RI ESG Briefing, August 22: Pensions think tank ICPM calls for climate research

The round-up of the latest market developments


The International Center for Pensions Management, the influential research network, has issued a call for research papers on climate change – saying it is one of the most significant societal risks facing humanity. “It does, and will, affect the decision making of pension funds and other asset owners.” Up to C$40,000 will be awarded to high-quality submissions meeting the criteria of ICPM and prize winners will be invited to present their research at an ICPM Discussion Forum. The deadline for submissions is September 30.

A Californian bill that would compel the State’s pension giants CalPERS and CalSTRS to report on their “climate-related financial risk” every three years has passed its latest legislative hurdle. Bill SB 964, which has already passed through the House of the Senate and is now making its way through California’s second legislative house, the Assembly, was approved by the Committee on Appropriations, which has primary jurisdiction over bills on fiscal matters, by 12-5 on 16 August.

The Australian Council of Superannuation Investors (ACSI) has slated the Australian government for shelving carbon emissions legislation, saying the “regrettable” move will delay “much-needed investment in energy generation”. The emissions targets, which proposed a reduction of 26% from 2005 levels by 2030, had been a central part of the National Energy Guarantee (NEG), the government’s new energy policy. Last week, however, Prime Minister Malcolm Turnbull announced he was scrapping the legislation. ACSI CEO Louise Davidson said: “Investors need regulatory certainty to deploy capital. A smooth transition to low-emissions energy presents a far lower risk to investments – the retirement savings of millions of Australians – than a disorderly one.”

Exxon is reportedly to face a climate lawsuit brought by investors who say they were misled about the impact of climate change on the firm’s business, after its bid to dismiss the suit was denied in a US federal court last week. The investors, which include the Greater Pennsylvania Carpenters Pension Fund, said that Exxon and top executives did not adequately account for climate impact, blaming a drop in the company’s share price on public statements and financial disclosures it made. Exxon had argued the plaintiffs failed to state a claim, but Texas federal judge Ed Kinkeade ruled the civil action could go ahead. The oil giant has since called the complaint “meritless”, saying it would defend itself “vigorously”. A court filing from the firm said that the Securities and Exchange Commission has concluded its investigation into the company and didn’t recommend any enforcement action. (RI will be looking in detail at the lawsuits facing Exxon in a forthcoming article.) Link


The Chicago Teachers’ Pension Fund (CTPF) Board of Trustees has voted to divest and to prohibit future investment in private prison companies and businesses that operate immigration detention centres. The Trustees directed staff to instruct investment managers to prudently liquidate public market holdings in private prison companies “as soon as reasonably practical and in accordance with the managers’ fiduciary duties”

The coalition that concluded the Dutch Banking Sector Agreement on International Responsible Business Conduct Regarding Human Rights has published its first annual report. The report includes two new analyses, one concerning the global cocoa value chain and the other describing how the Agreement parties can help prevent human rights violations. Read the full report here. Governance

The Council of Institutional Investors (CII) has hit back at a tweet by President Trump which said he had asked the Securities and Exchange Commission (SEC) to look into making financial reporting requirements for firms less frequent. Trump said he’d requested the SEC to study changing required financial reporting for public companies from a quarterly system to reporting every six months. CII deputy director Amy Borrus said: “Investors and other stakeholders benefit when regulations ensure that important information is promptly and transparently provided to the marketplace.” She added, “Investors need timely, accurate financial information to make informed investment decisions.” The SEC Investor Advisory Committee has previously said the current “degree, quality and frequency of disclosure is appropriate”.

The A$90bn (€57bn) Australian superannuation fund First State Super has appointed Hermes’ stewardship and engagement team to provide engagement and public policy services for developed markets, not including Australia. Hermes EOS will advise on behalf of £9bn of assets.

Denmark’s MP Pension is engaging with Vale as it believes the Brazilian extractives company has violated the United Nations declaration on human rights, according to reports citing a statement. According to the fund, Vale opened a coalmine in Mozambique seven years ago – leading to 900 families being re-located.

YES BANK has become the first Indian bank to release a TCFD-aligned sustainability performance review. The bank said it “believes that enhanced climate-related financial disclosures can positively contribute to businesses and markets, by sharing the right information in order to mitigate risks and seize the right opportunities”. Full the full report here.

Workers at US corporations would elect at least 40% of board members, as one of a string of proposed reforms aimed at upending the “harmful corporate obsession with maximizing shareholder returns at all costs”. The Accountable Capitalism Act, introduced by Senator Elizabeth Warren, would also prohibit directors and officers of corporations from selling shares within five years of receiving them or within three years of a company buyback. Warren said the legislation is intended to reverse the trend of soaring corporate profits and rising worker productivity being accompanied by stagnant wages, and bring back an era “when American corporations and workers did well together”.

Investors have got the go-ahead to bring a lawsuit against Goldman Sachs, alleging the bank made false statements about mortgage-backed securities transactions, including betting against the same securities it was selling to its clients. The securities class action relates to various transactions, including the infamous Abacus deal, which saw Goldman Sachs paying $550m (€477m) in fines to the SEC.

British renewables investor Quercus is to stall construction of a €500m solar plant in Iran because of recent US sanctions on the country, according to media reports. The plant would have been the sixth largest in the world, at 600MW capacity, as well as Quercus’ largest investment. Construction was projected to take three years, with each 100 MW standalone lot becoming operational every six months.

The University of Manchester has become the first Russell Group of British research universities to sign up to the PRI. Stephen Dauncey, Director of Finance, said: “We have made significant progress with our Investment Managers to allow us to pursue a sustainable approach to investment without compromising our investment returns.