Return to search

RI ESG Briefing, December 12: Canada Pension Plan Investment Board in major farmland deal

The round-up of environmental, social and governance news

Environmental

The C$192.8bn (€132bn) Canada Pension Plan Investment Board (CPPIB) has agreed to acquire the assets of Assiniboia Farmland LP, a fund that owns and manages a portfolio of farmland in Saskatchewan. CPPIB will invest up to C$128m and the deal is expected to close in January 2014. The portfolio consists of approximately 115,000 acres of farmland -one of the largest investable farmland portfolios in Canada. The key crops produced by the portfolio are wheat, barley and canola. The existing management team will continue to manage the portfolio. Earlier, CPPIB, announced it bought 15% of ORPEA, a European provider of long-term care services, for €320.8m.

Funds managed by Hermes GPE, the fund firm with £6bn (€7.1bn) under management for institutional investors, have agreed to buy a majority interest in the 144MW Fallago Rig Wind Farm in Scotland from EDF Energy and EDF Energies Nouvelles. The facility is the fifth largest onshore wind farm in the UK and came on stream earlier this year. Hermes said: “The renewable energy sector is a key area of interest for us, and Fallago Rig has very attractive investment characteristics.”

The European Bank for Reconstruction and Development (EBRD) has adopted a new strategy that supports the move to lower-carbon fuel sources in response to the challenge of climate change. The bank says it will not finance any coal-fired power generation projects except in “rare and exceptional” circumstances. The strategy also reinforces the EBRD’s growing support for renewable energy, which will include financing both energy-generating capacity and key infrastructure such as transmission lines and backup generation.

German state-owned development bank KfW reports that loans it made to support renewable energy projects spurred €10bn in investment in the sector last year. That volume, in turn, accounted for 51% of all the renewable investment for 2012. The KfW also said that as a result of its loans, 6.3m tonnes of CO2, the main greenhouse gas, were saved in 2012. Its renewables financing enabled Germany to avoid importing €460m worth of energy.

Social

The UK Sustainable Investment and Finance Association (UKSIF) has welcomed the government’s plans to provide tax breaks for people that invest in shares and bonds from charities and other social enterprises. The government hopes that the measure, known as the Social Enterprise Tax Relief (SIR) will mobilise £500m (€595m) in new investment in social enterprises.h6. Governance

Standard Life Investments, the £179.6bn fund manager, says it will support companies that require their directors and senior executives to retain an “appropriate proportion” of the shares they own after they leave a company. It’s part of revised Governance & Stewardship Principles and Policy Guidelines at the firm which will be applied on a global basis. Another change is the inclusion of a new “Values and Business Practices” section. Guy Jubb, Global Head of Governance & Stewardship, said: “We shall not only be looking to boards to demonstrate how they have ensured that their values and standards of business practice are implemented but also progressively hold them to account for doing so.” Link

The UK charity Comic Relief, which has raised £1bn for good causes, is to review its investment policy after the BBC reported it has millions invested in tobacco, alcohol and armaments stocks. Interviewed by the BBC, Comic Relief Chief Executive Kevin Cahill acknowledged that for the sake of return, the charity’s funds had invested in those stocks.

The Corporate Governance Committee for Italy’s stock exchange reports a high level of compliance among listed Italian firms to its governance code. In its first annual report, the Committee said that all but nine Italian companies whose shares trade on the exchange had agreed to fully implement the code.

A group of 16 European institutional investors has filed a claim for up to $250m against Royal Bank of Scotland and rating agency Standard & Poor’s relating to losses on constant proportion debt obligations (CPDOs) that were rated AAA by S&P, according to litigation finance company Bentham IMF Ltd. It follows a judgment by Australia’s Federal Court in November 2012, which found S&P had deceived 12 local government councils that bought the CPDOs.

New US activist boutique Engaged Capital, the firm set up by former Relational Investors executive Glenn Welling, is engaging with US clothing firm Abercrombie & Fitch. The company has extended the contract of Chief Executive Mike Jeffries until February 2015, ignoring a demand from Engaged Capital, which has a 0.5% stake. Engaged Capital has a partnership with Governance for Owners, the pension fund-backed UK activist investor.

The National Association of Pension Funds (NAPF) says the planned European financial transaction tax (FTT) will hit UK pension funds. The body said funds would be hit if they bought shares or did business with banks in the 11 EU countries with the tax. EU leaders should “look for ways to encourage saving and extend workplace pensions to the 60% of EU citizens who currently have no access to one.”