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RI ESG Briefing, January 2: Canadian public pension fund in NZ forestry move

The round-up of environmental, social and governance news

Environmental

Canada’s C$64.5bn (€49.5bn) Public Sector Pension Investment Board will take a 30% stake in the 178,000-hectare Kaingaroa forest in New Zealand as the Harvard Management Company sells down its stake. The New Zealand Superannuation Fund has lifted its share slightly to 41.25%. Harvard will retain a 28.75% stake.

Private equity giant KKR says its ‘Green Portfolio Program’, which it launched in 2008 with the Environmental Defense Fund, has achieved a cumulative $644m in combined financial impact and avoided more than 1.2m metric tons of greenhouse gas emissions, 3.4m tons of waste, and 13.2m litres of water use. The initiative covers 24 companies in KKR’s portfolio. “Nearly five years since we started on this journey with EDF and our portfolio companies, our results continue to demonstrate the significant environmental and financial benefits of our program’s efforts,” said George Roberts, KKR’s co-founder and co-CEO.

Australia’s Clean Energy Finance Corporation (CEFC), the planned A$10bn (€7.9bn) fund to back renewable energy, low-emissions and energy efficiency projects and technologies, is to absorb Low Carbon Australia Ltd., the company established in 2010 by the Australian government which manages an AU$84.6m investment fund. Merger announcement

Social

The Association for Sustainable and Responsible Investment in Asia (ASrIA) has released the Asia Sustainable Investment Review 2012 – “a baseline study of sustainable investment strategies and practices”. ASrIA reports that over 130 investment managers use sustainable investment approaches, with US$74bn of identified sustainable investment assets under management in the region. “It is increasingly clear that Asia will play a key role in the future development of the sustainable investment industry,” said ASrIA Chairman Alexandra Boakes Tracy.

Core Laboratories, the New York-listed oil services firm, will be deleted from US sustainable fund firm Calvert Investments’ Calvert Social Index as it “no longer meets the Index’s standards for environment and workplace safety”. The deletion will take place in March 2013.

Brazilian exchange BM&FBOVESPA says the percentage of listed companies which ‘report or explain’ on sustainability factors has risen to 57.95% as at October 2012m from 45.31% in May.h6. Governance

The Securities and Exchange Commission (SEC), the US financial regulator, has charged Germany-based insurance and asset management company Allianz SE with violating the Foreign Corrupt Practices Act (FCPA) for improper payments to government officials in Indonesia during a seven-year period. The SEC’s investigation uncovered 295 insurance contracts on large government projects that were obtained or retained by improper payments. Allianz agreed to pay more than $12.3m to settle the SEC’s charges.

The SEC has also charged pharmaceuticals firm Eli Lilly and Co. with violations of the FCPA for improper payments its subsidiaries made to foreign government officials to win millions of dollars of business in Russia, Brazil, China, and Poland.

The New Jersey Carpenters Pension Fund has sued exchange operator NYSE Euronext over its proposed $8.2bn sale to IntercontinentalExchange, according to a Reuters report. The complaint in New York State Supreme Court in Manhattan claims NYSE Euronext breached its duty to maximize returns for shareholders. It is the second lawsuit filed against NYSE Euronext since the deal was announced.

The number of companies in the S&P 500 and Fortune 500 that now report on sustainability has more than doubled, according to new analysis from the Governance & Accountability Institute. The institute, data partner for the Global Reporting Initiative (GRI) in the United States, the UK and Ireland, published its analysis called 2012 Corporate/ESG/Sustainability/Responsibility Reporting – Does It Matter?. For the first time, it says, non-reporters are in the minority. G&A Institute Chairman Hank Boerner said: “We believe this minority universe will continue to shrink as it has in the past few years as more large-cap companies embrace sustainability reporting.”

The $154.8bn California State Teachers’ Retirement System (CalSTRS) issued a statement in the wake of the Sandy Hook school shootings in December on its investments in private equity funds managed by Cerberus Capital Management invested in the firearms maker Freedom Group. Cerberus said it intended to look at selling its Freedom holdings.
The United Nations-backed Principles for Responsible Investment (PRI) is planning a formal written consultation in early 2013 with its signatories on how to overcome strategic barriers to sustainable capital markets. It will “help inform the work of our new, action-oriented research and policy work stream”.