RI ESG Briefing, January 21: Christian Aid head joins Church of England ethical advisory panel

Environmental

Aquila Capital, the Germany-based infrastructure investor, and Swiss power utility EWZ have acquired four onshore Swedish wind parks for €95m. The seller of the parks, which have a combined power capacity of 60MW, is developer Eolus Vind AB. Under the terms of the deal, EWZ has acquired a 51% controlling stake in the wind parks while Aquila takes the remaining 49% stake. In a statement, Hamburg-based Aquila said a Finnish subsidiary of internet giant Google had agreed to purchase the power generated by the parks from this year. Including this latest Swedish deal, Aquila also said its infrastructure funds, which are targeted to institutional investors, now owned and operated 360MW worth of wind power capacity. Link

Bloomberg Philanthropies, the charitable foundation set up by former New York Mayor Michael Bloomberg, is backing a $48m Clean Energy Initiative to advance state-based, clean energy solutions in the US. It is working with the Heising-Simons family to “bolster collaborative, state-based approaches that encourage utilities to adopt technologies that have only recently become available and affordable”.

It’s emerged that 12 of the 14 sub-funds in the clean energy and technology portfolio held by $291bn (€250.1bn) US pension giant CalPERS posted negative returns as of June 30, 2014. Since starting the portfolio in 2007, CalPERS has committed $308.2m to it. The portfolio is managed by California-based Capital Dynamics which has allocated capital from CalPERS to 14 sub-funds. Of those sub-funds, only two posted positive internal rates of return (IRR) as of last June. They were the ‘Element Partners 2’ fund (IRR: 8%) and the Braemer Energy Ventures II fund, whose IRR was a scant 0.3%. CalPERS said that for one of the 14 funds, the XPV Water Fund, its IRR of -5.6% was “not meaningful,” as its investment in it was still very new. Link

Social

Mining industry body the ICMM (International Council on Mining and Metals) is opening a public comment period on its updated Indigenous Peoples and Mining Good Practice Guide, which was first published in 2010. The update follows the 2013 publication of ICMM’s revised position statement on Indigenous Peoples and Mining which articulates a “progressive set of commitments” that applies to all ICMM member companies. Like the earlier version of the guide, the draft of the updated guidance document is intended as a good practice resource for mining companies and others with an interest in ensuring that mining projects bring long-term mutual benefits to companies and host communities. The comment period runs from January 30 to March 12.

The World Bank’s International Finance Corporation has sold five-year “inclusive business bonds” valued at $100m to Japan’s Dai-ichi Life Insurance Company (Dai-ichi Life). Sole arranger of the transaction was J.P. Morgan Chase. IFC inclusive business bonds support companies in emerging markets that actively integrate low-income communities into their value chain so they can participate in economic growth.h6. Late-breaking: people news

Loretta Minghella, head of Christian Aid, the international development charity, has accepted an invitation to join the Church of England’s Ethical Investment Advisory Group (EIAG), which supports the Church of England’s national investing bodies on ethical investment – the Church Commissioners, the Church of England Pensions Board and the CBF Church of England funds managed by CCLA. Minghella took up her present role in April 2010 having previously been Chief Executive of the Financial Services Compensation Scheme (FSCS), which played a major role in mitigating the effects of the financial crisis, paying out some £21bn in compensation to holders of over 4m bank accounts in 2008/9.

Governance

Clean Yield Asset Management, the US SRI firm, has withdrawn a shareholder proposal on the supply chain impact on deforestation and the company’s plans to mitigate its risks at chemicals giant Du Pont, according to documents lodged with the Securities and Exchange Commission (SEC). Clean Yield, which had filed the motion on behalf of J. Bruce Bell, had failed to provide to sufficient provide proof of share ownership. “With or without a proposal on the ballot, we hope that DuPont will be open to conversation concerning the feasibility of the ideas presented in proposal,” said Shelley Alpern, Clean Yield’s Director of Social Research & Shareholder Advocacy in a letter to Du Pont’s 
Corporate Secretary Erik Hoover.

Separately, Alpern – a long-time shareholder activist who was previously with Trillium Asset Management – has argued in a blog entitled ‘Talking to the Hand’ that investor engagement with fossil fuel companies is not preferable to divestment. It is time, she argues, for investors to “shake off their cognitive dissonance” and admit that fossil fuel companies’ business model has to be abandoned. She writes: “My takeaway from these efforts, along with a lingering concussion from too much cranial contact with brick walls, is that the time for polite conversation is over.” Investors can still own a small shareholding to have a “seat at the table” while being mostly divested from the companies, she argues.

Around one-third of so-called “independent board directors” at the 50 firms comprising the STOXX 50 equity index has had prior organisational ties with management executives at those firms, a new study from SONEAN, a Germany-based consultancy, has found. In its study, SONEAN identified 121 independent directors at the STOXX firms. Of this group, it said 38 have had at least two organisational ties with STOXX 50 managers (e.g. through university or a prior job). As a result, there is a big question mark about how independent these directors truly are, SONEAN said. A spokesman for the EU business lobby Business Europe declined to comment. In light of its findings, SONEAN has recommended to the OECD that listed companies disclose the social connections between board directors and management to provide greater transparency for investors.

Calvert Investment Management, the $13.5bn US SRI investor, has withdrawn a shareholder proposal on ‘big data’ at banking giant Wells Fargo, according to SEC documents. The motion would have called for the bank to publish a report on the board’s and the company’s approaches to identifying and managing civil rights risks related to the company’s “collection and use of big data”. Companies’ potential violation of rights is notable from social and political perspectives, but also is a matter of shareholder concern, as a possible driver of litigation, reputational damage, and negative business impacts, Calvert had argued.