RI ESG Briefing, August 23: SEC adopts extractives transparency rules

The round-up of environmental, social and governance news

Environmental

Kristina Curtis, senior vice president of Green Century Capital Management and president of the Green Century Funds and Matt Patsky, CEO of Trillium Asset Management, have argued that the end to a tax credit scheme could almost bring the US wind power economy to a halt. They make the case in an article in the Houston Chronicle.

The first meeting of the UN’s Green Climate Fund kicks off today (August 23) in Geneva to start outlining the terms for the $100bn (£63bn) that developed countries have pledged should flow to poor nations each year by 2020, to help them cut greenhouse gas emissions and adapt to the effects of global warming. However, it is expected that key decisions on where the fund will be headquartered, who should run it, how it will operate and how it can raise funds will take months.

Danish wind turbine maker Vestas Wind Systems plans to cut another 1,400 jobs by the end of the year as it prepares for it what it says will be a tough 2013. The firm is already on track to make a previously announced 2,335 redundancies by September. Announcement

Social

The Securities and Exchange Commission, the US financial regulator, has voted to adopt rules mandated by the Dodd-Frank Act requiring extractives firms to disclose payments made to the US and foreign governments. “For the first time, investors will be able to evaluate these risks across industries and portfolios in ways that have not before been possible,” said sustainable funds firm Calvert. The SEC has estimated that some 6,000 public companies will be affected, at an initial compliance cost of up to $4bn and annual costs of up to $609m.

India’s Ministry of Corporate Affairs is set to publish a sustainability reporting framework for companies, according to an Economic Times report citing Corporate Affairs Minister Veerappa Moily. The framework is expected to be ready “within one month or two”. The Securities and Exchange Board of India (SEBI) has mandated all listed companies to submit an annual ‘business responsibility report’, the report added.

The International Development Committee of the UK Parliament has called on the government to introduce new accounting standards that would require corporations to report information on a country-by-country basis. The committee said it believes the UK should act unilaterally to help expose tax evasion in developing countries.h6. Governance

The UK Investment Management Association (IMA) says it will work with the Association of British Insurers and others to set up a system for consistent disclosure of fees by pension fund providers. It follows criticism of high fees charged to investors. The National Association of Pension Funds (NAPF) is already working on a fees code as part of a review into the issue by the Financial Services Authority and The Pensions Regulator. A code could be in place in late September.

The $237bn California Public Employees’ Retirement System (CalPERS) is drawing up new corporate governance criteria under which it would boycott any new listed company with multi-tier share structures. It would also campaign to remove dual class, classified or plurality voting structures and not invest in initial public offerings which use them.

Remuneration was the most controversial issue at UK annual general meetings (AGMs) in the first half of 2012, according to voting analysis by PIRC, the UK proxy voting service. From just over 300 AGM results for FTSE All- Share companies, PIRC found that the average vote against a remuneration report was 7.64% against 6.1% for the same period in 2011. PIRC said the average level of abstention on votes by investors on issues had gone down by 0.5%, which it said reflected anecdotal feedback that some investors, particularly non-UK shareholders, are choosing to oppose rather than abstain on pay votes more often.

Six pension funds have been named as lead plaintiffs in a shareholder lawsuit against investment bank JPMorgan Chase & Co over credit derivative trading losses. They are the Arkansas Teacher Retirement System, State Teachers Retirement System of Ohio, School Employees Retirement System of Ohio, Ohio Public Employees Retirement System, Oregon Public Employee Retirement Fund and Sweden’s Sjunde AP-Fonden (AP7).

New survey data from consulting firm Mercer shows that 14% of global banking organizations have ‘clawed back’ compensation payments made to employees. The information comes from Mercer’s Financial Services Executive Compensation Snapshot Survey which looks at compensation structures in 63 global financial services companies.

A group of institutional investors led by the $75.9bn North Carolina Retirement Systems is seeking to be named lead plaintiff in a lawsuit against Facebook and its initial public (IPO) offering underwriters, according to a Pensions & Investments report. The case relates to losses suffered when the shares dropped within days of the offering.