Environmental
Follow This, a group of green activist shareholders in Shell, have applauded the oil giant’s announcement of “ambitious” greenhouse gas (GHG) emission reduction targets. The Anglo-Dutch company has committed to halve the carbon footprint of its energy products by 2050. The announcement comes in the wake of a resolution filed by Follow This at Shell’s AGM in May 2017 asking for the company to set targets in line with the Paris Climate Agreement, which received the support of 11% of shareholders. Follow This has announced that it will submit a new resolution for the 2018 AGM next week.
Global environmental campaign group WWF has launched a campaign warning investors and banks not to invest in, or lend to, controversial hydropower dam, Stiegler’s Gorge, until a full Strategic Environmental Assessment has been carried out, which is legally necessitated by Tanzanian law where the dam is to be built. WWF is calling for the impacts of the dam, which is located within the Selous Game Reserve, a UNESCO World Heritage site in Tanzania, to be assessed first. It claims that the proposed dam would endanger the livelihoods of 200,000 local people and the reserve’s rare wildlife.
Iceland has reportedly ramped up its commitment to ESG with the passing of new legislation for pension funds and the establishment last month of Iceland SIF, a sustainable investment forum for the pensions and asset management industry. Hrefna Ösp Sigfinnsdóttir, the recently appointed Chairman of Iceland SIF, is quoted as saying, “We’ve recently had new legislation introduced that says that pension funds should be taking ethics into account when investing…One of the first tasks of the forum will be to look into what this legislation means and how to implement it”.
Thomson Reuters has enhanced its ESG data capabilities with a new tool that allows users to compare companies or industries’ ESG credentials. The ESG Peer View, which can analyse by industry, geography, and market capitalization, is available on the Eikon platform.
Australian “clean energy financier” Clean Energy Finance Corporation (CEFC) has announced a A$200m investment in real estate giant QIC Global Real Estate’s flagship Shopping Centre Fund. The senior debt facility – CEFC’s largest property investment commitment to date – will be used to improve energy performance across a retail portfolio in Australia.
Social
Tokyo based financial giant Mitsubishi UFJ has announced that it will not finance any company that manufactures cluster bombs, regardless of “whether the purpose of the credit is related to cluster bomb manufacturing, or not”. Previously the bank only “prohibited the provision of credit for the purpose of funding the manufacturing of cluster bombs”.
BNP Paribas has announced it is ceasing its “financing and investment activities” related to manufacturers of tobacco products, including producers, wholesalers, and traders whose revenue is derived mainly from tobacco. The move follows the UN Global Compact’s decision to exclude tobacco companies from becoming members of the UN corporate sustainability body.
AustralianSuper, Australia’s largest superannuation fund, has also announced that it will exclude companies that manufacture tobacco products from its portfolio. The A$123bn fund has stated that “tobacco is inconsistent with our purpose of helping members achieve their best possible retirement outcomes”. The divestment process is expected to be completed by the end of 2019.
The Archbishop of Canterbury, Justin Welby, has reportedly stated that as a large landowner, the Church of England must develop affordable housing. Despite the manager of the Church’s assets – the Church Commissioners – being “semi-autonomous from the Church”, he stated his belief that the Church needs “to be committed to housing development and most of all to community building”.h6. Governance
Norway’s $1trn sovereign wealth fund has reportedly written to the 500 largest companies it owns outlining its expectations on tax. Addressing companies including Nike and Apple, it has expressed its dislike for aggressive tax planning and strategies that result in international companies paying very little tax in the countries where they generate their profits. Carine Smith Ihenacho, chief of the ownership division at Norges Bank Investment Management, is quoted as saying that the letter sends “extremely clear signal” to the companies.
The Ethos Foundation, the Swiss governance body comprising more than 220 pension funds, has published the 17th edition of its annual proxy voting guidelines and corporate governance principles. The 2018 edition focuses on the body’s expectation that companies increase pay transparency.
The International Corporate Governance Network (ICGN), the $26trn global association, has discouraged the inclusion of non-voting or limited voting shares in benchmark stock indices. Executive Director Kerrie Waring – citing SNAP’s IPO with exclusively non-voting shares – called on “stock exchanges and securities regulators to recognize the inhibiting effects such share structures have on effective investor stewardship and to avoid a regulatory race to the bottom in terms of governance standards of publicly listed companies”.
The Australian Council of Superannuation Investors (ACSI), the 37-strong membership body, has published revised guidelines articulating “its members’ expectations for governance oversight at listed Australian companies”. The Guidelines state that directors should “monitor ESG issues, assess their materiality and disclose any financial impacts on the company”. It also provides practical examples of ESG oversight on climate change, human and labour rights, corporate culture, and tax disclosure.
The London Metal Exchange has been “forced” to launch an investigation into whether cobalt mined by child labour is trading on its exchange, according to the Financial Times. Members of the 140-year-old exchange allege that a Chinese company has been allowed to sell untraceable cobalt through the exchange in the last three months. This has raised concerns that the rechargeable battery material may have come from mines in the Democratic Republic of Congo where child exploitation is common.
The UK’s Pensions & Investment Research Consultants (PIRC) has advised supporting a shareholder resolution at Cisco calling for greater lobbying transparency from the US tech giant. Since 1998 the company has spent a reported $1.3bn on lobbying. PIRC supports the resolution – filed by the US’ Unitarian Universalist Association – stating that the “transparency and completeness of the Company’s reporting on political donations could be improved”.
Proxinvest has published its annual report on France’s proxy season, with 2017 being dubbed the most “contentious” seen by the French governance advisory firm. According to Proxinvest, this year’ was a “milestone for shareholders in France”. It featured “a record number of rejected resolutions, an accelerated pace of shareholder activism, the first implementation of a binding vote on remuneration policies, and a significant level of dilution from double voting rights”.
Californian pension giant CalPERS’ ESG approach is hurting returns according to a study by a business-backed non-profit, The Sacramento Bee reports. The report by the American Council for Capital Formation criticizes the $345bn pension fund’s sustainable investing strategies. It argues that CalPERS, which is currently one-third underfunded, should focus solely on making money to protect the pensions of 1.8m California public workers and retirees. CalPERS spokesperson Wayne Davis was quoted saying in response to the study that the fund is committed to its sustainable investment program, which has helped to diversify corporate boards and compel companies to discuss climate change. He rejected as “laughable” any suggestion that CalPERS should stop engaging.
Dutch bank ING has reportedly agreed an innovative financial deal with palm oil firm Wilmar International to provide a $150m revolving credit facility tied to the scandal-hit company’s sustainability performance. The deal follows the release of an Amnesty International report last year accusing Wilmar of human rights abuses throughout its supply chain.
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