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RI ESG Briefing, December 4: £120bn LAPFF challenges asset manager steering of UK Investor Forum

The round-up of environmental, social and governance news

Environmental

The United Nations’ Green Climate Fund has opened its headquarters in Seoul, South Korea – although it’s not expected to be fully operational until the second half of 2014. The launch was part of the country’s Climate Finance Week, with the government saying: “On the first week of December 2013, Korea takes its first step towards the green earth.” The fund – set up to channel up to $100bn a year to developing nations, currently has $40m in its coffers.

The Green Investment Bank, the new UK institution, is funding a group that will retrofit car parks of national chain NCP. GIB will work with Sustainable Development Capital and Future Energy Solutions on new energy efficient lighting to be installed in 149 locations in 2014. The £10m funding is via the UK Energy Efficiency Investments Fund that is managed by Sustainable Development Capital funding by the GIB.

Climate Change Capital, the environmental asset management and advisory group, has welcomed the announcement by the UK government that insurers are to put £40bn into renewable electricity generation projects.

Social

The OECD’s latest Pensions at a Glance 2013 study says that most OECD countries will have a retirement age for both men and women of at least 67 years by 2050. This represents an increase from current levels of about 3.5 years on average for men and 4.5 years for women.

The European Investment Bank (EIB) has updated its Environmental and Social Handbook following a 12-month consultation process with internal and external stakeholders. It aims to take into account current changes in practices and realities that influence environmental sustainability and human well-being, the EIB said, adding it is effectie as of January

Groupe MAIF, the €15.7bn French assurance group, has won the 2013 Responsible Investor prize (le Prix de l’Investisseur Responsable) awarded by Amadeis, the French advisory firm, and Mirova, the sustainable investment arm of Natixis Asset Management. The prize recognises the investor who has done the most in SRI in the last 12 months and the judges said MAIF had made ESG issues a major plank of its investment strategy.

Zürcher Katonalbank (ZKB), one of Switzerland’s biggest asset managers with CHF190bn (€154bn) in assets, has been named “Best Sustainable Asset Manager” by FERI EuroRating. ZKB beat out four other asset managers nominated in the category to win the title. They include: Germany’s Union Investment, Switzerland’s J. Safra Sarasin of in Basle, Belgium’s Dexia Asset Management and Bankhaus Schelhammer & Schattera, a private bank based in Vienna. According to Tobias Schmidt, chief executive of FERI Euro Rating, all managers were nominated on the basis of having provided excellent performance through active fund management.h6. Governance

The UK Local Authority Pension Fund Forum (LAPFF), a voluntary association of 58 public sector pension funds based in the UK with combined assets of approximately £120bn has challenged the leadership by an asset manager of the Investor Forum set up for collective engagement by UK institutional investors. The UK Investor Forum, set up by the Collective Engagement Working Group (CEWG), put together by the Investment Management Association, the National Association of Pension Funds (NAPF) and the Association of British Insurers (ABI), will be lead by Sacha Sadan, Director of Corporate Governance at Legal & General Investment Management. The government-backed Kay Review requested the Forum. However, LAPFF chairman Cllr Kieran Quinn, said “This report still avoids facing up to the fact that asset owners must be in commend when a new Investor Forum is established.” Quinn said this was a recognition that “fundamental differences” exist between the needs and interests of asset owners compared to the interests of asset managers: “Both are crucial to successful engagement with UK and overseas listed companies, but as the underlying owners of company shares, pension funds and other end beneficiaries need to be in the driving seat.” LAPFF says it will publish its own proposals in January 2014 ahead of Ministerial consideration of the next steps in the debate.

Trillium Asset Management, the US sustainable asset management firm, is lining up its shareholder proposals for the 2014 voting season. Among the, it will target methane emissions reporting at EOG Resources and Spectra Energy as well as greenhouse gas emissions at Lowe’s Companies, Church & Dwight and Valmont Industries. There will be motions on political contributions at Motorola Solutions and Hess Corp. Link

Securities and Exchange Commission Chair Mary Jo White says she would be very interested in reaction to the European authorities’ recommendation that proxy firms adopt a code of conduct on transparency and conflicts of interest. “I will be very interested in your thoughts about the European experience and your assessment of the ESMA [European Securities and Market Authority] report and its recommendations,” she said at 10th Annual Transatlantic Corporate Governance Dialogue event in Washington.

A new report from Ernst & Young (EY) reflects that while the inclusion of women at the boards of US companies has gone slowly, that process is likely to accelarate in the near future. In a study of 1500 listed US firms, EY said the share of firms with just one female director had remained constant at 36% for the past seven years. Moreover, women still accounted for just 15% of all board seats at these companies. But EY said the US board landscape would likely change considering that a big share of male directors are long tenured or approaching retirement. At the same time, more women are joining as directors. EY noted that 49% of the women appointed to US boards since 2011 were first-timers. The consultancy estimates that over the next five years, 27% of current board seats could turn over. Link to full EY report

BankTrack, the global network of civil society groups tracking the operations and investments of private sector banks, has issued its analysis of the so-called Thun Group of banks, set up to discuss the UN Guiding Principles on Business and Human Rights. BankTrack has a number of criticisms of the initiative, which involves Barclays, Credit Suisse, UBS, Unicredit, BBVA, ING Group and RBS Group. The range from a lack of engagement with civil society and other key stakeholders, weak content which “underplays banks’ influence”, partial coverage and human rights due diligence in corporate and investment banking. BankTrack noted there has been “minimal public discussion” about the project.