RI ESG Briefing, February 23: $17bn Illinois fund tenders proxy advisory and voting

The round-up of the latest ESG news

Environmental

The EDHEC Risk Institute, the financial research centre of the French business school, has teamed up with consulting firm South Pole Group to launch a new series of low carbon indices. The launch is by the ERI Scientific Beta, the smart beta index provider set up by EDHEC Risk Institute in 2012. “The combination of low-carbon emissions and state-of-the-art smart factor indices is a compelling opportunity for investors globally,” says Maximilian Horster, Director Financial Industry at South Pole.

Dutch development bank FMO has become a partner of the Climate Bonds Initiative, the London-based NGO that promotes investment in and standards for green bonds. Said Nanno Kleiterp, FMO’s CEO: “Partnering with the Climate Bonds Initiative fits well against our long term commitment to green financial development and sustainable investment, particularly in developing nations.” In past years, FMO has been both a major investor in green bonds as well as an issuer of the securities. With the proceeds from its green bonds, FMO invests in projects relating to renewable energy, energy efficiency, food production and water.

An annual progress report from the Sustainable Shipping Initiative (SSI) is reportedly calling on the sector to embrace new finance models to help fund cleantech upgrades. Business Green said the SSI, which represents 17 firms such as Bunge, Cargill, Maersk Line, ABN AMRO and Lloyd’s Register, is backing a new global framework for tackling shipping emissions.

Social

More than 80% of pension fund professionals have expressed a moderate to high interest in sustainable investing, a new study released by US asset management firm State Street reflects. Another 76% of the professionals also say they are more likely to hire an asset manager who can sustainably invest than one who cannot. On behalf of State Street, Longitude Research collected 400 responses from pension fund professionals in 20 different countries. Beyond ESG investing, the professionals express their views on pension fund governance, alternative asset classes and the shift from defined benefit schemes to defined contribution ones.

TIAACREF, the US financial giant with $854bn in assets under management, has changed its name to TIAA. It said the new name takes the organization full circle from 1918, when TIAA was founded through the vision of Andrew Carnegie to make a difference in the lives of teachers. “This is more than a name change; this is a game change,” said Connie Weaver, chief marketing officer at TIAA.h6. Governance

The $17bn (€15.4bn) State Universities Retirement System of Illinois (SURS) is conducting a search for a proxy advisory and voting firm. According to SURS’ Request for Proposal (RFP), the ideal candidate will already advise three other institutional investors with more than $10bn in assets each and have been in business for at least five years. The candidate also must be bereft of conflicts of interest with SURS’ board, custodian or asset managers, the RFP said. The incumbent supplier is Chicago-based Marco Consulting.

Trillium Asset Management, the socially responsible investor with $2bn (€1.8bn) in assets, plans to again oppose the election of Apple’s entire board, which includes Chief Executive Tim Cook and Al Gore, the former US Vice President. As in past years, Trillium says it doesn’t support Apple’s board because it isn’t diverse enough. To meet Trillium’s diversity requirement, 30% of a firm’s board must be women and/or people of colour. Trillium said: “While Apple has been making commendable steps towards diversity, they have not come far enough to meet our very high standard.” Apple’s annual meeting is scheduled for February 26.

The Responsible Investment Association Australasia (RIAA) aims to increase the portion of sustainably managed assets relative to the entire Australian market fourfold by 2019. “We have the goal of increasing responsible investments from 2.5% of the market currently to 10% over the next three years,” the RIAA was quoted as saying on Money Management. To meet this goal, the RIAA said it hoped to tap into growing interest in responsible investing on the part of retail clients and pension funds. RIAA also will work to make policy and regulation more conducive to responsible investing.

Governance research firm Institutional Shareholder Services (ISS) has advised investors to withhold support for six directors at media company Viacom, according to Reuters. It said the largest proxy adviser cited concerns including their oversight of executive pay. ISS also recommended support for a shareholder proposal calling on the company to adopt a recapitalization plan to give each share an equal vote. Viacom holds its AGM on March 14.

ERAFP, the French Public Service additional pension scheme, and whose investments are 100% responsible, has joined the French SIF. The French SIF was created in 2001 and has for goal to promote ESG practices. For Philippe Desfosses, director of the ERAFP, this is part of a strategy to develop and contribute to a sustainable economic transition.