RI ESG Briefing, December 10: MassPRIM in $265m Massey Energy settlement

The latest environmental, social and governance news

Environmental

The CDP (the former Carbon Disclosure Project), which works with 722 institutional investors worth US$87trn (€63.2trn), has found that major US companies are including future costs for carbon emissions in their strategic plans. The CDP found that 29 firms factor in an “internal carbon price” of up to $60 per ton of emissions. Link

The European Fund for Energy, Climate Change and Infrastructure (“Marguerite Fund”) has sold a 7.5% stake in German offshore windpark Butendiek to French state bank Caisse des Depots et Consignations (CDC). Financial details of the transaction, which lowers the Marguerite Fund’s stake in the park to 15%, were not disclosed. The other investors in the €1.3bn facility include Danish pension schemes Industriens Pension and Pensionskassernes Administration (PKA), German engineering giant Siemens and wpd, the project developer for Butendiek.

Chinese listed environmental companies are set to establish a private joint-stock bank, China Daily reported, citing the China Securities Journal. The bank will be established by eight to 10 listed environmental companies with CNY5-6bn ($823m-$988m) in capital, it was reported.

Bloomberg, the news and data giant, has launched a Carbon Risk Valuation Tool. It’s available on the Bloomberg Professional Service at XLTP XCO2 and offers a “starting point” to illustrate the potential impact on earnings and share price of companies, particularly those in extractive industries, under carbon pollution constraints. Bloomberg hopes to expand the tool beyond carbon, so that it incorporates other environment-related risks that could strand assets. Link

Social

Cambridge Associates, the Boston-based investment consultant, reckons institutional investors may benefit from considering impact investing “opportunistically” and not as an asset class with a specific target allocation. The firm has released a new report called “Impact Investing: A Framework for Decision Making”. Setting “hard, top-down” impact investment allocations could prompt investors to sacrifice quality for quantity – jeopardizing social returns, said Cambridge Managing Director Kyle Johnson. Link

Private equity firm Cerberus Capital Management is reportedly looking at ways to allow investors to exit armaments maker Freedom Group, maker of the weapon used in the Sandy Hook school massacre. Reuters was citing unnamed people as saying Cerberus would seek a credit amendment with existing lenders of Freedom Group.h6. Governance

The Massachusetts Pension Reserves Investment Board (PRIM) has reached a $265m (€192.7m) all-cash settlement to resolve securities fraud claims with Massey Energy Co., centring on the coal producer’s misrepresentation of its safety practices in the run-up to the deadly Upper Big Branch mine disaster in 2010. “This settlement should remind corporate leaders of the importance of taking good care not only of the financial capital of their investors, but also the human capital of their employees,” said Chris Supple, MassPRIM’s Deputy Executive Director and General Counsel.

US law firm Robbins Geller Rudman & Dowd has announced that a federal court on has approved a settlement in which Countrywide Financial has agreed to pay $500m to investors who allege that they were misled by the company’s sale of mortgage-backed securities (MBS) from 2005 to 2007. It’s the largest MBS class action recovery in history. Lead plaintiffs in the case were the State of Vermont’s Employee Pension Funds and Pension Trust Fund for Operating Engineers. Other lead plaintiffs include Maine State Retirement System and the Washington State Plumbing & Pipefitting Pension Trust. The settlement also involves the resolution of two other cases led by the Western Conference of Teamsters Pension Plan and the Maine State Retirement System.

The International Integrated Reporting Framework has been launched following a three-month global consultation led by the International Integrated Reporting Council (IIRC) earlier this year. It’s designed to bring “greater cohesion and efficiency” to corporate reporting process and improve the quality of information available to providers of financial capital. Its focus on value creation, and the ‘capitals’ used by the business to create value over time, contributes towards a more financially stable global economy and is a force for sustainability.

While most large companies acknowledge risks from environmental and social “megaforces”, few link corporate responsibility to remuneration, according to KPMG. The consulting firm found that just 5% of companies it surveyed report the potential impact of environmental and social risks on their financial results. The findings come in the eighth KPMG Survey of Corporate Responsibility Reporting. It was “disappointing” that so many companies shy away from quantifying and factoring the risks into pay said Yvo de Boer, the former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) who chairs KPMG’s Climate Change & Sustainability Services.