RI ESG Briefing, January 22: PIRC recommends voting against Lonmin accounts

The round-up of environmental, social and governance news

Environmental

The Carbon Disclosure Project, which acts on behalf of 655 global institutional investors, has released research showing that 70% of companies believe that climate change has the potential to affect their revenue significantly. This is intensified by a “chasm” between the sustainable business practices of multinational corporations and their suppliers. The report – Reducing risk and driving business value – is based on information from 2,415 companies, including 2,363 suppliers and 52 major purchasing organizations who are CDP Supply Chain program members.

The NZ$21bn (€13.3bn) New Zealand Superannuation Fund is considering acquiring non-domestic agricultural land, according to a Reuters article citing the fund. Crop, dairy and livestock farming operations in North and South America, Australia and Europe were potentially attractive, it cited General Manager of Investments Matt Whineray as saying. “If we go and buy a farm, we will sell a little bit of global equities and fixed income,” he was quoted saying.

Union Investment’s renewables fund for institutional investors had made its inaugural acquisition, buying an 18MW wind park 40km south of Nuremberg from developer Renerco. The purchase price was not disclosed. As reported, Union launched the closed-end fund last summer and expects to take in €1bn in assets from investors. Around 70% of them are to be invested in onshore wind parks that are fully built and the rest in photovoltaic. Beyond Germany, Union said it was looking at wind parks in the UK, France, Poland and Scandinavia, adding that three years from now, the fund would own 20 such facilities.

Social

RobecoSAM, the Swiss-based sustainability boutique, has published the 10th edition of its Sustainability Yearbook in cooperation with consulting firm KPMG. The 120-page publication assesses the sustainability performance of more than 2,000 companies worldwide across 58 sectors as a guide to investors on which companies are doing the most to address the risks and opportunities of sustainability. A total of 67 companies worldwide have been awarded gold medals. Link

A group of global agriculture ministers have issued a communiqué on responsible investment in the food and agriculture sectors, calling on investors to “comply with corporate social responsibility requirements”. It follows a meeting of the Global Forum for Food and Agriculture in Berlin earlier this month. Link. Governance

PIRC, the UK governance research house, is recommending that shareholders oppose the report and accounts, and remuneration report, at London and Johannesburg-listed mining giant Lonmin. It follows controversy surrounding the firm’s Marikana mine in South Africa. Lonmin holds is annual general meeting on January 31.

Ethos, the governance advisor owned by Swiss pension funds, has released its new, more stringent, voting guidelines for the 2013 annual shareholder meeting season. “Ethos will not re-elect the chairman of the nomination committee if there is insufficient renewal of the board of directors,” it says. It is also tougher on executive pay, with chief executives to be assessed separately as of this year. “The variable part of the CEO remuneration should not exceed 3 times the fixed part, while the variable remuneration of the other members of executive management should not exceed twice their fixed remuneration,” Ethos says.

Australia’s ‘two-strike rule’ on executive pay, introduced in 2011, has improved corporate governance as it has made directors more accountable to their shareholders, according to AMP Capital’s head of ESG research Ian Woods, cited in the Financial Standard. Under the rule, a board faces re-election if a significant number of shareholders disagree with the amount directors are paid. “This AGM season we’ve seen a dramatic increase in the number of companies seeking to engage with us,” Woods was quoted as saying.

The Change to Win Investment Group, the union-linked US activist investor group, wants computer giant Hewlett-Packard to replace its auditor Ernst & Young following its ill-fated purchase of UK software firm Autonomy. CtW is also seeking changes at HP’s audit committee, according to reports.

The International Accounting Standards Board (IASB) and the International Integrated Reporting Council (IIRC), which promotes combining sustainability and financial information, are in talks to sign a Memorandum of Understanding, according to the Accountant. An official announcement is expected next month – with the agreement likely to focus on “showing support” rather than anything more concrete.