RI ESG Briefing, February 7: BlackRock, UBS, Deutsche Bank receive stewardship letter over Carillion

Round-up of the latest ESG developments.

Shareholders in liquidated UK construction firm Carillion – including BlackRock, UBS, Standard Life, and Deutsche Bank – have received a letter from two UK parliamentary committees, looking to examine “the effectiveness of the board’s stakeholder engagement and whether its major institutional investors complied with the Stewardship Code”. It also asked what steps they took “to influence the financial decisions of the board, what response did you receive, and what lay behind your decision to sell shares in the company when you did?” The Work and Pensions Committee and Business, Energy and Industrial Strategy Committee asked for a response from the investors by Friday 2 February.
A planned £2bn offshore wind farm off the coast of England has attracted the interest of a number of infrastructure investors and pension funds, including Australia’s Macquarie, Switzerland’s Partners Group and Denmark’s PFA Pension, Reuters reports. The project, known as Triton Knoll, is owned by German energy group Innogy.
A US securities fraud class action led by the Mineworkers’ Pension Scheme has won its case against First Solar. It alleged that the US solar giant concealed a defect in its solar panels, misrepresented the cost and scope of the defects, and reported false information on the company’s financial statements.
It comes at the same time as First Solar confirmed it would sell its jointly-owned yieldco, 8point3 to Swiss asset manager Capital Dynamics. The US vehicle, which holds operational solar assets with the aim of generating consistent yield with no construction risk, saw its share price tumble after the announcement that First Solar and SunPower, who co-launched 8point3 in 2015, would sell it for $977m – less than its market value. It will now be merged with CD Clean Energy and Infrasrructure V JV, an equity fund run by a consortium led by Capital Dynamics. Shares fell by up to 15% on the announcement.
Boston based consultancy Bain & Company has joined the World Business Council for Sustainable Development (WBCSD). It joins a cohort of nearly 200 other companies at the sustainability network. The firm has also committed to invest $1bn in pro bono consulting support for global development non-profit organisations.
US university, Harvard, has reportedly been urged by students to divest a Boston hedge fund holding nearly $1bn in Puerto Rican debt. The activists argue that Baupost Group are stifling recovery efforts in Puerto Rico, where the government is trying to rebuild hundreds of thousands of businesses, homes, and schools devastated by Hurricane Maria whilst trying to repay its creditors.Malaysia’s second largest pension fund has reportedly become the region’s first signatory to the Principles for Responsible Investment. The $32bn Kumpulan Wang Persaraan (KWAP) fund announced the news, stating that it “holds a strong belief that by integrating ESG practices into investment activities, sustainable risk-adjusted returns can also be generated while enabling KWAP to meet the fund’s obligations at an optimum level”.
SOAS University of London has fulfilled its 2015 pledge to divest from fossil fuels within three years, making it the first university in London to make good on its promise. The University “no longer has investments within the oil and gas producers’ sub-sector or any companies that derive more than 10% of their revenues from coal mining”. The update comes as Edinburgh University, which has the largest endowment fund of any university in Scotland, has pledged to divest its fossil fuel holdings in the next three years. It will become the largest university endowment in the UK to be free of fossil fuel investment.
Bristol University in England has also reportedly divested the majority of its holdings in the most carbon intensive sectors. Its recently-appointed fund manager Rathbone Greenbank has helped the UK academic institution decrease its investment in carbon intensive industries by 78%, it said.
The Bank for International Settlements has published a report on banks’ opacity and insider trading, which found that contrary to “conventional wisdom” banks are not more opaque than other firms. It found the only divergence with other types of firms was when “bad news arrived”. The report – which distinguishes insiders from outsiders (such as investors or depositors) – claims “that sales by bank insiders are not followed by negative stock returns. This allegedly suggests “that bank insiders do not receive bad news earlier than outsiders”.
49 institutional investors with assets of $31tn want more detailed ESG disclosure according to a recent’-Board-Composition-Business/?feedref=JjAwJuNHiystnCoBq_hl-Vxyxd2_5mXrUT-uxCXoIqgr_OxXu5bFKQqXMZEVLcepz51RgqIO9jteeI1Kq_zxBxjUZ7-9_1AgxnhqXMh__QcQMsO68Iv5seDXn91BQqxF report by corporate governance consultant, Morrow Sodali. Published ahead of the 2018 annual meeting season, the report also identifies boards of directors and long-term business strategy among its top-three areas of concern for investors. The survey indicated that executive pay, support for activist investors, disclosure around materiality and sustainable metrics, and integration of ESG are also all on investors’ agendas as the AGM season gets underway.
California-based Wilshire Consulting – the institutional investment advisory and outsourced-CIO business unit of Wilshire Associates – has reportedly launched a new manager diversity initiative. In response to client demand, the firm will now include – where products are available – at least one diversely-owned firm in every public securities manager search it conducts for advisory clients.