RI ESG Briefing, August 28: South Africa’s Tutu presses ABP over Israel banks divestment

Environmental

Investors are convinced about the need for a carbon price, according to former Principles for Responsible Investment Executive (PRI) Director James Gifford. Speaking to the Courier Mail in Brisbane, he was quoted saying: “The investors I’ve worked with over the years – and these are very mainstream Wall Street and City of London investors – are absolutely convinced that a price on carbon is the best strategy for the economy.” Gifford, who is now senior strategic adviser for Tau Investment Management, added he has met “virtually no large investors” who didn’t believe that a price on carbon – whether via a tax or a trading scheme – was necessary.

Campaign group WWF has released a new guide for banks on environmental, social and governance (ESG) integration which will be presented at a series of workshops – the first being held at the Singapore Exchange on 9 September. The workshops will discuss key ESG issues facing the banking sector and how ESG risk management can be integrated using the guide as a roadmap. “Well managed banks should focus on both the risks and opportunities, and in so doing they can become key leverage points to move from business-as-usual to a sustainable future,” states the WWF in the foreword to the 96-page guide. This can be done by engaging with clients on ESG, shifting capital to more sustainable activities and creating new products.” The report, ‘Environmental, Social and Governance (ESG) Integration for Banks: A Guide to Starting Implementation’, is available here.

The Yale Corporation, the governing board and policy-making body for the US university, has voted not to divest from fossil fuel companies, according to the college newspaper the Yale Daily News. It cited an email to the Yale community from University President Peter Salovey which also “introduced several sustainability initiatives” including implementing guidelines on shareholder resolutions. Gabe Rissman, policy coordinator for Fossil Free Yale, told a student vigil that the campaign would continue, the paper added.

Social

Banking giant Deutsche Bank and insurer AXA have joined the European Venture Philanthropy Association (EVPA), the Brussels-based membership body. Deutsche has joined via its DB Private Equity division within the Deutsche Asset and Wealth Management. AXA’s membership is through its Corporate Responsibility division. Link

Eighty seven percent of asset managers view the increased focus on environmental, social, governance (ESG) strategies as a secular trend, according to the August 2014 issue of the Cerulli Edge from market intelligence firm Cerulli cited by Institutional Asset Manager. Although many firms view it as a permanent shift that will influence strategies, the report found that most managers only consider it “somewhat important” to offer ESG capabilities. 
h6. Governance

South African Archbishop and Nobel laureate Desmond Tutu has appealed to Dutch civil service pension giant ABP (€325bn in assets) to divest Israeli banks Bank Hapoalim, Bank Leumi and Mizrahi Tefahot Bank. In an open letter, Tutu said: “Your Board has a choice – continue to turn a blind eye to the facts and claim ABP investments are somehow ring-fenced from bolstering Israel’s occupation, or join the growing movement towards divestment, which will reduce the company’s risk, respect international law and strike a powerful, non-violent blow for peace in the Middle East.” ABP has €68m invested in the three banks, which have been criticised for financing settlements on the West Bank. ABP’s board is expected to discuss the issue today (August 28); it insists it has found no evidence the banks have violated human rights or international law.

The Securities and Exchange Commission, the US financial regulator, has adopted new requirements for credit rating agencies to “enhance governance, protect against conflicts of interest, and increase transparency” to improve quality and accountability. SEC Chair Mary Jo White said it would “help protect investors and markets against a repeat of the conduct and practices that were central to the financial crisis”. The new requirements address internal controls, conflicts of interest, disclosure of performance statistics, procedures to protect the integrity and transparency of rating methodologies, disclosures to promote the transparency of credit ratings, and standards for training, experience, and competence of credit analysts. The requirements provide for an annual certification by the CEO as well.

The percentage of shareholders voting at annual general meetings of Switzerland’s biggest firms totalled 59% of the share capital this year, up almost seven percentage points from the AGM season of 2009, Swiss proxy firm zRating reports. Examining the voting at AGMs for the 20 firms listed on Switzerland’s blue-chip SMI Index, zRating said the highest percentage this year was at pharmaceuticals firm Roche (87%), followed by Swisscom and luxury goods firm Richemont (74% each). The proxy firm also said that due to the Minder initiative, which will take effect in 2015, the percentage was likely to rise even further, as it requires funds to vote on executive pay at AGMs and then report back to beneficiaries. Link (German)

Inflection Point Capital Management (IPCM)’s recently announced partnership with French asset manager La Française has been recognized by ratings agency Fitch Ratings. Affirming La Française’s ‘High Standards’ rating, Fitch notes how its “long history and experienced teams have been broadened by recent high-profile hires, and by partnerships with Inflection Point Capital Management (IPCM) and Tages Capital”. The tie with IPCM – the new venture of Innovest founder Matthew Kiernan – strengthens La Française AM’s capabilities in environmental, social and governance investing, Fitch added.