RI ESG Briefing, August 29: investors welcome Australia-EU carbon trading link-up

The round-up of environmental, social and governance news

Environmental

The Investor Group on Climate Change (IGCC), the collaboration of Australian and New Zealand investors with a combined A$700bn (€579.6bn) under management, has welcomed the announcement that Australia’s emissions trading scheme will be linked with the European emissions trading scheme (EU ETS). The investors said it would create a more liquid market, support price discovery and lower the cost of abatement in the long run.

A campaign to create ‘Clean Energy Victory Bonds’ (CEVBs) – modelled on US bonds sold during the First and Second World Wars – has had a breakthrough. California Democrat Bob Filner and 10 cosponsors have put forward the Clean Energy Victory Bonds Act of 2012 to the House of Representatives. It proposes that retail investors could participate in investing in the future of clean energy for as little as $25. Link

The US government’s announcement that cars will have to meet a new 54.5 miles-per-gallon (MPG) standard by 2025 has been welcomed by environmental groups. Link

Social

The UN Principles for Responsible Investment’s Clearinghouse engagement forum was today (August 29) set to hold a webinar on mining giant Lonmin’s Marikana mine massacre, to be moderated by SinCo founder Graham Sinclair.

Germany’s Deutsche Bank has become the first major bank in the world to introduce rules allowing it to take back staff bonuses earned at previous employers, according to a report in the Financial Times. The bank will be able to take back unvested shares that new top staff received in exchange for stock earned elsewhere.

ESG research firm EIRIS has issued a review of progress against seven environmental, social and governance (ESG) recommendations proposed in 2010 at mining company Vedanta Resources. It said: “Progress has been made on five of them: four previously graded as ‘amber’ are now ‘light green’, and one previously graded ‘red’ is now graded as ‘amber’. Link. Governance

There was a 12.34% vote against controversial London-listed Indian mining giant Vedanta at its annual general meeting this week. It came as campaign groups pressured the company over its Orissa operations and investors including Aviva and Standard Life asked questions about sustainability at the AGM. Campaign group Amnesty International published a report called Vedanta’s Perspective Uncovered: Policies cannot mask practices in Orissa.

US pension funds, the City of Monroe Employees Retirement System and the Louisiana Municipal Police Employees Retirement System, have sued the boards of care firm Amerigroup and investment bank Goldman Sachs. The case relates to Amerigroup’s acceptance of a $4.9bn offer from rival WellPoint, which mean Goldman was “hopelessly conflicted” the suit says.

Governance research company GMI Ratings has released data comparing the equity performance of companies with top-decile and bottom-decile ratings according to its Accounting and Governance Risk metrics. The key findings are that a portfolio of companies with top-decile ratings would have outperformed the lowest-decile portfolio by 123% in North America over a seven-year period. Announcement
GMI Ratings has also published a governance alert on social media giant Facebook, following founder Peter Thiel’s $1bn cashing out. GMI said: “Stakeholders have to ask, is this someone you really want on the board?” Link

Norges Bank Investment Management, which runs Norway’s NOK3.6trn (€493bn) Government Pension Fund, is the latest sovereign fund to oppose the planned $70bn merger between commodities firm Glencore and mining giant Xstrata, according to an unsourced report in the Financial Times. The FT, citing regulatory filings, said NBIM has spent more than $500m over the last few weeks buying Xstrata shares.