RI ESG Briefing, Dec. 2: Investment Association, ING, Social Stock Exchange, Finland governance

Environmental

The Investment Association, the UK trade body, has warned that investors could seek to withdraw from the UK energy sector as a result of recent policy changes around the renewable industry such as the withdrawal of the climate change levy exemption for renewable power. It is in response to an inquiry from the UK parliamentary Energy and Climate Change Committee that is exploring investor confidence in the UK energy sector. In a submission to the committee, the Investment Association says it will like to work with the government to facilitate engagement with investors on the issue.

ING, the Netherlands’ largest bank, is withdrawing from financing new coal power and mining projects. ING has also committed to avoid funding any new organisations generating more than 50% of their business from coal power or mining. Research conducted by BankTrack carried out in 2014 showed that ING was among the 30 banks most heavily involved in financing the coal industry, with finance of over $4.5 bn for coal between 2005 and April 2014.

OP Wealth Management, a Finnish manager with €50bn in assets, has decided to exit the coal sector and divest power utilities that still rely heavily on the energy source. OP said that as its exposure to the coal sector was already almost nil, its announcement was targeted to power utilities. “We want to communicate to energy producers the need to develop their business towards a lower-carbon economy by favouring cleaner energy production,” said Mika Leskinen, Head of Sustainable Investing at the firm. OP plans to announce the exact exclusions in 2016.

German ethical bank Steyler has become the 20th financial institution to sign the so-called Paris Pledge under which banks promise to exit coal finance completely. Steyler, which has over €300m in balance sheet assets, said that as a result of the pledge it would rid itself of all remaining investments in the coal sector. “Coal producers are already largely excluded from our investment universe. By getting out of coal completely, we are just continuing a policy already in place,” said Steyler Chief Executive Norbert Wolf. The Paris Pledge was devised by Dutch NGO BankTrack.

Social

The UK’s Social Stock Exchange has almost doubled its membership over the last three months. Now, it has 27 firms on its books with a collective market capitalization approaching £2bn. Home page

The Ford Foundation, the second-largest private foundation in the US, will reportedly put forward a specific impact investing policy for its $12bn endowment “in the coming months”. Darren Walker, president of the Ford Foundation, said: “I no longer find it defensible to say that our investment strategy is only to maximize the value of our endowment—just as it’s no longer defensible for a corporation to say its only responsibility is to maximize shareholder value.”h6. Governance

Finland’s Securities Markets Association has launched an English-language document outlining the country’s new corporate governance code that will come into effect January of next year. Changes include requiring companies to report objectives related to men and women being represented on boards.

Lars Rebien Sorenson, chief executive of Danish pharmaceutical giant Novo Nordisk, has shot up to the top of Harvard Business Review’s annual ranking of the best performing CEOs as a result of ESG being added to the analysis of performance. For the first time this year, the HBR ranking looks at each company’s ESG performance using calculations from investment research firm Sustainalytics. It now weights long-term financial results at 80% and ESG performance at 20%. As a result, HBR staff say the 2015 list is very different from last year’s: “On the purely financial metrics, Amazon’s Jeff Bezos leads all other CEOs—just as he did last year. But Amazon’s relatively poor ESG score drags Bezos down to #87 overall.”

The $10.8bn Chicago Public School Teachers’ Pension and Retirement Fund has filed a class action lawsuit accusing 10 major Wall Street banks and two trading platforms of conspiring to illegally undermine competition in the $320tn interest rate swaps market. The lawsuit, filed in U.S. District Court in Manhattan, names Goldman Sachs Group, Bank of America Merrill Lynch, JPMorgan Chase, Citigroup, Credit Suisse Group, Barclays Plc., BNP Paribas SA, UBS, Deutsche Bank AG, Royal Bank of Scotland, and broking platforms ICAP and Tradeweb, part of Thomson Reuters. News agency Reuters said Goldman Sachs, Citigroup, Bank of America, BNP Paribas, Credit Suisse and RBS declined to comment and that JP Morgan, Barclays, Deutsche Bank and UBS were not immediately available to comment.

Barclays, the UK-based bank, has agreed, subject to court approval, to pay $14m to settle a case brought by holders of its American depositary shares. The action led by the Carpenters Pension Trust Fund of St. Louis and the St. Clair Shores Police & Fire Retirement System in Michigan, allege Barclays conspired with rivals to rig the Libor benchmark interest rate (from July 2007 to June 2012), causing its share price to be inflated. Earlier this month Barclays also agreed to pay $120m to resolve similar manipulation claims brought by investors. Link

Swiss food giant Nestlé has released a report that acknowledges evidence of major human rights abuses and forced labour in its Thai seafood supply chains (an industry worth $7bn a year), stating that there is an ‘endemic risk’ to virtually all European and American companies which source seafood from the region. Anti-slavery groups have commended the report’s publication. Link

The International Integrated Reporting Council (IIRC), a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs, will launch the < IR > Academic Network on December 16. It’s designed to facilitate collaboration and information sharing – helping ensure the IIRC is kept abreast of relevant academic thinking.