RI ESG Briefing, December 4: Divestment necessary on slavery – Archbishop of Canterbury

Environmental

National Australia Bank has launched the first Australian green bond, a A$150m (€102m) issue for renewable energy facilities. It said: “The NAB Climate Bond is also the first bank-issued bond to be certified in compliance with international Climate Bonds Standards, a benchmark to assist investors prioritise investments that finance climate change solutions.” Proceeds will be ring-fenced for financing a portfolio of renewable energy assets, including wind farms and solar energy facilities. Fourteen of these Australian facilities are operational and three are under construction. All are project finance facilities originated and serviced by NAB.

The University of Maine System, the public university in the US state, could be about to cut its coal investments, according to reports. The Portland Press Herald reported that the UMS Investment Committee has voted 4-0 to exit direct investments in coal mining firms – and avoid future investments in the sector. If approved by trustees next month, the policy change would affect some $500,000 of the roughly $9.8m the $589m system has invested in fossil fuels, it added. It follows analysis for the committee by New England Pension Consultants, the report said.

German energy giant E.ON has sold an 80% stake in two US wind parks to Enbridge, the Canadian oil pipeline firm, in a deal that values the parks at $650m (€523m). E.ON will retain the other 20% stake in the parks, which it developed, and also operate them. The parks are located in Texas and Indiana and have a combined power capacity of 405MW. Commenting on the deal, Eckhard Rummler, Head of Climate & Renewables at E.ON, said: “We are happy to have found a partner in Enbridge, which shares our approach of combining high class assets with safe operations.” All told, E.ON operates more than 2.7GW or renewable capacity in the US and is that country’s leader in wind power. Announcement

The Green Investment Bank (GIB) of the UK has acquired a 20% stake in the Sheringham Shoal offshore wind park for £240m (€302m). The sellers are Norwegian energy firms Statkraft and Statoil. Located off the coast of Norfolk, Sheringham Shoal has a power capacity of 317MW. According to the GIB, this is enough power to supply 200,000 households, roughly equating to the domestic demand of the county of Norfolk. GIB also said Statkraft and Statoil had further plans to develop offshore wind projects in the UK, including the 402MW Dudgeon park off the Norfolk coast. Dudgeon is to be completed in 2017. Link

Social

The Global Reporting Initiative, the non-profit organization that promotes sustainability standards, has teamed up with Spain’s Fundación ONCE organization to create a resource guide for reporting on disability related matters. The guide, set to be published in the first quarter of 2015 and accompanied by a launch event in Spain, will help companies better understand and communicate the business value of disability. It’s one of a range of enhancements the GRI is introducing.

Oak Hill Capital Partners, a New York-based private equity firm, has published its second annual ESG (environmental, social and governance) performance report. According to the Environmental Defense Fund, an NGO that advises Oak Hill on ESG issues, the report includes mention of Oak Hill’s recent embrace of the Principles for Responsible Investment (PRI) and detail on how it integrates ESG factors when deciding what companies to invest in. Citing examples, the NGO said Oak Hill decided to invest in Pulsant, because the IT firm sourced all of its electricity from renewable sources. Oak Hill also invested in the Hillman Group due to hardware firm’s energy efficiency efforts Link. Governance

Archbishop of Canterbury Justin Welby, the former oil industry executive who leads the Anglican Church, has said investors must divest companies implicated in slavery in their supply chains once engagement has failed. And, borrowing a phrase from President Roosevelt, he said investors needed to wield a big stick with companies. “There will be cases where divestment is necessary,” Welby said in an interview with CNN. “There will be companies where however much you talk to them, however much their names are in the press, they say ‘no no no it’s not our business’ or ‘we can’t follow the supply chain’ or whatever. Then divestment is necessary. You start with engagement but then, in the words of a US President, you ‘talk softly and carry a big stick’.” Welby’s comments followed a gathering of global faith leaders at the Vatican where they signed a declaration to end modern slavery by 2020.

US pension funds, the St. Lucie County Fire District Firefighters’ Pension Trust Fund and the Fire and Police Retiree Health Care Fund have filed a class action lawsuit against Houston-based oil firm Cobalt International Energy. The complaint, filed on their behalf by Bernstein Litowitz Berger & Grossmann, alleges Cobalt gained access to wells in Angola by “partnering with shell companies in Angola that were partially owned by high-level Angolan officials” – putting it at risk for violations under the Foreign Corrupt Practices Act (FCPA). The suit follows an announcement by Cobalt in August that the SEC would escalate its investigation of the company by notifying if of enforcement proceedings (a ‘Wells Notice’). Announcement

Switzerland’s Ethos Foundation has published the voting guidelines which it will apply at company annual general meetings next year. Pension fund-backed Ethos said a new appendix concerning the maximum number of external mandates has been included to take account of the ‘Minder initiative’ on pay. Ethos added: “A negative vote recommendation will now be issued when certain governance rules are not respected. In the future, Ethos will systematically oppose the discharge if the board of directors does not include at least four members and it will refuse the election of the chairman if he also serves as CEO.”

US class action law firm Robbins Geller Rudman & Dowd says it has been appointed co-lead counsel in an antitrust and commodities manipulation class action against 14 of the world’s largest financial institutions and a leading industry broker. The lawsuit alleges that defendants violated federal law by conspiring to fix the ISDAfix benchmark rate, a key interest rate for a number of derivatives and other financial instruments. The case is pending in the United States District Court for the Southern District of New York.

A group of institutional investors, under the banner of the Alignment of Interests Association, has released a set of guidelines aimed at creating increased investor-manager alignment in the hedge fund space. Among the investors involved in a 15-member Steering Committee are the State Board of Administration of Florida, the Teacher Retirement System of Texas, the University of Texas Investment Management Company, MetLife and OMERS Capital Markets. “The Core Principles for the Alignment of Interests Association are a tremendous milestone in fostering industry best practices while providing a more effective alignment of interests between hedge fund managers and investors,” said Sharmila Kassam, deputy chief investment officer of the Employees Retirement System of Texas.