RI ESG Briefing, August 6: Strong support for governance resolutions at Freeport McMoRan

Environmental

Danish pension funds have been criticized by the local arm of environmental campaign group the WWF for keeping society dependent on fossil fuels and not investing in renewable energy. The WWF has released a study ranking the country’s eight largest funds by how climate-friendly their investments are. None of the large funds achieved more than 50% of the potential score, the WWF said. Link (Danish)

The Co-operative Bank has provided 10-year project financing of £4.2m (€4.8m) for the 4MW Orchard End wind farm project in Lancashire developed by Renewable Energy Generation Ltd., the AIM-listed renewable energy group. As previously announced it is intended that Orchard End will be sold to BlackRock later this year. Announcement

Ireland-based wind and solar developer Mainstream Renewable Power has agreed to sell a 25% equity stake to Japanese trading company Marubeni Corporation for €100m. As part of the agreement, Marubeni gains the right to representation on Mainstream’s board, alongside Barclays which invested in the company in 2008. Mainstream has a global pipeline of more than 19,000MW of wind and solar projects.

Social

Seventeen companies have registered as Delaware’s first ‘Benefit Corporations’, enabling them to create value for society as well as shareholders, after new legislation came into force recently. Delaware is the 19th state in the US (plus the District of Columbia) to enact benefit corporation legislation, but as legal home of most venture-backed businesses, the majority of publicly-traded companies, and nearly two-thirds of the Fortune 500, it is the most important state for businesses that seek access to venture capital, private equity and public capital markets. Link

The Big Issue, the magazine which supports homeless people, reportedly plans to enter the fund management business later this year. The Financial Times, citing group chairman Nigel Kershaw, reported that Big Issue Invest Fund Management will launch funds focusing on social and financial returns to institutional and retail investors – aiming to raise £250m in the next five years. The business is recruiting a CEO for the approximately six-member team.h6. Governance

A proposal filed by the American Federation of State, County and Municipal Employees (AFSCME) Pension Plan at Freeport-McMoRan Copper & Gold calling for an independent chairman at the mining company gained 56% support at its annual meeting last month, according to the Corporate Counsel blog. A motion filed by the California State Teachers’ Retirement System (CalSTRS) for shareholders with at least a 15% stake to be able to call a special meeting had 70% backing. Freeport also faced shareholder resolutions on board environmental expertise (from the New York State Common Retirement Fund) and board diversity (New York City Pension Funds).

The Kay Review and the European Commission’s Green Paper on Long-Term Financing have “broadened the debate on long-term finance”, according to the Investment Management Association (IMA), the UK trade body. According to its latest industry survey, respondents see three areas in particular: 1) ‘Long-termist’ behaviour, emphasising engagement in corporate governance, stewardship and socially responsible investment. 2) Long-term finance provision, such as direct lending to business. 3) Long-term financing projects (infrastructure or project finance).

Twelve major institutional investors are currently testing what is claimed to be a new way of monitoring investments for corporate fraud that has been developed by governance research firm GMI Ratings. They include the likes of the California Public Employees Retirement System (CalPERS), said GMI’s Vice Chairman James Kaplan. The offering – dubbed the Forensic Alpha Model – is designed to help investors dodge a drag on investment returns caused by “pervasive” corporate fraud. It builds on academic research which estimates that, on average, corporate fraud costs investors 22% of enterprise value in companies committing fraud – and 3% across all firms. Link

The Wellcome Trust, the £14.5bn UK endowment, has confirmed that it sold its stake in controversial payday lender Wonga. The trust bought the stake in 2010 and “several months ago” decided to sell it as it was “no longer consistent with our investment criteria”. The statement followed a row about the Church Commissioners’ stake in the company triggered by comments from the Archbishop of Canterbury.