RI ESG Briefing, January 11: NZ Super-backed wind firm Longroad targets 600MW with Vestas order

The round-up of the latest ESG developments


A wind energy firm that is part owned by the New Zealand Superannuation Fund has bought wind turbine components that could power 600MW of projects from Danish supplier Vestas. NZ Super co-owns Longroad Energy Holdings, which was founded just last year, with infrastructure firm Infratil and Longroad executives. “Given the increasingly competitive position of wind power in certain markets, this is an important step in creating growth opportunities for Longroad,” said company CEO Paul Gaynor. Separately, Vestas this week upgraded its expectations for free cash flow in 2016 to up to €1.6bn “primarily driven by a strong order intake”.

The Spanish Government is working on the draft of a Climate Change Act, announced on the back of Marrakech COP 22, to comply with the emissions reduction targets of the Paris Agreement. The project is being led by the Ministry of Agriculture and Environment. Valvanera Ulargui, director of the Ministry’s affiliated body, the Climate Change Office, confirmed this week that such a law is on the cards and that the corporate sector will have a say in the project. She said companies are aware of the challenges posed by the transition to a low carbon economy and that they are already taking action. “Resources are needed, but there is already funding,” Ulargui told national media. Link


UK Prime Minister Theresa May has said the country will continue to lead the way internationally in the development of social finance in a speech outlining her ‘Shared Society’ vision this week. The ‘Shared Society’, widely seen as a rejection of her predecessor David Cameron’s ‘Big Society’ agenda, broadly reflects her wish to move from laissez-faire liberalism to ‘a new philosophy that means government stepping up’ in tackling social issues. In a speech outlining her vision for tackling social challenges, May highlighted social finance and social impact bonds.

London-based impact investor ClearlySo has launched an impact assessment tool for private equity and venture capital investors. Dubbed ClearlySo ATLAS it will help investors assess the social and environmental impact of their investments and provides practical suggestions for action. Octopus Ventures, a London based venture capital firm, is in the process of rolling out the solution across its portfolio. Luke Hakes, investment director at Octopus Ventures commented: “We are delighted to be working with ClearlySo to assess the social and economic impact of the companies we back.”

A UK-government backed review has said the country should create social and environmental impact investments funds targeting £1bn by 2021. It is one of ten recommendations from a review of “mission-led businesses” chaired by Nigel Wilson, chief executive of Legal & General. It says that its call for evidence on mission-led businesses has revealed that they are growing in popularity. Other recommendations in the review include the government incentivizing the positive social impact of mission-led business by enabling blended finance investment models and social pension funds, and the introduction of a “benefit company” status in English law.h6. Governance

Investors have welcomed more detailed disclosure around lobbying expenditure for pharmaceutical firm Allergan. The Interfaith Center on Corporate Responsibility hailed the new policy, Public Policy Engagement and Disclosure of Political Activities that is being included on the Corporate Social Responsibility section of Allergan’s website. “We appreciate Allergan’s responsiveness to shareholder advocacy that sought more transparency of corporate lobbying practices,” said Cathy Rowan, director of Socially Responsible Investing for Trinity Health, and leader of ICCR’s engagement with Allergan. And Rob Lively, Vice President Government Affairs at Allergan, added: “Allergan’s constructive dialogue with ICCR has resulted in further strengthening our lobbying disclosure, especially at the state level. We appreciate their engagement on issues of importance to shareholders.”

Candriam Investors Group, the fund manager formerly known as Dexia Asset Management that has a strong sustainable investment slant, has opened an office in New York. It said the office would “serve U.S. institutional investors with a range of Candriam’s flagship international equity and fixed income strategies, including Sustainable and Responsible Investments, and investment solutions for insurers and pension plans”. The firm, now owned by New York Life Insurance Company, is also partnering with the Penn Social Entrepreneurship Movement (PennSEM), a student association at The Wharton School at the University of Pennsylvania, and is working with Columbia University, in collaboration with NYLIM’s MainStay Investments, to research “ESG dynamics”.

Japan’s Financial Services Agency (FSA) has published a list of 214 institutional investors and their service providers, who are planning to accept or have accepted the country’s stewardship code. The total number breaks down to seven trust banks, 152 investment managers, 26 pension funds, 22 insurance companies and seven other service providers.

Nigeria’s recently issued National Code of Corporate Governance 2016 has been dismissed as “business unfriendly” and “inimical to further investment” by a well-known businessman and some investors in the country, respectively, as quoted in Nigerian media. The Financial Reporting Council of Nigeria released three separated codes: one compulsory for the private sector; a comply-or-explain one for not-for-profit entities; and a third code for the public sector, given its importance in the Nigerian economy. Olusegun Osunkeye, former chairman of Nestle Foods Nigeria and the Nigerian Accounting Standards Board, told Vanguard that several sections of the code contradict national company law. He warned the FRC “cannot usurp the powers of the National Assembly”.

The University of Cambridge Institute for Sustainability Leadership is tendering for two pieces of commissioned research work based on discussions with its insurance industry board members has resulted in two new research commissions. The research projects are designed to be helpful for financial regulators/central banks and industry leaders.
1. How important could exposure to ‘transition risk’ (i.e. the risk of a disorderly transition to a zero carbon economy) be for the financial performance of insurers’ investments in infrastructure? Link to tender
2. How can insurance data and related expertise help to improve understandings of the exposure of investors and lenders to climate-related natural catastrophes? Link to tender