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RI ESG Briefing, Jan. 27: BOE’s Carney sets up high-level panel to address global financial system

The round-up of the latest ESG developments

Environmental

The Indian Ocean island state of the Seychelles is reportedly planning to offer ‘blue bonds’ to fund sustainable fisheries, according to a Bloomberg article quoting Finance Minister Jean-Paul Adam. It said the country’s Treasury is in talks with multilateral agencies including the African Development Bank and the World Bank on the sale of $10m of the debt. It’s an idea that has been around for some time, developed with backing by the UK’s Prince Charles.

Schroders, the listed UK-based asset manager, has developed an indicator to measure the carbon content of a fossil fuel company’s production mix, according to the firm’s latest Responsible Investing Report. “We have used estimates of carbon emissions from the three main stages of fossil fuels’ lifecycle – the extraction and refining stages plus the emissions from the burning of fossil fuels – to analyse our investee companies’ portfolios,” writes ESG Analyst Solange Le Jeune. “We can use this life cycle carbon factor as an overall indicator of energy companies’ risk exposure to the carbon shift.” She suggests that a carbon risk analysis should be run against a capital spending efficiency analysis – “reviewing capex per barrel produced vs. carbon content”. Link

The Sustainable Natural Resource Investments Working Group has been set up by the Network for Sustainable Financial Markets, the non-partisan network of finance sector professionals, academics and others. Its aim is to increase investment cash flows into the sustainable natural resources sector. The working group will combine the following themes into a single work stream topic: sustainable agriculture, forestry, and soft commodities; conservation finance – including biodiversity and other natural capital; payments for ecosystem services (PES); and agriculture, forestry, and other land-use (AFOLU).

Social

Legal & General Capital (LGC) and Dutch pension fund manager PGGM have today announced the launch of a Build to Rent partnership. The partnership will initially invest £600m into building purpose built private rental housing across the UK, providing over 3000 homes. The duo aim to help address the UK housing crisis by increasing the supply of new homes and “disrupt the status quo of ever increasing rental rises by investing long-term institutional funds into building new homes to rent at scale, and by developing a UK institutional rental market”.

A new 40-bed care facility for adults with learning difficulties and autism in Northern England has been supported by Triodos Bank. Industry magazine Care Home quoted Triodos relationship manager as saying: “This community rooted project fits the values and objectives of Triodos Bank perfectly, and we are always looking to support projects like these.”h6. Governance

Bank of England Governor Mark Carney and World Economic Forum Founder Klaus Schwab have announced the formation of a high-level Taskforce to address the future of the global financial system. The members include: Michael Corbat (CEO, Citigroup); Laurence Fink (CEO, BlackRock); Douglas Flint (Chairman, HSBC); and Brian Moynihan (Chairman and CEO, Bank of America). The Taskforce will publish a comprehensive suite of recommendations and actions during the Annual Meeting 2017 in Davos. Announcement

A provisional version of guidance for practitioners in the mining, oil and gas industries on stakeholder engagement has been unveiled by the Organisation for Economic Cooperation and Development (OECD). The guidance provides a practical framework for identifying and managing risks with regard to stakeholder engagement activities to ensure companies play a role in avoiding and addressing adverse impacts as defined in the OECD Guidelines for Multinational Enterprises.

Trillium Asset Management, the US-based SRI firm, has successfully withdrawn a 2016 shareholder proposal (co-filed with Green Century Capital Management) on quantitative goals for cutting greenhouse gas emissions at Hologic, the Nasdaq-listed diagnostic and medical imaging systems company. Trillium withdrew the proposal following commitments from the company to set reduction targets. The company has committed to make these goals public by September 2016. “We commend Hologic for engaging in a productive dialogue and for providing more transparency as they move towards greater energy efficiency,” Trillium said.

Car giant Volkswagen was given three months by the prime minister of Lower Saxony, its second-biggest shareholder, to fully account for the diesel-emissions scandal, according to Bloomberg News. Stephan Weil, who’s also a member of VW’s supervisory board, was quoted as saying in an interview that it was in the company’s interest to “provide a complete clarification”. Volkswagen has promised to present a report on the scandal at the annual shareholders’ meeting on April 21.

Separately, German car-parts group Robert Bosch has launched an internal probe to find out if any employees were involved in a scandal over the rigging of automotive emissions tests. The industrial giant, manufacture a diesel engine management system used by car companies such as Volkswagen, Reuters reported.

The Ontario government has announced new decisions on the proposed design of the Ontario Retirement Pension Plan (ORPP) — another step in delivering on its commitment to strengthen retirement income security for the two-thirds of Ontario workers without a secure workplace pension plan. The implementation of the ORPP is set to begin on January 1, 2017. Recent progress has seen the appointment of a CEO and board at the Ontario Retirement Pension Plan Administration Corporation and the passing of two pieces of enabling legislation. Announcement