RI ESG Briefing, August 21: New Long-Term Infrastructure Investors Association to focus on ESG

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

Environmental

The Long-Term Infrastructure Investors Association (LTIIA) is a new group of infrastructure investors convened by Paris-based Meridiam that includes Allianz Global Investors, Skandia Mutual Life Insurance Company, and the Development Bank of Japan. Other founding members are among the world’s leading private investors in infrastructure, including major French and UK institutions as well as one of the largest US pension funds. They will be announced ahead of the association’s first meeting in October 2014. It says a key objective is to enable the integration of environmental, social and governance (ESG) aspects. “Led by investors, the LTIIA aims to facilitate discussions on the management of long-term infrastructure investments across a range of regions, states and territories, and will establish criteria for the conduct of business,” the group said.

The World Bank has priced a $12.057m (€9m) green bond sold to Merrill Lynch Wealth Management clients. Bank of America Merrill Lynch offered the step-up fixed rate bonds, which are callable after one year. The bonds will pay a 2.32% coupon (interest rate) per year for the first five years (stepping up to a maximum final coupon of 8.82% per year). They will mature on August 27 2024. “We are delighted with the strong demand for this product, demonstrating that individual investors also have a keen interest in the issue of climate-smart development,” said Doris Herrera-Pol, Director and Global Head of Capital Markets at the World Bank. The offering is consistent with the Sustainable Energy for All Initiative. Announcement

Harvard and other universities will eventually divest from fossil fuels, argues 350.org founder Bill McKibben in an opinion piece in The Progressive magazine. “Over time, Harvard and the rest will divest,” he writes, saying it will be quicker than the apartheid-linked divestment of South Africa. He says students are “doing their endowments a favor by warning them off fossil fuel stocks”. He continues: “If and when the world actually tackles climate change, their values will start to fall, as analysts at far left institutions like HSBC Bank have made clear.”

Social

The Wellcome Trust, the UK charity, has announced a “multi-million-pound” emergency funding package for research that could help to contain the Ebola epidemic in West Africa – alongside a £40m long-term investment in African science. The emergency Ebola initiative, which includes contributions from partner funders, will support research that can swiftly begin to investigate new approaches to treating, preventing and containing the disease. Link

Confessions of Ethical Inve$ting is a new book by Australia-based industry analyst and personal investor Kassia Klinger in which she explores how “the real power money has when it is employed for the benefit of all: society, the environment and investors wanting good financial return”. Klinger is a member of Australian Ethical Superannuation and a nominee in the Climate Advocacy Fund – both from Australia Ethical Investment Ltd. And she’s a member of the Responsible Investment Association of Australasia (RIAA). Link. Governance

In response to a shareholder proposal filed by Green Century Capital Management and the New York State Common Retirement Fund, packaged food giant ConAgra Foods has agreed to eliminate any palm oil supplier engaged in deforestation by December 2015. New York-listed, Omaha, Nebraska-based ConAgra is estimated to be the 115th largest palm oil consumer globally by MSCI. “With this commitment, ConAgra has sent a strong signal to its investors, suppliers and the market at large that destroying tropical forests for palm oil is unacceptable business practice,” said Lucia von Reusner, Shareholder Advocate at Green Century.

The Global Private Equity Initiative at INSEAD, the graduate business school, has documented the evolution of the industry’s approach to managing ESG investment considerations in a report called ESG in Private Equity: A Fast-Evolving Standard. “While the industry is still in search of definitive best practice, the experience of many General Partners [private equity firms], showcases how these factors are not just good for marketing or PR, but can contribute to building stronger businesses and create tangible, monetary value,” INSEAD said.

The Sustainability Accounting Standards Board (SASB), the US non-profit body, is the subject of a case study by the Harvard Business School that will be taught at HBS this winter. It was written by Julie Battilana, Associate Professor of Business Administration and Case Writer Michael Norris, who have tracked SASB’s development over the past three years. SASB itself was conceived at the Initiative for Responsible Investment (IRI) at the Kennedy School of Government at Harvard with a 2010 paper (‘From Transparency to Performance: Industry Based Sustainability Reporting on Key Issues’) by Steve Lydenberg, David Wood, and Jean Rogers, who is now Executive Director of SASB.

A New York Times article on shareholder activists in the US has been called a “shameful distortion” by corporate governance pioneer Nell Minow. The NY Times piece (Grappling with the cost of corporate gadflies) looked at the work of shareholder activists John Chevedden, William Steiner and James McRitchie in bringing shareholder resolutions before companies. “The question is whether these proposals are doing more harm than good for all the shareholders,” the article said. “How about asking a shareholder?” Minow tweeted.

The National Association of Insurance Commissioners (NAIC), the US standard-setting and regulatory support organization, has adopted a Corporate Governance Annual Disclosure Model Act and supporting Model Regulation. It provides a means for insurance regulators to receive additional information on the corporate governance practices of US insurers on an annual basis. Under the requirements of the Model Act, insurers will be required to provide a detailed narrative describing governance practices to their lead state or domestic regulator by June 1 each year. The new disclosure requirements are expected to commence in 2016.