RI ESG Briefing August 11: NZ Super, Danish pension funds, BMO, Kenyan Stewardship Code

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


Danish pension funds Industriens Pension and PKA say Butendiek, a 288MW German wind park of which they own 45%, has been completed on schedule and just under its budget of DKK10bn (€1.34bn). Butendiek is located in the North Sea, about 32 kilometres west of the German island of Sylt. Its construction began in March 2014. Beyond Industriens Pension and PKA, which committed DKK1.5bn to Butendiek, the park’s other owners are the EU’s Marguerite Fund, project developer WPD and German technology firm Siemens. “Butendiek is proof that the green transition is possible – both for the benefit of our members’ pensions and for society as a whole,” said PKA Chief Executive Peter Damgaard Jensen. Announcement (Danish)

Climate change is “no longer a risk to investments that can be considered purely long-term and arising far away in the future”. That’s the conclusion of an overview and analysis of fund manager BMO Global Asset Management’s engagement on the “stranded assets” theme. Canada’s BMO said its Governance and Sustainable Investment (GSI) team has engaged almost 100 companies in 24 countries, across the oil and gas, mining and utility sectors. “As momentum builds towards a global deal in Paris later this year, we will continue to press management and board directors to closely examine the economic impact of climate change on their business.”

Banking group Standard Chartered has reportedly said it will now not advise or help finance the huge Carmichael coal mine in Queensland, Australia that is being developed by India’s Adani Mining. It follows Commonwealth Bank of Australia saying it had ended its advisory role on the project and a court decision revoking the Australian government’s environmental approval for the mine. “This is a victory for anyone who cares about the future of both the Great Barrier Reef and the world’s efforts to tackle climate change,” said Greenpeace campaigner Sebastian Bock, adding the project had become a “massive reputational risk” for banks.

The Ontario Teachers’ Pension Plan Board (OTPP) and an unnamed US-based investor have reportedly acquired almond farms owned by the Macquarie Group in Australia for more than A$115m (€76m). According to the Australian Financial Review, the deal involves a Macquarie fund called MacFarm transferring about 940 hectares of almond orchards to the two North American investors as well as $25m worth of water rights. Macquarie declined to comment. The Financial Review also said the deal followed a major investment by another big Canadian pension scheme – the Public Sector Pension Investment Board – into cattle stations in Queensland.


Washington-based think tank the Brookings Institution has released a report on the potential and limitations of social impact bonds analyzing its five-year history worldwide. The 140-page report covers the 38 SIBs globally (contracted at the time of writing) and tallies SIBs by geography.

Seventy-three per cent of institutional investors predict that there will be a growing institutional appetite for investing in the alternative finance market over the next two years as the sector will continue to offer attractive risk-adjusted returns, according to new research from Amicus Finance. The research among 111 European institutional investors reveals that they expect the alternative lending sector to grow by a quarter (23%) over the next 24 months, driven by the demand for expansion finance by SMEs.h6. Governance

The New Zealand Superannuation Fund (NZ Super) has scored a legal victory in its effort to recoup an indirect $150m investment in Portuguese bank BES, which collapsed shortly after the investment was made. In July 2014, NZ Super and other investors provided a total of $835m to a special purpose vehicle (SPV) set up in July 2014 by Goldman Sachs for the sake of funding BES. BES collapsed a month later and the $835m looked to be lost after the Bank of Portugal, BES’s regulator, ruled that the SPV’s investors would not be indemnified as part of a bailout of BES. NZ Super and the other investors countered by filing an English debt recovery action, which the UK Commercial Court has now confirmed may proceed. A date for a court hearing has not yet been set. Link

Kenya’s Capital Markets Authority regulator has launched a 30-day comment period on a draft Stewardship Code for Institutional Investors. The Stewardship Code’s primary intent is to encourage deliberate and responsible management and oversight of assets by institutional investors through engagement with listed companies. The development of the code is part of the Authority’s ongoing reforms in corporate governance. The Stewardship Code has been developed by a special committee appointed by the CMA Board known as the Capital Markets Stewardship Code Committee. The Committee’s eight members represent various institutional and capital markets players.

ShareAction, the UK-based advocacy group, has given a cautious welcome to reports that Royal Dutch Shell has responded to pressure from investors and will not renew its membership of the American Legislative Exchange Council (ALEC). ALEC is a US-based lobbying group that has promoted sceptical positions on the links between human activity and climate change, and ShareAction is now asking whether Shell will withdraw from other trade groups that lobby against effective climate legislation. ShareAction earlier this year coordinated an investor letter asking the company to end its affiliation with ALEC and other trade associations. ShareAction has also released an investor briefing looking at FTSE 100 companies’ membership of trade associations that have lobbied against progressive climate policies.

Microsoft, the US software giant, has changed its governance rules to permit ‘proxy access,’ or the right of shareholders to nominate directors to its board. According to John Seethoff, Deputy General Counsel at Microsoft, a group of shareholders (up to 20) which own 3% of the firm’s stock for three years may now nominate up to two candidates to its board during annual general meetings (AGMs). Seethoff said the change followed a number of shareholder proposals on proxy access that Microsoft faced during AGMs this year and last. “We believe the policy announced today establishes an additional mechanism for Board accountability, without imposing undue burdens or distractions,” he said in a blog post.

The Nigerian Stock Exchange has received the 2015 Award for Promoting Best Practice Reporting and Corporate Disclosure from the Lagos Chamber of Commerce & Industry. The award was presented by the President of the Lagos Chamber of Commerce & Industry Alhaji Remi Belo at a ceremony on August 8.