RI ESG Briefing, February 13: Academic evidence for role of governance

The round-up of the latest ESG news


German investor KGAL says it has further expanded its portfolio in wind parks in the past three months. Six parks were purchased in Germany and two parks in France with a total of 38 wind turbines and an overall output of 85.2MW, for a total investment of €166m. As a result, KGAL’s wind portfolio runs to 33 parks, 188 turbines with a total output of about 367MW – worth €600m.

Prudential Financial, the US finance giant, has disclosed a 10.8% stake in China Hydroelectric Corporation, according to a Securities and Exchange Commission filing. Last year a group of investors including an arm of Swiss Re and the UK pension fund-backed water fund Aqua Resources won a boardroom battle at the New York-listed hydropower firm.

A new report from the Worldwatch Institute environmental think tank has found that hydropower and geothermal technologies saw slower growth in 2011. It said global installed capacity of hydropower reached 970GW, only a 1.6% increase from the previous year. While geothermal energy’s cumulative capacity reached 11.2 GW, slowing to below 1% for the first time since 2002. Link


The UN-backed Principles for Responsible Investment (PRI) has a new Quebec network ahead of a major conference on responsible investment in Montreal set for February 19. The event will be the first meeting of the new Réseau PRI Québec; there are currently more than 25 institutional investors in Quebec who adhere to the PRI. Link

Paris Europlace, the French lobby group for Paris as a financial centre, has merged its two separate commissions on CSR and SRI into one, presided by Nicole Notat, Founder and President of Vigeo, reports Novethic. The new joint commission will meet four times per annum.h6. Governance

The Canadian Coalition for Good Governance, whose 46 members manage nearly C$2trn (€1.5trn) in assets, has published a review of the academic literature showing the relationship between governance and company values. The Value of Governance was prepared by Professor Anita Anand of the University of Toronto Faculty of Law. “Overall, there is a strong consensus in the literature that corporate governance is linked positively to firm value, even when “governance” and “value” are defined and measured in various ways,” Anand writes.

Walden Asset Management’s shareholder proposal to US industrial group Emerson Electric seeking sustainability reporting, co-filed with a group of institutional investors, gained 38% support at the company’s annual meeting on February 5 – up from 35% last year. Investors backing the proposal included the AFSCME Employees Pension Plan, Christian Brothers Investment Services, the California State Teachers Retirement System, the Florida State Board of Administration, Trillium Asset Management and Calvert Funds, according to the Proxy Democracy site. “We will continue to seek a dialogue with the company,” Walden said.

Axa Investment Management, the fund firm with €548bn in assets under management, says it is exploring applying environmental, social and governance (ESG) factors to sovereign debt investing. “We are seeing increasing interest from clients in ESG analysis that can be applied to asset classes such as sovereign debt,” said Matt Christensen, Global Head of Responsible Investment at the firm, which has published a research paper on the topic called ‘Sovereign debt investing: ESG framework and applications’.

The New York Stock Exchange has sent out its Annual Corporate Governance Letter to listed companies. It highlights considerations for companies ahead of the annual general meeting season. Link