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RI ESG Briefing, Feb. 18: Broadridge takes stake in corporate governance data firm AMA

The round-up of the latest ESG news

Environmental

Gode Wind 2, a German offshore wind park which a consortium of Danish pension funds owns half of, will soon begin supplying 260,000 German households with renewable power. According to Danish pension scheme PKA, which has the biggest stake (24.75%), the park’s first turbines are connected to the grid and the rest will follow over the next two weeks. The other three Danish schemes that own the facility are Industriens Pension (10.5% stake); Lærernes Pension (8.75%); and Lægernes Pensionskasse (6%). In July 2014, the four Danish funds paid DONG Energy DKK4.5bn (€602m) for half of the 252MW park.

The McKnight Foundation has declared its $188m bond portfolio “coal-free”. “It’s a move we made to further align our investments with our grant making goals of building a low-carbon economy,” said Program Director, Impact Investing, Elizabeth McGeveran in a blog. She said the $2bn Minnesota-based foundation’s manager Mellon Capital Management, helped it to build its own coal screen (she calls it a “scrubber”) to prevent future purchases from companies with underground coal reserves. She added that McKnight’s portfolio still includes companies that use coal to generate electricity as forward-looking utilities are already making the shift from coal to increasingly cost competitive renewable energy options. McGeveran was formerly with F&C as senior vice president of governance and sustainable investment. Link

The German government is planning to ensure that “citizen owners” of wind parks in the country can bid for facilities yet to be built. Through co-operative structures, German citizens own around one-fourth of German wind parks. From 2017, the government is changing the bidding rules for wind parks so that the investor that needs the least amount of subsidies wins. This could exclude citizen owners because they cannot compete financially with bigger investors. The Sueddeutsche Zeitung (SZ) reports that the government is considering ensuring their participation by simply requiring that their co-operatives have at least ten people as owners. The citizens involved in the co-operatives also must come from the county where the wind park is to be built.

Social

The Roundtable on Sustainable Palm Oil (RSPO), a not for profit organisation advocating the global adoption of sustainable palm oil practices, has launched a new, stricter standard for sustainable palm oil production, RSPO Next, to help shift demand towards more ethical and sustainable plantations. The voluntary standard promotes good practice by offering credits to companies that buy 100% certified sustainable palm oil. Link

Campaign group Bank Track says banks must do more to meet their obligations under UN guidelines to disclose how they respond to specific human rights impacts linked to their finance. This is the main conclusion of the first in a new series of Human Rights Impact Briefings it has released, which assesses the responses of 15 large commercial banks to evidence of serious labour standards violations by a company they financed, the Malaysian palm oil grower IOI Corporation.h6. Governance

Broadridge Financial Solutions, the New York-listed investor communications firm, has acquired a minority stake in AMA Partners, a Netherlands-based firm that provides DirectorInsight, an analytics platform that offers data and analytical tools for corporate governance and executive compensation analysis. Broadridge has also entered into an exclusive distribution and marketing alliance with AMA; the terms of the deal weren’t disclosed. AMA was founded in 2012 by former Hermes Fund Managers’ strategist Aniel Mahabier and Hermes’ CEO Saker Nusseibeh sits on its Advisory Board.

Advocacy body As You Sow has released a report looking at how CEO pay has grown. “The 100 Most Overpaid CEOs: Are Fund Managers Asleep at the Wheel?” finds that CEO pay has grown 997% the past 36 years, vastly outpacing growth in the cost of living, the productivity of the economy, and the stock market. It highlights the forces behind disproportionate pay – and the fund managers who continue to approve these pay packages. Link

German technology group Siemens, which retained a 17.5% stake in light bulb maker Osram after spinning it off in 2013, voted against discharge for Osram CEO Olaf Berlien at its annual general meeting (AGM) on February 16. Speaking at the AGM, Siemens Chief Counsel Christian Bleiweiß criticised a decision by Osram to spend €1bn on a new Malaysian LED lighting factory. According to Bleiweiß, Berlien did not correctly communicate such an important decision to the firm’s investors. When the new plant was announced last November, Osram’s share lost one-third of its value and has not recovered since. Despite Bleiweiß’s remarks, Berlien was discharged for 2015, garnering almost 71% of the shareholder vote. Link (German)

Monsanto will pay an $80m (€72m) penalty to settle charges of false accounting brought against it by the Securities and Exchange Commission (SEC). According to the SEC, Monsanto did not properly account for millions of dollars in rebates offered to distributors of a product called Roundup during its 2009, 2010 and 2011 business years. As a result, “Monsanto misstated its earnings in corporate filings during the three-year period,” the SEC said. As part of the settlement, Monsanto CEO Hugh Grant, as well as a former chief financial officer, have reimbursed the company for cash incentives and stock awards that they received in 2009 and 2010, the US agribusiness firm said.

Aerospace giant Rolls-Royce is reportedly preparing to back a bid by activist investor ValueAct to gain a board seat. The Financial Times said the San-Francisco based fund, which is the aircraft engine maker’s largest shareholder with a 10% stake, has met some of the firms top shareholders recently to “assuage concerns” about its intentions.

The Global Reporting Initiative, the corporate sustainability reporting body, has launched a new membership and engagement program called the GRI GOLD Community. It consists of diverse companies and organizations from across civil society, business, mediating institutions, labor and intergovernmental agencies, who, the GRI says are “united in the belief that greater transparency is a catalyst for change towards a more sustainable economy and world”. More than 550 organizations from 69 countries are part of the GOLD Community, representing more than 35 sectors of the world’s economy.