RI ESG Briefing, Feb. 17: Australia reviews investor collective action rules to boost corporate governance

The round-up of the latest environmental, social and governance news


The Strathclyde Pension Fund is backing a renewable energy project in Scotland alongside the Green Investment Bank (GIB). The fund is putting £10m (€13.5m) into a scheme via developer Albion Community Power plc that will finance up to 30 projects generating c.24MW of new renewable energy. The first project to be announced is a hydro scheme around 100km north of Glasgow. The GIB has committed up to £50m while Albion is “working to attract” a further £40m. Strathclyde chairman Paul Rooney said: “I’m pleased that Strathclyde Pension Fund will be providing funding to innovative projects that might otherwise have been frozen out of the market – and that the investment made by our members in their own future will support the future of our communities, through improved infrastructure and jobs.” Announcement

“As stewards of long-term capital, today’s investors cannot ignore the coming carbon price and the shift toward low-carbon energy sources,” write two leading investment figures in a World Economic Forum blog. “That means devising practical ways to finance and encourage the required shift,” write Jeffrey Sachs, Professor of Sustainable Development at Columbia University and Hendrik du Toit, CEO of Investec Asset Management. They argue that the financial industry should work with governments to create a “global investment framework” that includes appropriate incentives to take on the challenges of sustainable growth.

Christopher Ailman, the chief investment officer for the California State Teachers’ Retirement System (CalSTRS), the $188.bn (€166bn) US pension giant, has called for a global price on carbon emissions. On Global Divestment Day, Ailman tweeted via his personal account: “The only solution is a global price on carbon emissions. If there was a price, changes would be immediate and massive. Price emissions!”

Both divestment and engagement with companies on fossil fuels have a “creative role” to play in achieving change, according to Timothy Smith, Senior Vice President and Director of ESG Shareholder Engagement at Walden Asset Management. Drawing on the role faith-based investors took in the anti-apartheid campaign, Walden says in an article in Green Money Journal: “One lesson to be learned from the South Africa experience is that the combination of those pushing divestment and those seeking engagement could well have an enhanced impact on these companies’ thinking and behaviour.”


Hermes Equity Ownership Services (EOS) is engaging with CEOs of pharmaceutical companies over concerns about supplying the US penal system with death penalty drugs. In a blog, Associate Director Tim Goodman says the increased use of experimental drugs has resulted in a series of botched executions, leaving the manufacturers open to reputational, legal and divestment risk.

The Responsible Investment Association Australasia (RIAA), the Australia and New Zealand SIF, has joined the UN PRI Australia Country Network Steering Committee. RIAA said the move would help to more closely coordinate the global focused activities of the PRI with the regional and local expertise of RIAA. To date, the regional SIF organizations have not tended to have formal linkages with the PRI.

Cranfield University in southern England is launching a full-time Masters Degree in Management and Corporate Sustainability. It’s a one-year full-time programme starting in September each year, designed to develop practical, proactive corporate sustainability managers.h6. Governance

The Australian Securities & Investments Commission (ASIC) is reviewing its regulatory guidance for investors who want to take collective action to improve the corporate governance of listed firms. ASIC Commissioner John Price said: “Effective investor engagement underpins good corporate governance and promotes confident and informed investors and fair, orderly and transparent markets.” He said the regulator recognises “it can be efficient and effective” for investors to work together when engaging with firms. Comments are due on the consultation by April 20.

The Taiwan Stock Exchange says specified listed companies will start mandatory corporate social responsibility (CSR) reporting annually from 2015. Taiwan will be the first Asia-Pacific market to implement mandatory CSR reporting that adheres to internationally recognized Global Reporting Initiative (GRI) G4 principles this year. “We believe fostering quality, corporate transparency and growth potential of Taiwan’s capital market will attract more investors looking for sustainable investment opportunities,” said Mr. Lee Sush-der, Chairman of TWSE and head of the Advisory Committee of the Corporate Governance Center. Announcement

ERAFP, the €20bn French civil service fund and 100% socially responsible investor, will focus its 2015 investor engagement on challenging companies that use aggressive corporate tax optimization strategies or are hypocritical over their own corporate sustainability strategy and simultaneous funding for climate change deniers. Outlining its latest voting and lobbying strategy, the fund – a rare institutional corporate governance champion in France – said it will also vote against opaque corporate financial strategies, board elections where less than 30% of the candidates are women, and will pay particular attention to transparency, fairness and moderation for executive pay.

Separately, Jean Philippe Rouchon, Responsible Investment Officer at the fund is leaving after two years, having developed its shareholder engagement policy. ERAFP is seeking a new Responsible Investment & Engagement Officer to replace him. The job involves leading ERAFP’s shareholder engagement and voting and the monitoring of its socially responsible investments. Rouchon is joining the “Fédération des Entreprises d’Insertion”, a French association for job re-insertion through economic activity.

Australian ESG research house CAER will face court action in April from Perth-based copper mining company Sandfire Resources which alleges CAER published “misleading” and “deceptive” research that lead to the Australian National University’s (ANU) decision last year to publicly divest Sandfire and six other fossil fuel companies. The case will be heard by Justice Katzmann at the Federal Court of Australia and has been lodged under consumer protection of a misleading or deceptive type. ANU’s decision to divest the A$16m (€10.9m) – or 5.1% of its Australian equity holdings – sparked an intense debate in Australia and even drew criticism from Prime Minister Tony Abbott.

The Carbon Tracker Initiative has written to the US Securities and Exchange Commission (SEC) highlighting that fossil fuel company disclosures have not effectively conveyed the risks to company business models of trends towards a low-carbon economy. The letter, written to the SEC in the light of its ongoing review of disclosure, also proposes two disclosure improvements that would address “the core, material risks posed by climate reality”: disclosures of future capital expenditure by break-even price bands and the carbon content of reserves and resources. Link