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RI ESG Briefing Dec. 10: Asian sustainable investment assets up 22% a year since 2011 – ASrIA

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

Environmental

National Australia Bank has reportedly closed Australia’s first climate bond certified under the Climate Bonds Standard, with industry group the Climate Bonds Initiative saying “strong investor demand” led to the bond doubling from the minimum deal size of A$150m to A$300m within five hours. The seven-year bond has a coupon, or interest rate, of 4% and is rated AA- (S&P) / Aa2 (Moody’s). Australia’s Clean Energy Finance Corporation (CEFC) committed A$75m to the bond.

The State of Massachusetts plans to sell $230m (€185m) worth of green bonds to investors like pension funds and endowments, the Associated Press reports. Citing State finance officials, the AP said proceeds from the issue would go to fund clean water projects around the state. AP quoted State treasurer Steven Grossman as saying the bond sale by Clean Water Trust is scheduled for this week (commencing December 8).

Nearly seven in 10 European institutional investors expect to raise their exposure to renewables over the next three years, according to a new study by Aquila Capital, a German provider of renewable funds. In its study of 64 investors, Aquila said half of them already had some exposure to renewables, though their average allocation was just 4% of total assets. Yet by 2017, 69% of the investors said their renewables allocation would rise, with another two-thirds saying that the bias would be toward wind power. More than half (53%) of the investors expect to increase exposure to biogas, 50% to photovoltaics, 35% to hydropower, 42% to geothermal and 37% to tidal. The study also showed that the pursuit of return is the main motivation for investing in renewables.

Social

Verisk Analytics, the Nasdaq-listed risk data firm, has acquired UK-based global risk analytics and advisory firm Maplecroft for £20.25m (€25.6m). Maplecroft, whose users include institutional investors, enables its customers to assess, monitor, and forecast a growing range of worldwide risks, including geopolitical and societal risks. The firm, founded and headed by Professor Alyson Warhurst, will be known as Verisk Maplecroft and Warhurst “will transition into an advisory role”.

Investment and Pensions Europe (IPE) has reported that PBU, a DKK48.5bn (€6.5bn) Danish teachers’ pension scheme, is indirectly invested in Alliant Techsystems, a US defence firm that the scheme had blacklisted due to cluster bomb links. Citing Danish news service Kommuen, IPE says PBU is exposed to Alliant through an unnamed passive index investment fund. PBU was criticised by one of its board members, Lasse Bjerg Jørgensen. “We have a clear expectation that the guidelines we have approved on the board (i.e. which companies to exclude) are followed by the pension scheme,” IPE quoted Bjerg Jørgensen as saying. PBU’s management will now review the investment. Link. Governance

The Association for Sustainable & Responsible Investment in Asia (ASrIA) says that, on aggregate, sustainable investment assets in the region have grown by 22% per annum since 2011. And there are some US$44.9bn of assets in Asia (ex-Japan) being managed using one or more sustainable investment strategies. The figures come in ASrIA’s 2014 Asia Sustainable Investment Review. “We are seeing positive trends in areas such as clean energy investment and increasing interest in green bonds – pointing to a dynamic market with huge potential,” said ASrIA CEO Jessica Robinson. The report finds that climate change is an important issue for investors, and targeted investments to tackle environmental challenges are growing in importance. Sixty-two percent of respondents state that climate risk will be more important in the next two years. ESG integration is the most commonly adopted sustainable investment strategy – at US$23.4 billion (52% of all assets).

Japan’s Financial Services Agency says 175 institutional investors have now signed up to the Principles for Responsible Institutional Investors, the country’s new ‘stewardship code’. The code was published in February this year and the FSA said a new list includes 15 further signatories. Staying in Japan, the FSA is understood to be holding a final meeting on Friday (December 12) to fix the final draft of the new Corporate Governance Code. It is likely that a final draft will feed into Tokyo Stock Exchange listing rules next year. And RI also understands that an ‘Investor Forum’ proposed by the Ito Review (similar to the UK’s Kay Review) could launch in January.

Shareholder advisory firm PIRC has recommended a vote in support of a climate change resolution at ANZ Bank’s annual meeting on December 18. The Australasian Centre for Corporate Responsibility, in collaboration with the Asset Owners Disclosure Project, is calling for directors to determine and then report each year their assessment of the quantum of greenhouse gas emissions that the Company is responsible for financing.

The first social and environmental shareholder resolution of the 2015 US annual meeting season occurs at the January 14 meeting of Commercial Metals Co. Walden Asset Management has submitted a proposal calling for the firm to issue a sustainability report describing its environmental, social and governance (ESG) risks and opportunities including greenhouse gas (GHG) emissions reduction targets and goals. The Irving, Texas-based metals company is resisting the motion, saying a sustainability report “would not provide any meaningful additional benefits”. Proxy

CtW Investment Group, the union-linked advisory group, has written to investors in Walgreen urging them to vote against the pharmacy chain’s proposed acquisition of UK-based Alliance Boots. It says the board “fails to make a compelling case for investing an additional $24bn to fully acquire” the firm. The matter goes to a vote at special shareholders’ meeting on December 29. CtW Investment Group works with union-sponsored pension funds with $250bn in assets under management.