Zealand Superannuation Fund, solarcity, has launched
its solarZero service in Christchurch. It will let homeowners install solar panels on their homes for free, and pay for the power they generate, not for the panels. Solarcity is backed by NZ Super via its investment in a private equity fund from Pencarrow.

A debate on fossil fuel divestment is to take place at the Massachusetts Institute of Technology (MIT), the famed research university, on April 9. The event is titled “Should MIT Divest? A Debate on Fossil Fuel Investment” and will be webcast live. Among those debating against divestment will be Timothy Smith of investment management firm Walden Asset Management. The debate – designed to “educate, not to polarize” – will be moderated by Tony Cortese of the Intentional Endowments Network. Link

Campaign groups have welcomed Barclays’ decision to stop financing mountaintop removal (MTR) coal mining worldwide. The UK-based bank, which according to the BankTrack NGO was the “number one bankroller of MTR worldwide in 2013”, has ruled out future financing for the controversial technique in a policy statement. The Barclays announcement comes just weeks after US-based PNC Financial announced its own policy restricting financing for MTR coal producers. The move was a “very good step in the right direction” said Rainforest Action Network’s (RAN) Senior Climate and Energy Campaigner Ben Collins. RAN’s 2015 Coal Finance Report Card will be released later this month. Link

Social

RobecoSAM and S&P Dow Jones Indices have launched a new ESG sovereign bond index. The S&P ESG Pan-Europe Sovereign Bond Index is an ESG tilted version of the S&P Pan-Europe Developed Sovereign Bond Index. It measures the performance of European sovereign bonds based on the notion that ESG is an important element of a country’s long-term investment profile; the offering is the first of a series of ESG sovereign bond indices that will be launched by the pair this year.

The Global Impact Investing Network (GIIN), the not-for-profit group which promotes impact investment, has published a “state of the market” analysis of the industry in South Asia. The Landscape for Impact Investing in South Asia, published with Dalberg Global Development Advisors, claims to be the most comprehensive study of impact investment activity in the region to date.h6. Governance

Emerging market companies are working to protect themselves from current and future water-related risk, according to research by CDP, the environmental data body, for financial services group Nordea. The research aims to improve awareness and accelerate action to mitigate water risk in companies in Nordea’s Emerging Stars equity portfolio. Together Nordea and CDP entered into dialogue with the companies in the investment portfolio which were judged to be at high risk from worsening water security.

An event is being held to raise money for the Australian Centre for Corporate Responsibility (ACCR) and Environmental Justice Australia’s federal court case against the Commonwealth Bank. They are aiming to establish a precedent to allow shareholders to propose ordinary resolutions at Australian company AGMs. The event, on April 30 in Melbourne will feature shareholder advocate Stephen Mayne and is backed by ethical investment firms Tas Ethical and Ethical Investment Services. “If we win shareholders will more easily be able to move resolutions related to what their companies do about issues including climate change, human rights, diversity and corporate citizenship at companies’ AGMs,” ACCR said.

Petrobras has been hit by a wave of lawsuits from investors, including some big names from the responsible investment movement, following revelations of a multi-billion dollar bribery scandal at the Brazilian oil group. According to press reports, Petrobras faces three separate lawsuits, one of which is a class action led by the £40bn (€54.8bn) Universities Superannuation Scheme (USS). USS claims that it lost $84m (€77m) as a result of the scandal at Petrobras. Union Investment, as well as Dutch pension investors APG and PGGM, are also part of the class action, the reports say. Meanwhile, the Financial Times reported that Swedish buffer fund AP1 had left USS’ class action and filed its own suit against Petrobras. The firm also faces litigation from US asset manager Dimensional Fund Advisors.

The implications of shareholder votes for disclosure of political activity and lobbying at large public companies are to be discussed on a conference call next week organized by campaign group the Corporate Reform Coalition. Advocates and investors will brief the press on shareholder resolutions regarding corporate political activity at Bank of America, JP Morgan, Citi, Pfizer, Duke Energy, Chevron, Google, Verizon, AT&T and Comcast. Speakers will discuss the 2015 landscape and implications of these resolutions and the expected results of shareholder votes on them.

Sustainalytics, the ESG research house, has reported that its Jantzi Social Index (JSI) – its socially screened index of 60 Canadian companies – decreased in value by 2.75% during March. During the same period, the S&P/TSX Composite Index decreased by 1.88% and the S&P/TSX 60 Index fell by 2.08%. Since inception in 2000 through to the end of March this year, the JSI has achieved an annualized return of 6.53%. The firm has also published a new report on the utilities sector. “Utilities—The Great Transformation Begins” looks at the ESG investment risks and opportunities of 234 public and non-public utilities companies, including climate change, carbon regulation, water scarcity and community relations.