RI ESG Briefing, Dec. 17: Boston Common, PFA Pension, ANZ vote, Danone, Cambridge Associates

Environmental

Boston Common Asset Management is to lead an effort for investors to engage with companies on energy efficiency. Speaking to Responsible Investor, Geeta Aiyer, President of Boston Common, said the group would be launched next year under the moniker ECO Resource Efficiency and look at engagement across all sectors to save energy, water and costs. Aiyer, who spoke on the issue at COP21 in Paris last week, said the efficient use of carbon capacity had been short-changed for renewable power generation. “In the absence of carbon taxing, or a systemic, elegant solution, investors will be moving forward to highlight the energy efficiency agenda and I think companies get it.”

Infracapital, the European infrastructure investor that’s managed by M&G Investment Management, has agreed to buy ‘sustainable and business critical energy infrastructure’ firm Adven Group in a consortium with AMP Capital Investors. They are buying Adven, which operates in Finland, Sweden and Estonia, from private equity firm EQT Infrastructure for an undisclosed sum.

An advisory committee at the University of Toronto has reportedly
recommended a targeted divestment of some fossil fuel companies. The Canadian Press said the committee reported to university president Meric Gertler that it should exit companies that engage in “egregious behaviour” and contribute “to social injury” – although blanket fossil fuel divestment was not advised. The University of Toronto Asset Management Corp. has C$7.4bn (€4.9bn) in assets.

Cambridge Associates, the investment consultant, has warned against complacency when assessing the risk posed to portfolios by climate change, arguing that investors should consider climate change as more than a low probability ‘tail risk’ in a newly published report, Risks and Opportunities from the Uncertain and Changing Climate: Playbook for the Truly Long-Term Investor. Another recent report by The Economist Intelligence Unit put the mean expected losses as a result of climate changes to the global stock of manageable assets (which amount to $143tn) at $4.2tn by the end of the century.

Social

French food group Danone and B Lab have teamed up to pave the way for the so-called ‘B Corp certification’ of large multinational companies. B Corps are firms that commit to put “purpose” at the heart of their business strategy. The pair have partnered on an “open source cooperation agreement” to enable lessons learnt to be shared with the wider community.

The German state of Brandenburg is the first region to receive a European Investment Bank (EIB) loan dedicated to helping European countries to better face the challenges of the current refugee issue. Signing an agreement with the State’s investment bank, Investitionsbank des Landes Brandenburg (ILB), the EIB has committed to providing up to €120m for the refurbishment and construction of refugee accommodation in different parts of the Federal State.

The Warsaw Stock Exchange has announced the portfolio of its social responsibility RESPECT index. The index now has 23 participating companies, including one new member: Bank Ochrony Środowiska. The new portfolio takes effect on December 21. It has gained 31% from the first publication on December 19 2009 to December 2015, while the main WIG20 benchmark has gained 11%, the exchange said. “Polish and international investors are increasingly interested in the index. I believe that it will draw the attention of other companies to the importance of corporate social responsibility,” said Exchange President Paweł Tamborski.h6. Governance

Danish commercial pension provider PFA Pension has excluded German cement maker HeidelbergCement due to what it says are human rights violations. In a statement, PFA said its board had decided on the exclusion as HeidelbergCement was involved “in the extraction of natural resources in a way that is incompatible with PFA’s policy for responsible investments.” The company, which is also a member of Germany’s Dax 30 blue-chip index, operates a quarry on the disputed territory of the West Bank. Including HeidelbergCement, PFA excludes 34 companies for ethical reasons, including what the scheme says are their violations of the UN Global Compact.

The climate change resolution at Australian banking group ANZ’s annual meeting today (December 17) received only 5.38% of shareholder votes in favour, according to advocacy group the Asset Owners Disclosure Project (AODP). The resolution – supported by CalPERS, Australian Ethical Investment’s Advocacy Fund and Vision Super – had been tabled by the AODP with the Australasian Centre for Corporate Responsibility (ACCR). According to the Sydney Morning Herald, the resolution on the remuneration report was passed with 84.52% support.

Norges Bank Investment Management, manager of Norway’s massive Government Pension Fund Global, has provided an assessment on the ‘last look’ practice in the foreign exchange markets – where market makers get a final chance to reject an order after a client commits to a trade at a quoted price. It concluded that whilst it serves a legitimate need of liquidity providers, it also advocates greater transparency in its application to mitigate conflicts related to the “asymmetry in optionality it introduces, as well as the potential for misuse of private information”.

Stuttgart’s public prosecutor has launched an investigation against Volkswagen component supplier Robert Bosch to see whether Bosch played any role in VW’s emissions rigging scandal. Bosch, which supplies fuel injectors to VW autos, said it was fully cooperating with the prosecutor. Bosch, a privately held firm, also dismissed any suggestion of wrongdoing, saying that it was merely an auto component supplier. “Whatever the manufacturer then does with the component is up to the manufacturer,” it said. Last week, VW said the 800,000 petrol engines that had come under suspicion of being rigged to have lower CO2 emissions during tests were in fact not.

The Bursa Malaysia, the Malaysian exchange, has issued its second report on the analysis of corporate governance disclosures in annual reports of 450 issuers listed on the Main and ACE markets, bringing the total to 750 listed issuers’ annual reports reviewed over two years. The Kuala Lumpur-based exchange said it was in furtherance of its agenda to “continuously strengthen the corporate governance culture and the quality of disclosures”. The review assesses the level and quality of disclosures by listed issuers in relation to Bursa Malaysia’s relevant listing requirements and the Malaysian Code of Corporate Governance 2012.

State Street, the US-based asset management and servicing giant, says
that it may have overcharged its clients on the servicing side around $200m (€184m) over an 18-year period. The finding follows a preliminary review. “State Street deeply regrets this matter. At the conclusion of its review, State Street will compensate affected clients fully, including interest, and make any required improvements to its billing practices,” the firm said in a statement, adding that most of the overcharging took place in the US.