RI ESG Briefing, Jan. 6: Singapore Exchange eyes ‘comply or explain’ sustainability reporting

The round-up of the latest ESG developments

Environmental

Quebec has become the first diocese in the Anglican Church of Canada to exit both mining and fossil fuels, according to reports. Anglican Journal reported that the diocese last month completed a four-year process of divestment from fossil fuels and resource extraction.

The Renewables Infrastructure Group (TRIG), a listed firm based in Guernsey, says that it and French solar firm Akuo have invested €57 million in 15 photovoltaic (PV) projects. The investment involves a combination of equity and a mezzanine loan. In a statement, TRIG said the 15 PV projects were located both in mainland France and in overseas departments, adding that their combined power capacity totalled 49MW. TRIG also said the projects, developed between December 2010 and May 2012, benefited from purchase agreements of up to 20 years with French power firm EDF, providing fixed, index linked revenues. TRIG’s partner Akuo will operate and service the projects. Link

MSCI, the ESG index and research firm, has analysed – in a new report, Implications of COP21: How do corporate carbon reduction targets stack up? – the attainability of the role expected of companies post-Paris agreement and concluded that gains made by companies introducing emissions targets will be largely offset “by the two thirds of companies [featured on the MSCI ACWI Index] without targets, leaving overall corporate emissions relatively flat”, and “short of the proposed aggregate emissions reduction commitments submitted by countries”. Link

Social

Sustainably managed assets in Europe totalled $13.6trn (€12.6trn) in Europe at the end of 2014, or more than double the figure ($6.6trn) for the US, according to the fund rating agency Morningstar. Morningstar said that as a result, 59% of assets were sustainably managed in Europe compared with just 17.9% for the US at the end of 2014. “One of the reasons Europe is leading the way is the fact that European institutional investors see sustainable investing as part of their fiduciary responsibility,” San Lie, Director of Manager Research at Morningstar was quoted as saying. Morningstar also put the volume of sustainably managed assets worldwide at $21.4trn.

The Sydney Morning Herald reports that the social impact investment market will get a boost in Australia in 2016 as groups work with the federal government on creating a range of domestic deals. Social Ventures Australia chief executive Rob Koczkar told the Herald that it planned to work with the Prime Minister’s office over the coming months on how social impact projects fit with the government’s innovation agenda outlined in December.h6. Governance

The Singapore Exchange (SGX) says it will be introducing sustainability reporting on a “comply or explain” basis and is inviting public comment on the proposed rules as environmental social and governance (ESG) disclosure rises up the agenda at Asian exchanges. Just yesterday, RI reported that the Hong Kong stock exchange (HKEx) has strengthened its ESG reporting guidance to require companies. And now the Singapore exchange, the world’s eighth largest exchange operator, said the move marks further progress from the voluntary reporting that has been in place since 2011 and was a “timely response” to the growing global interest in sustainability information. SGX expects the new rules and guide on sustainability reporting to apply to companies from the financial year ending on, or after 31 December 2017, with reports published from 2018. This public consultation is open until 5 February.

The board of The Children’s Place (TCP), a listed US clothing retailer, has proposed several governance changes, including proxy access and an expansion of shareholder rights. TCP said its proxy access proposal would enable shareholders holding 3% of its stock for at least three years to nominate 20% of its board. The proposals further allow for a simple majority of shareholders to approve agenda items and the right of shareholders holding 25% to call an extraordinary meeting. TCP’s board also plans to link executive compensation more closely with company performance.

Japan-based accounting and corporate services firm EY ShinNihon, part of the broader Ernst & Young group, has received a sanction from the Financial Services Agency (FSA) for an administrative monetary payment order, a business improvement order and a three month business suspension order that prevents it from “taking on any new business contracts”. It comes in the wake of electronics firm Toshiba Corp.’s $1.2bn accounting scandal. Link

Women may be 40 years or more from parity with men on U.S. corporate boards, according to a Bloomberg report citing the U.S. Government Accountability Office watchdog. About 23% of open seats in the S&P 1500 Index went to females in 2014, according to the report.

Yesterday (January 5) was ‘Fat Cat Tuesday’ as dubbed by the UK’s High Pay Centre. It’s the day when the group deems that the average pay received since the year started by chief executives of FTSE 100 companies surpasses the entire annual pay of the average worker. “By the end of the first Tuesday in 2016, Britain’s top bosses will have made more money in 2016 than the average UK worker earns in an entire year, according to our calculations,” the think tank said.

Proxy research firm Egan-Jones Proxy Services has announced a series of proposed changes to its guidelines for the 2016 proxy voting season, with possibly the greatest change relating to CEOs only being allowed to sit on one external board. Comments or questions should be directed to Magda Pacheco, Manager, Client Relations at Egan-Jones before January 20, 2016.