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RI ESG Briefing, February 24: Global sustainable investing assets grow 61% – global SIFs

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

Environmental

The European Investment Bank (EIB) has increased its 1.375% Climate Awareness Bond (CAB) by €400m. “The tap reinforces the benchmark character of the issue, which, now at €3bn, continues to be the largest Green Bond outstanding in any currency,” the EIB says. Joint bookrunners for the transaction were Crédit Agricole CIB, Credit Suisse, Nomura and Standard Chartered. The EIB says the issue has now “attained benchmark status in its own right”.

CDP, the investor-backed environmental data body, has released a new White Paper on the long-term risks posed by climate change to the US muni bond market and how CDP data can be used to assess them. The CDP, the former Carbon Disclosure Project, found climate change impacts can pose significant risks to U.S. municipalities that should be considered by municipal market analysts. The CDP says “additional ESG data sources” are needed to cover the 50,000 municipalities in the US, as well as other non-government issuers such as utilities and water authorities. The report has been put together by Rob Moore, Consultant at CDP, and Robert Fernandez, Vice President of Credit Research at Breckinridge Capital Advisors.

Oscar winning actress Natalie Portman is among the high profile ex-students of Harvard University who will return to the college in April to support the student fossil fuel divestment movement. In a letter sent last week, the alumni, which also includes 350.org creator Bill McKibben and film director Darren Aronofsky, praised the campaign and said they will join the cause on April 12 and 13 and make the case for divestment. Link

Deutsche Bank, Germany’s biggest, says it will increase its investments in green bonds to €1bn from €200m currently. In a statement, Deutsche said that as the green bond market had matured last year (volume: €32.3bn), it now considered the securities as “viable and prudent liquidity buffer investments.” Deutsche was one of the banks that subscribed to the ten-year, $600m green bond issued by the World Bank last week. It also was one of its underwriters, alongside Morgan Stanley and SEB.

Social

Bishop Michael Doe, the chair of the Ecumenical Council for Corporate Responsibility (ECCR) has signed the global petition calling on Italian clothing giant Benetton to pay proper compensation after the collapse of the Rena Plaza garment- factory in Bangladesh in 2013 in which 1,134 people died. The UN set up a ground-breaking compensation and corporate accountability scheme and Benetton is now the only major global brand with undisputed links that hasn’t paid up, preferring instead to pay an undisclosed sum to a local charity, the ECCR says. Link

Is it ethical for the Church to invest in fossil fuels? That’s the topic of new paper from the BrightNow campaign that explores how the Church, as an investor, can respond ethically to the growing threat of catastrophic climate change.h6. Governance

Global sustainable investing assets grew 61% from 2012 to 2014 to reach $21.4trn (€18.9trn), according to the Global Sustainable Investment Review 2014, released by the Global Sustainable Investment Alliance (GSIA), the body which represents global Social Investment Forums (SIFs). The most common sustainable investing strategy used globally is negative/exclusionary screening, affecting $14.4trn (€12.7trn) in assets. The second most common is ESG integration affecting $12.9trn (€11.4trn). Corporate engagement and shareholder actions is the third most prominent strategy, affecting $7trn (€6.2trn). Link

Institutional investors are increasingly demanding that private equity firms adopt ESG policies in their investment processes, according to new research from the London Business School’s Coller Institute of Private Equity. The study, based on responses from 42 private equity firms with collective assets under management of more than $640bn ($565.9bn), find growing pressure from clients (‘limited partners’) is hastening the movement of ESG from being purely a compliance function to a key part of the investment process.

Proxy advisory firm Institutional Shareholder Services (ISS) has issued a frequently asked questions (FAQ) document on ‘proxy access’ (the shareholder right to nominate board candidates). It indicates it will generally back management and shareholder proposals which allow for nominations to be made by shareholders owning not more than 3% of the voting power for three years, with “minimal” or no limits on the number of shareholders permitted to form a nominating group, and allowing nominations for up to 25% of the board. ISS is tracking 96 shareholder proposals on proxy access.

Walden Asset Management, the US socially responsible investment firm, says it has successfully engaged with 31 (out of 35) companies on lesbian, gay, bisexual, and transgender (LGBT) rights in the last three years. “Walden’s ultimate goal is for all client portfolio companies to have inclusive non-discrimination policies that are easily accessible to prospective employees,” the firm said. Since 2000, it has written letters, engaged in dialogues, or filed shareholder proposals with over 100 companies on LGBT workplace equality.

Global stock exchanges have to rebrand themselves as “economic engines for good”, according to an interview with Nasdaq’s Vice Chair Sandy Frucher. Discussing the UN’s Sustainable Stock Exchanges initiative, he told Capital Finance International: “We have a unique relationship with the markets we make and the companies that list with us.”

Proxy statements in the US are too long, according to more than half of the 64 investors who responded to a survey conducted by the Stanford Rock Center for Corporate Governance, RR Donnelley and Equilar between September and December 2014. Some 80% respondents reckon proxy voting increases shareholder value, though it is felt that the ideal length for the statements is about 25 pages. Link