RI ESG Briefing, August 15: Australian investors confident in company boards – ACSI

Environmental

US President Barack Obama on August 9 signed into law two bills aimed at boosting development of small US hydropower projects. They are expected to help unlock some of the estimated 60,000MW of untapped hydropower capacity, according to the National Hydropower Association. It added that in 2012, hydropower provided the majority of the nation’s renewable electricity, with 100,000 MW of installed capacity from coast to coast.

Consulting firm Accenture says it will again team up with the UN Global Compact and the Principles for Responsible Investment to conduct a survey of investors on sustainability, in parallel with a similar survey of company CEOs. Its latest CEO survey features in-depth interviews with 76 CEOs and a survey over of 1000 CEOs and will be presented this September at the UNGC Leaders’ Summit in New York. But early findings indicate, Accenture says, that the investment community may be beginning to pay greater heed to sustainability. It quotes one senior business figure as saying: “We still find it challenging to convey to mainstream investors why and how sustainability can drive value creation, but they’re starting to appreciate the risks of working in an unsustainable system.” Link

Social

Extractives industry group the International Council on Mining and Metals (ICMM) has released a report illustrating the methods available to measure human and social development contributions in the industry. Approaches to understanding development outcomes from mining is the first of two reports to be launched around the topic of social development in the industry. The second report will focus on community health partnerships. “We look forward to this report contributing to advancing the effective measurement of social investment outcomes in the mining and metals industries,” said ICMM President Anthony Hodge.

Oekom Research, the Germany-based ESG house, has evaluated the sustainability of development banks. It has analysed 23 development banks against a range of social and environmental criteria. The top overall rating on a scale from A+ (highest score) to D- was achieved by the International Bank for Reconstruction and Development, with a score of B, followed by the Netherlands Development Finance Company and KfW Bankengruppe, both of which scored B-.h6. Governance

An inaugural survey of 41 institutional investors in Australia conducted by the Australian Council of Superannuation Investors (ACSI) has found that they are broadly confident about the performance of the boards of directors of companies listed on the S&P/ASX 100. “This is positive for Australian companies and consistent with the view that Australia’s governance infrastructure compares well with that of other advanced countries,” said ACSI Chief Executive Ann Byrne. ACSI, which represents 34 Australian superannuation funds as well as five international pension funds, hopes the Board Confidence Survey will provide a platform for a systematic discussion between investors and boards.

A survey of board directors by consultants McKinsey has found that boards and companies are “increasingly complacent” about the risks they face as the 2008 financial crisis fades from memory. It said: “This is the one issue where the share of directors reporting sufficient knowledge has not increased: 29% now say their boards have limited or no understanding of the risks their companies face.” Boards spend just 12% of their time on risk management – less than two years ago. The online survey conducted in April this year garnered responses from 772 corporate directors, 34% of them chairs. Overall, 166 respondents represent publicly owned businesses, and 606 represent privately owned firms.

There was a 22.5% vote against the remuneration report at mining company Vedanta at its annual meeting earlier this month, according to governance firm PIRC, which had recommended opposition. It said the protest vote was “pretty big in its own right” but added that the scale of the revolt by minority shareholders was even more significant given that Volcan Investments, a trust controlled by the executive chair and his family, holds just under two thirds of the outstanding shares.

New research has found that top female executives in the US don’t have pay parity with their male peers. According to findings by Bloomberg editors Carol Hymowitz and Cecile Daurat, cited by Forbes, the best-paid female executives earn an average salary of $5.3m – around 18% less than their male peers. One example is Campbells Soup CEO Denise Morrison, whose $8.76m compensation was nearly 25% less her sector peers.