RI ESG Briefing, August 27: APG, TIAA-CREF, Hermes, OTPP write to SEC on ‘universal proxy’

Environmental

The Investor Group on Climate Change (IIGC), which represents Australian and New Zealand investors with around A$1trn (€708bn) in assets under management, has warned that any change to the renewable energy target (RET) would put billions of dollars of renewable energy investment at risk and reduce superannuation returns. “The prospect of the government weakening the RET continues to stun investors because investments were made with the expectation of continued bi-partisan support for the policy,” said Nathan Fabian, IGCC Chief Executive. “Renewable energy investments with long-term horizons of over twenty years were undertaken on the basis that the RET was here to stay.” Link

Bloomberg New Energy Finance (BNEF) has released a report warning that while it forecasts $5.5trn in clean energy investment from now to 2030, pension funds and institutional asset managers will find it hard to integrate these into their portfolios based on the risk-return and liquidity characteristics of projects. Noting that pressure is building for institutional investors to cut their exposure to fossil fuel stocks, with some deciding to divest, it says a large-scale divestment would be far from easy and require a massive scale-up of new investment vehicles.

Environmental campaign group 350.org is petitioning Pope Francis to divest the Vatican Bank from all investments in the fossil fuel industry and to publicly support the growing movement to divest from fossil fuels. In a letter penned to the Pope it lists religious institutions which have recently committed to fossil fuel divestment, including the World Council of Churches and the University of Dayton, the first Catholic University to divest. Link

German energy utility E.ON says it needs help from investors to help its renewable energy efforts, according to a Reuters report citing board member Mike Winkel. Winkel was quoted as saying in an interview that despite a big pipeline of onshore wind projects, E.ON could no longer meet the capital needs for the projects on its own. “Therefore, financial investors are very welcome to join and it turns out they see this market as being quite attractive,” he added.

Social

The UK government has announced the Social Investment Awards to recognise the best of social investment. Nominations have opened for the ceremony on October 27 to be hosted by RBS, which includes five categories – the Investor Access Award, the Global Impact Award, the Community Impact Award, the Investment Readiness Award and the New Markets Award. The UK government estimates its social investment market is worth over £200m (€251.8m) and anticipates it will increase to £1bn (€1.3bn) by 2016. Link

Social Ventures Australia (SVA), on behalf of the chairman of UniSuper, the A$28bn superannuation scheme, has recommended that the country set up a Big Society Capital-style bank with dormant accounts and allow institutional trustees to take into account ESG considerations when making an investment, in a submission to a government-sponsored inquiry into Australia’s financial system chaired by former Commonwealth Bank head David Murray. A similar inquiry was held was 16 years ago and led to major reforms.h6. Governance

A group of investors that are members of the Council of Institutional Investors’ Advisory Council have written to the SEC. They are urging the US financial regulator to act on the CII’s request of January this year for it to facilitate the use of universal proxy cards listing all board candidates when there is a contested election of directors. Signatories to the letter include executives from Hermes Equity Ownership Services, TIAACREF, Marco Consulting, Ontario Teachers’ Pension Plan, APG Asset Management and Amalgamated Bank LongView Funds.

Walden Asset Management, the US SRI investment specialist, has written to 36 companies urging their boards to conduct a cost-benefit analysis of their ongoing support of lobby group the American Legislative Exchange Council (ALEC). “We ask them to carefully assess their involvement in trade associations and organizations such as ALEC to determine if the organizational missions are compatible with their own corporate philosophy, policies, and programs,” Walden said. It reckons ALEC influences public policy and legislation that is “not in the long-term best interests of the economy, companies, or shareholders”. Some 85 major companies, most recently Microsoft, have cut their ties to ALEC, Walden added.

The Mexican Stock Exchange group BMV has become a partner to the Sustainable Stock Exchanges (SSE) Initiative, which looks at how exchanges can work with investors, regulators and companies to improve corporate transparency and performance in Environmental, Social and Governance (ESG) issues. “We welcome the Mexican Stock Exchange as an SSE Partner Stock Exchange, representing an important market in Latin America”, said Georg Kell, Executive Director of the UN Global Compact, and a co-organizing partner of the SSE, which was created by the United Nations in 2009. The exchange joins NYSE Euronext, Nasdaq OMX, BM&FBovespa, and the Johannesburg Stock Exchange in the SSE Initiative, which holds its Global Dialogue in Geneva on 14 October. Link

The Canadian Society of Corporate Secretaries has announced the winners of its second annual Excellence in Governance Awards at its 16th Annual Corporate Governance Conference held in Banff, Alberta, on August 24. Stephen Jarislowsky and Claude Lamoureux (Co-Founders of the Canadian Coalition for Good Governance) won the Peter Dey governance achievement award while the award for best sustainability, ethics and environmental governance program went to ATB Financial, the Edmonton-based crown corporation owned by the Province of Alberta.

A proposed fine for Priya Sara Mathur, the senior CalPERS official who sits on the Advisory Council and board of the Principles for Responsible Investment, has reportedly been rejected as too low by California’s political ethics panel. The LA Times said the Fair Political Practices Commission has declined to levy the negotiated $1,000 fine, with chairwoman Jodi Remke saying it is too low. The paper said Remke is suggesting a $4,000 penalty for Mathur, who has faced thousands of dollars of fines for repeated failures to file required disclosures.