RI ESG Briefing, Jan. 20: AP funds, church groups withdraw human rights proposal at Motorola Solutions

Environmental

The Institutional Investors Group on Climate Change, which represents European investors worth a combined €9 trillion, has recruited its 100th member, with Oxford-based OU Endowment Management joining the group in January. The group added a number of new members in 2014 including Sweden’s AP7, the Swedish asset manager Öhman, Danish pension funds Unipension, DIP and JOEP and various church groups including the United Reformed Church Trust.

Germany’s installed offshore wind capacity totalled just under 1.05GW at the end 2014, or more than double the 520MW figure recorded a year earlier, a new study commissioned by German engineering association VDMA shows. Turning to 2015, VDMA said it expected the capacity figure to triple to 3GW, adding that this corresponded to €10bn worth of investments. By the end of the decade, the German government aims to have 6.5GW worth of offshore wind power in place. According to the study, compiled by consulting firm Deutsche WindGuard, parks representing half of that figure are already either under construction, in place or on stream.

The World Economic Forum (WEF), which kicks off in Davos, Switzerland, this week, has named ‘water crises’ as its biggest global risk in terms of ‘impact’ for 2015. In its Global Risks Landscape, the WEF gives two top ten lists, one for likelihood, the other impact. Climate change adaptation, water and biodiversity loss feature prominently in the lists. Katherine Garrett-Cox, Chief Executive Officer at Alliance Trust, the UK fund manager is one of the co-chairs of the 2015 Davos event. Alliance Trust recently signalled that it would integrate environmental, social and governance (ESG) factors across its investments with the announcement that Peter Michaelis, its Head of SRI, was taking over as its head of equities.

PensionDanmark, the DKK175bn (€23.5bn) Danish pension scheme that is one of Europe’s biggest renewable investors and Denmark’s Export Credit Agency (EKF), have reaffirmed their commitment to backing Cape Wind, America’s first offshore wind park, amid news reports that the $2.5bn (€2.1bn) project is on the verge of collapse. The Cape Wind project envisions the construction of a 468MW wind park in Nantucket Sound off the coast of Massachusetts. The turbines for the park are to be sourced from the Danish subsidiary of technology giant Siemens. Construction of the facility has, however, been delayed for years by the inability to come up with the necessary financing.

Social

The 2015 version of sustainability boutique RobecoSAM’s annual Sustainability Yearbook has been published. It ranks companies based on their sustainability performance in 2014 to create a useful tool for investors. In total RobecoSAM awarded 69 “Gold Class” medals, 54 silver gongs and 112 bronze. Split by region, Europe holds the greatest number of companies included in the Yearbook as well as the most RobecoSAM Gold Class medal winners.

The UK’s Co-operative Bank has unveiled an expanded Ethical Policy based on the views of more than 74,000 customers and colleagues. It means it won’t finance any irresponsible gambling and pay day loans; it also won’t finance companies or organisations which do not responsibly pay tax to include the UK or elsewhere.h6. Governance

Swedish state buffer pension funds AP2, AP3 and AP4 and the United Church Funds have withdrawn a shareholder proposal filed for Motorola Solutions’ AGM around its human rights policy, as a similar proposal has been filed three times in the past five years without enough support and Motorola Solutions can legally omit the proposal under SEC law. In a letter withdrawing the proposal, United Church Funds says it has been advised that the proposal may be omitted. It has told RI it will file the proposal again in 2016.

US investor the Boston Retirement System and law firm Labaton Sucharow say they have settled a derivative action against the board of Freeport-McMoRan Copper & Gold. The $137.5m settlement, subject to court approval, is one of the largest derivative settlements in the Delaware Court of Chancery history. The action arose from Freeport’s acquisitions of Plains Exploration & Production Co. and McMoRan Exploration Co. in early 2013. Boston Retirement System’s Chairman Daniel Greene said the fund was “committed to protecting shareholder rights and promoting corporate governance reforms on behalf of shareholders”.

US SRI firm Green Century Capital Management has marked the five-year anniversary of the US Supreme Court’s controversial Citizens United decision by filing a shareholder proposal on political expenditure at what it calls “mega-spender” Chevron. Green Century said the oil firm spent $3m on local elections in Richmond, California last November. “The proposal highlights the risks and controversies for shareholders associated with the flood of corporate money in politics unleashed by the Citizens United Supreme Court decision five years ago this week,” Green Century said.

The Netherlands’ €334bn civil service scheme ABP has reportedly divested its €20m stake in India’s Larsen & Toubro. IPE.com reported the move comes after the company allegedly failed to clarify its involvement in the manufacture of submarines that can be armed with nuclear weapons. The reported added it would not invest in Russia’s Motovilikha Plants JSC over links to cluster weapons.

The UN Global Compact, the business sustainability initiative, reportedly expelled 372 companies in the second half of 2014 for failure to communicate progress for at least two consecutive years. It means the total number of expelled companies last year rose to 657. The number of companies joining the initiative still exceed the number of expulsions, with 729 companies from around the world signing up in the second half of 2014.

Senior females in the UK financial sector are reportedly calling for quotas for the promotion of female executives. A Financial Times poll of more than 30 of the City’s top employers found that women account for just 19.5% of managing director or equivalent roles. The FT said it was leading to a rethink of the “previously taboo” subject of quotas. It quoted former Lord Mayor Fiona Woolf as saying: “Why not have quotas for a bit?”

Sarah Wilson, chief executive of proxy advisors Manifest, has said that SEC Commissioner Daniel Gallagher is engaging in a “bullying campaign against corporate governance” and plans to write to the US Securities and Exchange Commission (SEC) chair Mary Jo White to raise concerns about him. She told RI that she and others were concerned over Gallagher’s criticism of Harvard University’s Lucian Bebchuk’s Shareholder Rights Project. Gallagher’s comments unleashed a storm of academic reaction, both for and against, on the Harvard Law School’s governance site.