RI ESG Briefing, February 10: Canada’s NEI Investments and Desjardins exit cluster munitions

Environmental

Leading institutional investors have released a Statement of Investor Expectations to support a “consistent, durable framework” for the green bonds market. The investor group was convened by US advocacy group Ceres’ Investor Network on Climate Risk (INCR). The investor group, made up of substantial purchasers of green bonds including pension funds, insurance companies and asset management firms, voiced support for the Green Bond Principles published in January 2014, and seeks to build on the Principles by addressing the following four key areas that would benefit from further definition and structure. These include: 1) Eligibility, including general criteria for “green” projects; 2) Disclosure (including intended use of proceeds); 3) Reporting on use of proceeds; 4) Independent assurance.

Pension funds, insurers and fund managers took 44% of a new $500m, 10-year green bond issued by Norway’s state-owned credit organisation Kommunalbanken, the market’s first syndicated new Green Bond issue in 2015. “It also represents KBN’s second ever syndicated Green Bond, following its inaugural transaction in November 2013, and underscores the issuer’s commitment to environmental sustainability,” KBN said. The lead managers were Bank of America Merrill Lynch, J.P. Morgan, Morgan Stanley and HSBC.

Turkish Prime Minister Ahmet Davutoglu has been urged to use his Presidency of this year’s G20 to secure a commitment from the grouping’s member nations to phase-out fossil fuels by coalition of around 40 organisations including 350.org, Greenpeace and Climate Action Network Europe. In a letter to Davutoglu, they say they are pleased that the Turkish G20 Presidency Priorities for 2015 includes discussions on the G20’s commitment to phase out inefficient fossil fuel subsidies, and recommend a number of outcomes the G20 should produce. Link

Social

BlackRock has announced it will set up an impact investing platform. The US fund manager has appointed Deborah Winshel as a Managing Director and global head of impact investing, to unify its efforts under the new BlackRock Impact platform for investors worldwide with social or environmental objectives. Winshel, formerly President and Chief Operating Officer of the Robin Hood Foundation, will also be responsible for overseeing BlackRock’s Global Corporate Philanthropy program. The firm says it currently manages over $225bn in strategies designed to align clients’ portfolios with their objectives and values, which will now be integrated under BlackRock Impact. Link

The first social impact bond (SIB) in Portugal will launch this month. It focuses on education and will involve computer programming classes to primary school students with the aim of improving their performance in Portuguese and mathematics. The Calouste Gulbenkian Foundation will invest €120,000 in the year-long programme for 65 students at three primary schools in Lisbon. If the programme achieves a 10% improvement in performance compared with a control group, the Municipality of Lisbon will repay the foundation’s initial investment. Performance below 10% will be subject to partial outcome payments. This SIB was structured by the Social Investment Lab, the non-profit organisation. Link. Governance

Canada’s NEI Investments and Desjardins Investments are banning investment in companies that manufacture cluster munitions, following November 2014 legislation that made it illegal for Canadians to make, use or trade them. John Kearns, CEO of NEI Investments, said: “The implications of the new cluster munitions act have not been widely discussed in the investment industry, but as responsible investment leaders we want to demonstrate how you can exclude these weapons from the entire investment universe. We will also be engaging companies on joining this worldwide effort as part of our 2015 corporate engagement Focus List.” Desjardins said that by banning the weapons, it was applying a responsible investment strategy to all its specialized savings products, adding: “With this decision, we reassert a cooperative value: money should be working for people, not the other way around.” Link

Danske Capital, the €100bn asset manager which is part of Denmark’s Danske Bank Group, which also owns €47bn Danica Pension, has selected ESG research firm Sustainalytics to provide analysis and data. The relationship will also see the two firms work together to “advance the dialogue around responsible investing best practices, helping investors better understand ESG integration”.

The California Public Employees’ Retirement System (CalPERS) is reportedly working with the International Civil Aviation Organisation (ICAO) and New York investment firm Kepos Capital on engaging the global investment community with a proposed global internationally harmonized market-based-measure to reduce emissions. Kepos co-founder Robert Litterman (like his Kepos colleagues a former senior figure at Goldman Sachs), writes that in the coming year it will work with CalPERS to engage investors, governments, civil society and the aviation industry, to “intentionally incorporate the appropriate incentive to reduce emissions in the market-based-measure being designed by the ICAO”.

US industrial giant Northrop Grumman has reportedly become the latest major firm to cut its ties with conservative lobby group the American Legislative Exchange Council (ALEC). The National Journal cited a company letter obtained by the Congregation of Sisters of St. Agnes. The Catholic nonprofit for women had filed a resolution in December asking Northrop to review its lobbying affiliations.

South Africa’s state-owned Public Investment Corporation, which runs the assets of the Government Employees’ Pension Fund (GEPF), has reportedly released its most recent voting report. Times Live said
PIC had cracked down on executive remuneration policies and directors that lack independence. The investor voted against resolutions at a third of the 44 AGMs it attended during the September quarter, the report added.

Investor-backed environmental data body CDP (Carbon Disclosure Project) has released
a new report on the automotive sector, ranking companies in a ‘super-league table’ of emissions-related metrics which could have a material impact on company performance. Its finds leaders are Nissan, Toyota and Renault. Laggards are Tata Motors (owner of Jaguar Land Rover), Hyundai and General Motors.