RI ESG Briefing, December 14: Railpen, CalPERS, Natixis, Azzad AM, LAPFF, FTSE Russell

The round-up of the latest environmental, social and governance developments


Railpen, the £24bn (€28.5bn) Railways Pension Scheme, has financed a rooftop solar portfolio through the UK’s Pensions Infrastructure Platform (PiP). IP Real Estate reported that PiP, working on behalf of one of its founders, RPMI Railpen, said the £20.3m (€24.2m) facility refinanced a portfolio of 1,911 rooftop solar assets owned by Foresight.

The American Museum of Natural History (AMNH) has reduced its fossils fuel exposure, according to May Boeve, Executive Director of campaign group 350.org. In a response letter addressing divestment campaigners and scientists’ concerns, the AMNH said the percentage of the Museum’s indirect holdings in fossil fuels companies (through pooled investment funds) declined from 4% in 2014 to less than 2% today as measured by the Carbon Underground 200 index.

Climate change could threaten the credit ratings of banks, according to Natixis. “Reputation, legal and regulatory risks could jeopardise banks’ commercial positions and put pressure on their credit ratings,” said Thomas Girard, a financial analyst and SRI specialist at the French bank in a blog. “While awaiting the adoption of stricter climate regulations, assigning an internal price to carbon will be necessary in our view,” he continued, adding that it was also important for governments to create “incentives”. “We also retain the idea of a ‘green supporting factor’ which could be introduced into international banking regulation”, Girard said, referring to a proposal put forward by the French Banking Federation.

The European Commission’s Director General for Financial Stability, Financial Services and Capital Markets Union has said it needs to “critically review” its stance on sustainable finance. Speaking at an event this week, Oliver Guersent said the commission must “see that the regulatory framework is not an impediment to sustainable finance”. “If we have a rule that is here for good reason but happens to be an impediment…we have to think how to reach our public policy objective without being an impediment,” he added. He added that it was essential that the Commission and member states were “aligned”, pointing out that when Europe speaks with a united voice “it makes an immediate difference, because we’re the biggest financial area in the world”. He said this applied to all topics, including reporting and disclosure.


What is claimed to be the first shareholder resolution focused on the Burmese Rohingya minority has been filed. Islamic finance house Azzad Asset Management and the Ursuline Sisters of Tildonk have called on oil giant Chevron to evaluate a policy of not doing business with governments believed to be engaged in genocide or crimes against humanity. The proposed resolution urges Chevron to halt its relationship with the government of Burma (Myanmar) until it ends what is termed state-sanctioned violence against the Rohingya people. The resolution, prepared in consultation with the International Campaign for the Rohingya, is expected to be voted on at Chevron’s AGM next May.

Sustainalytics, the ESG research house, has launched ESG Signals, a quantitative tool that provides securities-level financial risk and opportunity signals based on environmental, social and governance (ESG), trading and financial data. The firm said ESG Signals – developed with fintech firm Advestis – analyzes thousands of correlations between variables over time and applies machine learning to extract “meaningfully predictive risk/opportunity signals”.h6. Governance

The California Public Employees’ Retirement System (CalPERS) has filed a lawsuit in the Delaware Court of Chancery against the board of directors of IAC/InterActiveCorp and its controlling stockholder, Barry Diller, in connection with their proposed authorization of a new class of nonvoting stock that would effectively secure Diller’s control over the company indefinitely and dilute the voting power of other shareowners.

New rules empowering shareholders to vote on directors’ pay, so as to tie it more closely to their performance, have been informally agreed by the European institutions. “These rules also aim to foster shareholder commitment to companies’ long-run success,” the European Parliament said. Sergio Cofferati, the Italian MEP who is the ‘rapporteur’ on shareholder rights and corporate governance, said: “The measures agreed upon will help to steer investments towards a more long-term oriented approach and will ensure more transparency for listed companies and investors”.

The Local Authority Pension Fund Forum (LAPFF), which represents UK local government pension funds, has warned directors of satellite TV firm Sky not to undervalue the company as it considers a bid from Rupert Murdoch’s 21st Century Fox. The two companies have announced an £18bn sale. LAPFF Chair Kieran Quinn said: “All directors of Sky have a duty not to disadvantage the public shareholders, and the position of the non-executives will need to be robust to ensure the premium paid is appropriate and that shareholders are not disadvantaged by any temporary low in the share price.”

The London Stock Exchange Group will launch ‘good practice’ reporting guidance in a bid to improve environmental, social and governance disclosure from companies. The document has three sponsors: Nikhil Rathi, the CEO of London Stock Exchange, Mark Makepeace, the CEO of FTSE Russell, and Raffaele Jerusalmi, CEO of Borsa Italiana. It was originally slated to be published this month, but has been pushed back to accommodate the launch of findings from the Financial Stability Board’s Task Force on Climate-Related Disclosure. FTSE will now allow time to assess the FSB recommendations before launching its own on February 9.

FTSE Russell has teamed up with California-based Research Affiliates LLC to launch two new ESG indices. Just days after launching emerging markets and Latin American versions of its FTSE4Good indices, FTSE announced the pair of smart beta strategies – the FTSE4Good RAFI Index and the FTSE RAFI Ex-Fossil Fuels Index. They are based on existing FTSE RAFI indices, but have an additional overlay based on the ESG criteria used for the FTSE4Good index series. The Ex-Fossil Fuels option also excludes certain companies due to fossil fuel-linked revenues and reserves.

OwnershipTransparency.com is a new website tailored to businesses and investors that provides information on how to identify the ultimate owners of supplier and partner companies. It was launched at the 17th annual International Anti-Corruption Conference in Panama City and is a project of The B Team and its partners, Bank of Montreal, Deloitte and Thomson Reuters. Link

South Korea’s 545 trillion won ($467bn) National Pension Service (NPS) has reportedly decided to go ahead with introducing a stewardship code. Chief Investment Officer Kang Myoun-wook was quoted as saying it would act as a guide to exercise shareholder rights. Local media said the Korea Corporate Governance Service plans to announce its own review on the stewardship code plan on December 16.