RI ESG Briefing, August 13: US SIF looks at developing certification programme

The round-up of environmental, social and governance news

Environmental

An arm of US retirement fund manager TIAACREF has reportedly agreed to buy 30,959 acres of farmland in Florida from agribusiness group Alico for $91.4m (€68.3m). The Farmland Investor Letter said TIAACREF is making the acquisition through Terra Land Co., an affiliate of its majority owned Westchester Agriculture Asset Management arm. Alico will lease the land, used for sugarcane, back from TIAACREF for 10 years.

The UK Green Investment Bank and Japan’s Marubeni Corporation have refinanced part of their 50% shareholding in the 210MW Westermost Rough offshore wind project. The project is being developed by DONG Energy, which holds the remaining 50% equity in the project. GIB and Marubeni have signed an agreement with a consortium of lenders including the Japan Bank for International Cooperation, the Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank, Siemens Financial Services and Societe Generale Corporate & Investment Banking. They will provide c. £370m (€462m) of limited recourse senior debt.

The European Bank for Reconstruction and Development (EBRD) is considering a $30m loan to the National Bank of Egypt for on-lending to private sub-borrowers for energy efficiency and renewable energy projects. The EBRD is looking to engage a consultant to support the design and implementation of the credit line. Link

A new SEK11bn (€1.2bn) offshore wind farm is being planned off the German North Sea coast by Sweden’s Vattenfall and Munich utility Stadtwerke München. The 288MW Sandbank project will annually generate 1.4 TWh of renewable electricity, equivalent to the consumption of about 400,000 households. It’s the pair’s second joint venture wind farm and Vattenfall said: “We know how to work offshore and we see it as a significant building block in the success of the energy transition (Energiewende) in Germany.”

Social

China-based consultancy SynTao has released what is claimed to be the first guidelines in China that aim to promote disclosure of key quantitative information in corporate social responsibility (CSR) reports. The Material and Quantitative Indicators Guideline for CSR Report (MQI) was released at the 6th Annual CSR Conference of China.

A new working paper published by the International Monetary Fund (IMF) has found that investors treat a company’s shares differently depending on the type of Islamic bond (sukuk) that it issues as well as the reputation of the Islamic scholars who oversee them. “Overall our results support the hypotheses that the type of sukuk and the choice of scholars hired to certify these securities matter for the market valuation of the issuing company,” say authors Christophe Godlewski, Rima Turk Ariss and Laurent Weill. The 25-page study is available here.

The UK government has signalled that it will increase its investment into a £11.75m social enterprise fund managed by Bridges Ventures. In 2009/10 the Cabinet Office – the government department which supports the Prime Minister – agreed to invest up to £5m into the Bridges Social Entrepreneurs Fund by match funding the investment it secured from private investors. To date the Cabinet Office has committed £3.9m to the fund, constituting a 33.27% share of the fund. It has said in its new annual accounts to the end of March 2014 that it expects to make “additional loans” to the fund.h6. Governance

The US SIF Foundation, the supporting organization of US SIF: the Forum for Sustainable and Responsible Investment, is recruiting a consultant with a background in certification and/or credentialing programs to assess and evaluate whether it should develop a credentialing program. The task will be to: 1) conduct research and a comprehensive evaluation of the demand for a sustainable investment credential; 2) make recommendations on how US SIF could construct a credentialing program; and 3) assess whether US SIF currently has the organizational resources and capabilities to develop such a program, and if not, make recommendations on necessary additions. The deadline for applications is August 20; the consultant will produce a comprehensive final report by January 15 2015.

Corporate tax issues are high priority for many Principles for Responsible Investment (PRI) signatories, according to PRI Managing Director Fiona Reynolds. In an article in Pensions & Investments, she says that “no fewer than 100 of them” have included a reference to taxation in their responses to its new reporting exercise. “With 814 investor signatories reporting in 2014, these results are a global barometer for what investors are doing to create sustainable capital markets,” Reynolds writes.

Insurance and pensions giant Legal & General Group has said it will leave trade body the Association of British Insurers (ABI) by the end of the year – saying a lot of its business is now outside the ABI’s remit, given that “our business is now as much investment management as insurance”. It follows the merger of the ABI’s investment affairs division with the Investment Management Association earlier this year. It also comes ahead of the formation of the Investor Forum, in which L&G Investment Management’s Director of Corporate Governance Sacha Sadan has had a lead role. ABI Director General Otto Thoresen said the ABI was “disappointed” by the move.

Meanwhile, it has been reported that the UK’s Institutional Investor Committee – a forerunner to the Investor Forum – is to be disbanded. Professional Pensions said the move follows the merger between the Investment Management Association and the Association of British Insurers’ investment arm earlier this year.

Gender diversity on the boards of Australian firms is an issue for corporate governance advisory firms, according to new research by asset manager BlackRock cited by Money Management. The concerns at proxy firms including CGI Glass Lewis, ISS Governance and Ownership Matters could lead to ASX 200 directors failing to get re-electioned, the report added. BlackRock’s Asia-Pacific Corporate Governance and Responsible Investment Director Pru Bennett was quoted saying its research had found that 18% of ASX200 companies had no gender diversity on their boards; 38% were in the resources sector.

UK Business Secretary Vince Cable has reiterated that the UK will implement quotas as a “last resort” if listed companies do not improve the gender balance on their boards. Speaking to a UK parliamentary select committee about women on boards, Cable said the UK preferred a voluntary system to increase the number of women on boards of FTSE companies. The UK has set a target of 25% female board representation by 2015. The number currently stands at 22%.