RI ESG Briefing, April 9: San Francisco Employees’ Retirement System, AODP, RepRisk, News Corp., CalPERS

The round-up of the latest ESG news

Environmental

The San Francisco Employees’ Retirement System board has voted to invest $100m (€93m) in a fossil fuel free index. According to campaign group 350.org, it is the first time a US pension fund has made such a move. The vote comes as the board is also considering whether to divest $540m (€503m) it holds in fossil fuel companies, according to the San Francisco Chronicle. The board also is to decide whether to set up an ad hoc ESG committee.

The Asset Owners Disclosure Project (AODP), the not-for-profit organisation which aims to protect asset owners from climate change risk, has written an open letter to the Bill and Melinda Gates Foundation and Wellcome Trust, currently facing a fossil fuel divestment campaign by The Guardian. AODP CEO Julian Poulter, saying he has some sympathy for their predicament, recommends “climate risk management leadership” as their next steps – “as you are better placed than most to set a good example”. AODP Home Page.

The board of trustees at Wesleyan University, the private liberal arts college in Middletown, Connecticut, has reportedly accepted a recommendation made by its Committee for Investor Responsibility to officially divest from coal production companies. The recommendation was for Wesleyan to maintain investments in oil and natural gas in lieu of coal for the time being. Wesleyan President Michael Roth said in a blog that the school does not have any investments in coal, but he hopes to create an “explicit framework” for future investment decisions.

Social

A group of Dutch pension funds have reportedly raised €800m to lend to small and medium businesses. It will be via a new institution with government backing called the Nederlandse Investeringinstelling (NLII), according to European Pensions. NLII was set up in 2014 and includes leading funds such as ABP, PGGM and others, the report added. The fund, run by Robeco, will participate in bank loans to healthy companies; a separate subordinated loan fund will be run by Aegon Asset Management.

RepRisk, the Zurich-based ESG intelligence provider, has identified what it says were the eight most controversial projects in 2014. Topping its list is the Kunshan Zhongrong Metal Plating Factory. Last August, 70 workers were killed during a explosion at the plant, which supplies wheels to major auto manufacturers. According to RepRisk, an investigation revealed that the plant’s management had not done enough to ensure worker safety. Other projects on RepRisk’s list include the build-out of Moscow’s metro and the preparations for the 2022 World Cup in Qatar. Link. Governance

A Delaware judge has thrown out a lawsuit from a pension fund that sought to stop the board of News Corp., the company founded by Australian media mogul Rupert Murdoch, from resorting to a so-called “poison pill” defence if it feared a takeover bid. The poison pill defence (“shareholder rights plan”) is a measure triggered when any one stake in a listed US firm rises above a certain threshold. In News Corp.’s case, it is 15%. It was the subject of a lawsuit from the Miramar Police Officers’ Retirement Plan, a News Corp. shareholder based in Florida. Calling its lawsuit “absurd,” Delaware Chancellor Andre Bouchard has now ruled against the Florida scheme. Link

Engagement is the “first call of action” in the area of fossil fuel divestment, according to board documents at Californian pension giant CalPERS. “This is why, when it comes to climate change and its risks, CalPERS’ view is that the path to change lies in engaging energy companies, instead of divesting them. If we sell our shares then we lose our ability as shareowners to influence companies to act responsibly,” say Danny Brown, CalPERS Legislative Affairs chief and Chief Operating Investment Officer Wylie Tollette in a paper to be presented on April 13. CalPERS and fellow fund CalSTRS are facing pressure to divest coal from Senator Kevin de León. Rather, the fund says it is targeting 33 companies in the energy sector this proxy season calling for shareowners to have the right to nominate directors to corporate boards – arguing that changing directors is a way to change corporate practices. They add there is a risk of “a “slippery slope” of external parties directing portfolio 
activities.

The Nathan Cummings Foundation and Trillium Asset Management have written to fellow investors in US communications firm Verizon asking them to vote for their shareholder proposal on network neutrality – the principle that all Internet traffic should be treated equally. “Given the high stakes for our company and the economy at large, we believe that a careful re-examination of Verizon’s approach to net neutrality is warranted,” write Laura Campos and Jonas Kron, respectively Director of Shareholder Activities and Director of Shareholder Advocacy at Nathan Cummings and Trillium. “In our view, Verizon’s hostility to net neutrality creates market uncertainty, does not benefit investors and is not in the public interest.” Verizon holds its annual meeting in Minneapolis on May 7.

The strongest drivers for getting women on corporate boards and keeping them there are female economic power and the inclusion for a requirement for gender diversity in a corporate governance code, according to a new study from the Cambridge Judge Business School commissioned by BNY Mellon and its Newton arm. The study, which looked at the enablers and inhibitors to female inclusion on boards, reviewed 1002 companies from 41 countries. It found quotas were of limited value, while female economic power and corporate governance codes were strong drivers.

To contact the editorial team, please use this email