RI ESG Briefing, Feb. 8: OPTrust, Vigeo Eiris, ING, ERAFP, Kazanah Nasional, Rhode Island

The round-up of the latest ESG developments


OPTrust, the C$18.4bn (€13.1bn) Canadian pension fund, has released a position paper detailing its approach to navigating the complexities of climate change with respect to institutional investing and includes a call for collaboration in the development of standardized measures for carbon disclosure. The position paper is called Climate Change: Delivering on Disclosure and is accompanied by a report by Mercer titled OPTrust: Portfolio Climate Risk Assessment which provides an assessment and analysis of the organization’s climate risk exposure across the total fund. “Climate change impacts, and policy responses to these, will undoubtedly have repercussions on capital markets and our investment portfolio. While these impacts continue to grow, the investment industry has yet to develop a common approach to measure, model and mitigate these risks,” said OPTrust President and CEO Hugh O’Reilly.

ING has become the latest lender involved in financing the Dakota Access oil pipeline to express concerns about the project. The venture has been at the centre of protests that have seen more than 700 people arrested in the US, over worries that it will contaminate drinking water and destroy sacred land associated with the Standing Rock Sioux Tribe. ING is one of 17 banks providing debt to the project, in a deal it says is “legally impossible to withdraw from”. It divested some $220m shares in the parent companies at the end of 2016, it said, and has decided “to stop doing any new business with them”, including not renewing existing credit facilities when they expire. ABN Amro, another lender to the pipeline, said last week it would cut ties if further violence was used, while fellow lender Wells Fargo is the target of a $3bn divestment campaign by the City of Seattle as a result of its involvement.

Republican congressman Matt Gaetz has tabled a bill in the US Congress entitled ‘To terminate the Environmental Protection Agency”. The bill, which currently has no text, is co-sponsored by three Republican congressman – Thomas Massie, Steven Palazzo and Barry Loudermilk. In an email from Gaetz to other politicians on the bill, obtained by the Huffington Post, he reportedly says: “As conservatives, we must understand that states and local communities are best positioned to responsibly regulate the environmental assets within their jurisdictions…..I ask for your support in eliminating this abusive and costly agency.”


The French government has announced six new social projects it is reviewing to be part of its social impact bond or le contrat à impact social (CIS) programme. Last year, French President, François Hollande, signed off the first two CIS projects and now six further projects are being reviewed including an employment programme and a project to reduce re-offending. Link

The Social Stock Exchange, the UK exchange based in London, is exploring launching in Edinburgh and will be undertaking a four-month feasibility study with The City of Edinburgh Council. Cllr Alasdair Rankin, Finance & Resources Convener, City of Edinburgh Council, commented: “We know from our ongoing work in developing a 2050 Vision for Edinburgh that residents yearn for a more compassionate and equal city and are focused on narrowing the gap between rich and poor. Set against a backdrop of falling council budgets, we are keen to explore new ways of helping businesses to raise the funds they need to deliver much-needed services to local communities.”

The Australian government has launched a consultation on developing social impact investing. The consultation, launched by the country’s Treasury department, says state governments are already leading in the area and explores ways the federal government can also play a part through creating an enabling environment and by funding state governments. Questions include whether clarity on the fiduciary duty of superannuation trustees on impact investing is necessary. The deadline for responses to the consultation is 27 February 2017. Elsewhere, South Australia is set to launch its first social impact bond (SIB), a $9m SIB to reduce homelessness.h6. Governance

Vigeo Eiris, the ESG research house, has issued a positive alert on three US companies taking legal action against President Trump’s controversial anti-immigration decree. Vigeo Eiris issued a positive alert upgrading the scores of three US companies – Amazon, Expedia and Microsoft – in the Human Rights domain, following their decision to take legal action against Trump’s decree banning people from seven countries from entering America. The companies had made a “strong and positive signal” to investors and markets, said Fouad Benseddik, Director of Methods and Institutional Affairs.

ERAFP has expanded its shareholder engagement policy and set out its voting policy for 2017. New requirements include its asset managers initiating dialogue with companies involved in proven violations of international standards. Also, the French fund will expect all publicly traded companies to implement voting on the remuneration of corporate officers and a minimum threshold of 40% women board directors. Link

A group of 214 institutional investors and businesses have written to President Trump and members of Congress to defend the gains made by the Consumer Financial Protection Bureau and its director Richard Cordray. The letter was organized by both ICCR and the American Sustainable Business Council, organizations that have advocated for financial reform to prevent the types of lapses we saw in the 2008 crisis in light of threats by the new administration to handicap the bureau.

Kazanah Nasional Berhad, Malaysia’s sovereign wealth fund, has become a signatory to the Principles for Responsible Investment (PRI). Khazanah, which has assets of RM145bn (€30bn), becomes the first Malaysian PRI signatory. Other new PRI signatories include Transport for London Pension Fund and Governance for Owners Japan KK.

For the first time ever, Germany’s Commerzbank has moved up into the highest quality segment in the latest assessment by ESG ratings house Oekom Research. The bank, Germany’s second largest, said it had been recognised for its commitment in the field of sustainability by being awarded prime status. “Being awarded a prime rating is confirmation that the Bank’s CSR policies are on the right path,” says Rüdiger Senft, Head of Corporate Responsibility at Commerzbank.

Facebook is reportedly being pressured by a group of shareholders seeking the removal of CEO and founder Mark Zuckerberg from the board of the directors. VentureBeat said campaign group SumOfUs has submitted a proposal claiming that an independent chairperson would be better able to “oversee the executives of the company, improve corporate governance, and set a more accountable, pro-shareholder agenda.”

Britain’s largest fund managers have reportedly united against ‘fat cat’ pay deals. The Sunday Times reported that 13 asset managers – running a combined £9trn – are poised to take a tougher stance on executive attack salaries and bonuses. Houses including Aberdeen Asset Management, HSBC Global Asset Management, Schroders and M&G agreed the deal at a meeting of the Investment Association, the funds industry body, last month, the report added.

Rhode Island General Treasurer Seth Magaziner has met with Wells Fargo CEO Timothy Sloan to “demand answers” following the scam accounts scandal at the bank. “There continue to be unanswered questions about how long this fraud was perpetrated on unsuspecting customers, what systems and controls were in place, and how long it took management identify and begin to correct these problems,” said Magaziner, a former analyst at Trillium Asset Management. “As shareholders, and customers, we need to have confidence that the Bank- from the CEO down -is committed to ethical business practices.” Magaziner is among a group of shareholders who have filed a proposal on the issue with Wells Fargo.