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RI ESG Briefing, February 18: Icahn welcomes new Shareholder-Director Exchange initiative

The round-up of environmental, social and governance news

Environmental

The Carbon Disclosure Standards Board (CDSB), the consortium of global business and environmental NGOs, managed by CDP, is inviting public comment on its draft reporting framework as it expands beyond climate change to include more information on natural capital such as forest risk commodities and water. It said it hopes to encourage analysis and decision-making by investors that recognizes the dependence of economic and financial stability on a stable and healthy environment. The draft consultation is available here and the deadline for responses is May 19.

Environmental data group Trucost has partnered with Denmark-based pharmaceuticals firm Novo Nordisk to publish what’s claimed to be the first environmental profit and loss account in the sector. Trucost’s analysis found that the environmental impacts of Novo Nordisk’s business cost €223m in 2011 – though the company’s own operations were responsible for only 13% of these costs. Three quarters came from supply chain impacts such as greenhouse gases released from agricultural production of maize to make glucose, the main ingredient in its main product, insulin.

Investment bank Goldman Sachs has reportedly provided $50m in funding to Singapore-based solar leasing outfit Sunseap. The company expects to grow its energy generation capacity by at least 30MW and create a funding platform for more growth, according to a report in Eco-business.com

Social

GjensidigeStiftelsen, the Norwegian foundation with approximately $8bn in assets under management has selected MSCI ESG Research to provide ethical screening and external manager engagement services. Link

Asset manager AXA Investment Managers says it is possible to combine environmental, social and governance (ESG) factors with so-called smart beta equity. It back tested such a portfolio and found a return of 3.22% – outperforming the MSCI World index with lower total volatility. “Our study shows that ESG SmartBeta can offer investors a lower total risk and higher return than index investing, along with improved diversification and strong ESG performance,” said Matt Christensen, Head of Responsible Investment at AXA IM.h6. Governance

US activist investor Carl Icahn has come out in support of the new Shareholder-Director Exchange (SDX) initiative. SDX was launched earlier this month to facilitate direct communication between institutional shareholders and corporate directors. “From my perspective, the Shareholder-Director Exchange has tremendous potential to help improve corporate governance and performance in this country,” Icahn writes in a blog post. For too long, large institutional shareholders had been corporate governance “sleeping giants”.

The Principles for Responsible Investment (PRI) has issued a Request for Proposals (RFP) for its previously announced review of its own governance structure. The deadline for submissions is March 10 and it is envisaged that the individual or organisation will be appointed in late March. The process will be in three stages, with Phase Three (October – November 2014) being final recommendations ahead of a final report published to signatories in November 2014.

A shareholder proposal filed by the Green Century Equity Fund has prompted food group Kellogg Co. to announce a commitment to only purchase deforestation-free palm oil. Working closely with Green Century, Kellogg’s has committed to ensuring all palm oil purchases can be traced back to suppliers verified as protecting forests, peatlands, and human rights, with an aggressive target date of December 31, 2015, Green Century said.

ERAFP, the €15bn Paris-based French Public Service Additional Pension Scheme – a 100% SRI pension fund, has contracted FundLogic, the Morgan Stanley-owned funds platform to provide it with portfolio management services. FundLogic is a multi-asset fund sales platform for the firm’s UCITS and non-UCITS based funds. It also has an alternatives funds arm that sells access to third-party managers.

The Toronto Stock Exchange has announced that it has received notice of approval from the Ontario Securities Commission to proceed with amendments to listing rules, thus mandating companies to adopt majority voting. The amendments require each director of a TSX-listed issuer, other than of a majority controlled issuer, be elected by a majority of the votes cast with respect to his or her election other than at contested meetings.