RI ESG Briefing, January 20: Exxon, PIRC, Gaelelectric, Allianz, Amnesty, Alliance Trust

The round-up of the latest environmental, social and governance news

Environmental

A group of investors led by New York State Comptroller Thomas DiNapoli and the Church Commissioners are urging ExxonMobil to disclose the resilience of its business model in the wake of the Paris Agreement on climate change. The group of investors, including co-filers the Vermont State Employees’ Retirement System, the University of California Retirement Plan and The Brainerd Foundation, represents nearly $300bn in assets under management and more than $1bn in Exxon shares. “The unprecedented Paris agreement to rein in global warming may significantly affect Exxon’s operations,” said DiNapoli, trustee of the New York State Common Retirement Fund. Edward Mason, Head of Responsible Investment for the Church Commissioners, added that more transparency and reporting from ExxonMobil would enable responsible investors to assess how they are responding to the risks and opportunities of the low carbon transition.

Gaelectric Holdings, the Dublin-based renewable energy and energy storage group, has become the first Irish company to issue a green bond in the form of a €10m fixed interest instrument over three and a half years. The funds raised by the BCP/Gaelectric High Yield Note 2 will be applied to Gaelectric operations and development in areas of renewable energy generation and energy storage.

The National Bank of Abu Dhabi (NBAD) says it will provide $10bn (€9.2bn) in finance to sustainable businesses and projects over the next decade. NBAD said the commitment came on the heels of an internal report entitled ‘Financing the Future of Energy.’ The report identified a funding gap of $48trn for the next 20 years to meet global energy demand, with renewables playing a critical role. Said NBAD Chief Executive Alex Thursby: “We believe that even in the current climate of low oil prices, the transition towards more renewable sources will continue because the underlying drivers are long term.”

Allianz Climate Solutions and Allianz Global Investors have joined the 2° Investing Initiative, the Paris-based research firm promoting a better understanding of the impact of climate change on investments. They said they hoped to co-develop analytical tools to improve investments strategies that will benefit both climate and clients.

Social

Campaign group Amnesty International has reportedly traced cobalt used in batteries for household brands to mines in the Democratic Republic of Congo (DRC) where children as young as seven work in perilous conditions. The Guardian reported that Amnesty has traced the mineral in lithium batteries sold to 16 multinational brands to mines where workers paid a dollar a day.

The Gavi alliance for vaccines and immunization has signed a $5m advance purchase commitment to buy a vaccine being developed by Merck to protect against the Ebola virus. It said the deal would help the pharma firm take the experimental Ebola vaccine through late-stage clinical trials to licensing and then through pre-qualification by the World Health Organization (WHO). Earlier this month, Merck said it would pay $830m in a shareholder settlement relating to its pulled Vioxx painkiller.h6. Governance

The board of Electra Private Equity is not independent enough after the recent election of activist investor Edward Bramson to the board as a non-executive director, according to shareholder advisory firm PIRC cited by Reuters. Bramson, who staged a boardroom coup at F&C a few years ago, got a seat on the board late last year in a move which led to the resignation of Electra’s chairman Roger Yates. Now, PIRC has advised clients to reject Bramson at Electra’s AGM on January 25.

Alliance Trust Investments, the UK institutional investors, has developed a framework to integrate the United Nations Sustainable Development Goals into its investment analysis. It called on other asset managers to integrate the SDGs into their investment process – and for companies to disclose how they will support the SDGs. The investor will identify the “key driver or drivers” of long-term shareholder returns in the relevant sector and then analyse how the SDGs are likely to reshape the operating environment for companies and therefore which businesses are likely to win or lose over time. It will then seek to quantify, where possible, the scale of change on the core value drivers and therefore company value.

A US District Court has fined eleven former executives and board members of now defunct Superior Bancorp $100,000 each and barred them from ever serving again as an officer or director of a company. The sentence follows the court’s finding that the eleven were guilty of multiple counts of fraud. According to the Securities and Exchange Commission (SEC), the plaintiff in the case, the failure of Alabama-based Superior was in part prompted by bank officials repeatedly rolling over bad loans. This was done to conceal losses on the bank’s balance sheet.

Michele Faissola, former Chief Executive of Deutsche Asset and Wealth Management (DeAWM), faces charges of wrongdoing in connection with an accounting scandal that has engulfed Monte dei Paschi, Italy’s oldest bank. According to Bloomberg, Milan’s public prosecutor will issue an indictment for Faissola and five other current and former employees of Deutsche Bank. The prosecutor accuses them of colluding with Monte dei Paschi to cover up losses between 2008 and 2012. Beyond the alleged accounting fraud, the six are accused of obstructing justice market manipulation. Milan’s prosecutor also plans to indict managers at Monte dei Paschi and Japanese bank Nomura, Bloomberg said. Faissola, who resigned as DeAWM’s CEO last fall, vehemently denies the allegations.

Oekom Research, the German sustainability rankings firm, says 2015 marked a year of significant expansion, with its staff growing to almost 75 people and its rankings (for ESG performance) now covering more than 3,700 companies around the world. Summarising the highlights for the year, the Munich-based firm also pointed to the rollout of a sustainable/green bond ratings; its cooperation with South Pole for the inclusion of carbon footprint data; and closer cooperation with GES, the Stockholm-based engagement firm. With respect to 2016, Oekom Chief Executive Robert Haßler said his firm was poised for robust growth following December’s Paris climate deal.