RI ESG Briefing, February 19: Sweden’s AP2 calculates carbon footprint of equities portfolio

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

Environmental

Andra AP-fonden (AP2), the SEK293.9bn (€30.6bn) Swedish state buffer fund says it has calculated the carbon footprint for its equity portfolio for the second time. It said: “Fund investments in equities represent 2.2m tCO2e [tonnes of carbon dioxide equivalent], corresponding to 17 tCO2e per invested SEK million kronor.” It came as the fund reported a 13.3% return on its investment portfolio in 2014.

BlackRock has acquired a 10MW wind farm project from Renewable Energy Generation Ltd. (REG), the AIM-listed developer. The Denzell Downs facility has been sold to BlackRock Renewable Income UK for £24.4m (€33m). Under the agreement REG will oversee construction of the project and operate the completed project on behalf of BlackRock. It’s the latest deal between the two firms and BlackRock Managing Director Rory O’Connor said: “We are very pleased to continue BlackRock’s excellent partnership with REG and to make this long-term all-equity investment in the Denzell Downs project as part of BlackRock’s significant investment programme in the UK renewables sector.” Announcement

Lawyers for Harvard University will reportedly appear in court on February 20 (Friday) in a bid to resist attempts to force its $36bn (€31.6bn) endowment to divest coal, oil and gas companies. The Guardian reported that a lawsuit filed late last year by seven students claim Harvard has an obligation to resist climate change by withdrawing from fossil fuel companies. The university and the state of Massachusetts, which is also named in the lawsuit, are seeking the dismissal of the case, the report added.

Social

Spending on sustainability consulting engagements will grow from $877m in 2015 to over $1bn in 2019, according to a new forecast from research firm Verdantix. Based on interviews with 260 heads of sustainability in 13 countries across 21 industries and financial data from 5,662 firms, it forecasts growth in spending on corporate sustainability consulting of 4% a year over the next five years.

The Business Benchmark on Farm Animal Welfare was launched earlier this month. It is designed to help drive higher farm animal welfare standards in the world’s leading food businesses. It is the first global measure of animal welfare standards in food companies and is designed for use by investors, companies, NGOs and other interested stakeholders. Link

The undergraduate senate at Stanford University has approved a measure to divest holdings in companies operating in the disputed West Bank, according to media reports. The resolution calls for trustees to divest from firms that “violate international humanitarian law”. The measure had originally been struck down earlier but it was reconsidered, the Times of Israel said. It follows other similar resolutions at universities such as the University of California and Durban University of Technology in South Africa, the report added.h6. Governance

The Institute of Directors (IoD), the UK business lobby group, has called for a review of fund managers. It was responding to the Financial Conduct Authority’s announcement that it was launching a review into investment and corporate banking. The IoD said the FCA “should prioritise looking at the fund management industry”. It said greater clarity was required about the industry’s pay, fees and “perhaps most pertinent, their commitment to stewardship and their voting record”. It backed the opposition Labour party’s proposals to require fund managers to reveal how they vote on pay deals.

Whole Foods Market says its board has decided to postpone its annual meeting following the SEC’s intervention on ‘proxy access’ (shareholders’ right to nominate board candidates) last month. The move was needed to give the US retailer “adequate time to review and evaluate” its alternatives, according to a filing. The AGM was due to take place on March 10 but now Whole Foods will announce the new date, time and related deadlines after a final decision has been made.

Old Mutual, the fund manager with £293.8bn under management, has reportedly called for directors’ contracts in the UK to be “substantially shorter” than the current norm of 12 months. The Guardian said it follows multi-million-pound payouts to ex-directors of retail giant Tesco, which was hit by an accounting scandal. The paper quoted the National Association of Pension Funds trade body as saying it was time to debate the issue and that members of asset management body the Investment Association were also discussing the matter.

A set of questions that investors should ask Royal Dutch Shell about its Arctic drilling plans has been put together by campaign groups Greenpeace and Oil Change International. “We suggest questions investors should ask Shell, to understand whether the company has adequately assessed the various risks it faces,” they say in Frozen Future: Shell investor briefing. It follows the announcement last month that Shell intends to resume its US Arctic drilling programme at a cost for 2015 of at least $1bn.

Canada-based proxy solicitation firm Kingsdale Shareholder Services is set to expand into the US market by opening a New York office next month, according to a Reuters report. It quoted Chief Executive Wes Hall as saying in an interview that it could follow this up with acquisitions, given that its business has doubled in the last two years. The report added that the firm has evaluated several potential targets and was in “advanced talks” with one of them.

Asset management and insurance giant Aviva has welcomed the European Commission’s Green Paper on Capital Markets Union that was unveiled this week. It said: “Whilst the Green Paper supports the important link between finance, investment and long-term planning, we believe that more can be done to promote sustainable, long-term capital markets at an EU level. This is why we support the initial ideas set out in the paper around boosting the green bond market; and improving corporate governance and financial literacy.” Aviva, which has published its own Sustainable Capital Markets Union document, called the green paper a “landmark moment”.