RI ESG Briefing, February 3: USS gets lead plaintiff nod in Petrobras class action

Environmental

The pension committee of Hackney Council in London has reportedly agreed to endorse a series of recommendations relating to fossil fuel and climate change issues. Professional Pensions said
that it held a special meeting on divestment on January 28 at which it decided to add a dedicated fossil fuel investment section to the fund’s investment strategy statement. The report added it also agreed to invest 5% of the fund in sustainable/low carbon and clean energy funds – and look at switching some of the existing property mandate into a low carbon property fund. It follows pressure from the Divest Hackney group, it added.

Cornell University’s Board of Trustees have voted against divesting from fossil fuel investments, according to student newspaper the Cornell Daily Sun. It said the board would introduce new guidelines specifying the Ivy League university would only divest its endowment from “morally reprehensible” companies, such as those implicated in genocide, human trafficking, slavery, systemic cruelty to children, and violation of child labor laws. Investment Committee Chair Donald Opatrny was quoted as saying the endowment “must not be regarded primarily as an instrument of political or social power.”

Global revenue from solar photovoltaic (PV) installations will total $1.2trn by 2024 according to Navigant Research, cited by Renewable Energy Focus. It said Navigant has examined the market for solar PV, forecasting capacity and revenue, segmented by region and country – finding that the global electric power industry is evolving into a model with more diversity, both in terms of generation and in the ownership of generation assets; solar PV was one technology in the vanguard of this.

Social

The European Union’s securities regulator, the European Securities and Markets Authority (ESMA), is reportedly considering what action to take after finding that many actively managed funds could be misleading investors by in fact tracking a stock index. Reuters reported that Paris-based ESMA studied a sample of 2,600 funds over 2012-2014 and found that up to 15% of UCITS equity funds could potentially be “closet indexers”. “In partnership with national regulators we are taking a closer look at this issue,” ESMA Chair Steven Maijoor was quoted saying said in a statement.

Canada’s Desjardins financial group and the Université de Sherbrooke in Quebec are creating the position of Desjardins chair in responsible finance. “The Desjardins chair in responsible finance will be tasked with developing expertise related to the social and environmental impact of financial decisions, and helping us deal with the issues of responsible management,” explained François Coderre, Dean of the Faculty of Administration. Link (French)h6. Governance

The UK’s Universities Superannuation Scheme (USS) has emerged as the lead co-filer in a class action suit against beleaguered state-run Brazilian oil company Petrobras. The class-action litigation concerns investors seeking to recoup billions of losses arising from Petrobras’ bribery and political kickback scandal. Yesterday, US district judge Jed Rakoff said two class action suits against Petrobras could go ahead. One led by USS, the other by North Carolina’s treasurer and the Employees’ Retirement System of Hawaii. The investors involved in the class action include Danske Investment Management, London Borough of Hounslow Superannuation Fund and the Bill and Melinda Gates Foundation.

Bank leaders in the UK should commit to work with the Investor Forum to create banking and investment cultures that enable the sector to deliver long-term value – that’s one of the main recommendations of a new Banking Futures report. Banks should also better serve the real economy’s current and future needs and their management should “commit to a public process” involving consumers, civil society and regulators to improve their duty of care and respect for customers. “The report is an important start but it must not gather dust. Now we must all make the change happen,” says Andrew Bailey, Deputy Governor Bank of England.

Larry Fink, chief executive of BlackRock, the world’s largest asset management firm, has written to the CEOs of leading US companies asking them to focus on creating long-term value instead of emphasizing quarterly targets, according to reports. Fink said firms should still report their earnings on a quarterly results and that “long-termism” should not be a substitute for transparency, Reuters reported. He also called on companies to focus on environmental and social factors that impact them, the report added.

“Cease the legislative procedure” is the stark opinion of the Investment Association, the UK fund industry trade body, on a financial transaction tax. “A financial transactions tax would be counterproductive, as it would demonstrably push up costs for all users of financial markets and reduce liquidity,” the IA said – adding that implementing it in only a few European Union states would introduce “distortions in the operation of capital markets across the EU”. The IA was responding to a consultation on the regulatory state of play from the European Commission.

The Governance Institute of Australia, the Sydney-based professional association, has issued a guide for corporate political donations. “With a federal election looming and the inevitable campaigning that comes with it, Governance Institute of Australia has released much-needed guidelines outlining the issues companies need to consider if contemplating making political donations,” it said. CEO Steven Burrell said bodies such as the Australian Shareholders’ Association were “increasingly holding companies to account for diverting company profits to political causes of any kind”. Link