RI ESG Briefing, January 24: RobecoSAM sees role for corporate pension funds in sustainability

Environmental

Norwegian insurer Storebrand has followed the Government Pension Fund in divesting most of its palm oil investments, with the exception of Golden Agri-Resources Ltd. “Storebrand would rather invest more in companies that are pushing the industry toward a more sustainable approach,” said Christine Meisingset, Storebrand’s head of sustainable investments. A Storebrand study of the industry found 11 companies breached its sustainability standards.

The Pensions Trust, an occupational pension fund for the UK’s charity “third sector”, has adopted a climate change policy to help ensure climate change risk is explicitly considered throughout its investment process. It also pointed out it has achieved an ‘A’ rating in the Asset Owners Disclosure Project survey 2013-2014. The trust has assets of more than £5.7bn (€6.3bn) and serves over 2,400 employer organisations with over 170,000 members and pensioners.

German wind energy group Prokon has filed for insolvency. Prokon had raised almost €1.4bn selling certificates to some 75,000 retail investors. Prokon, which operates over 50 wind parks in Germany and Poland, was hit by a wave of withdrawals following critical media reports. Link

Social

What’s believed to be the UK’s first Local Impact Fund is being launched in Liverpool by social investment provider the Social Investment Business (SIB) and Social Enterprise North West. The £2m Liverpool City Region Impact Fund will offer business support and simple finance to local charities and social enterprises, providing unsecured loans of up to £250,000, helping them to grow and scale up the impact they make in their communities. Ten further cities and regions have plans to set up their own Local Impact Funds, SIB said.

Professor John Ruggie, the Harvard professor who headed up the UN’s “Protect, Respect and Remedy” framework (the “Ruggie Principles”), has written to UK Business Secretary Vince Cable urging him to push for “robust reporting standards” on non-financial issues at companies at the European Union level. “As you may be aware, a letter reiterating support for the inclusion of international normative frameworks in the EU Directive has been signed by leading European and global investors,” Ruggie wrote. Governance

Corporate pension funds have an important role in encouraging investors to integrate sustainability into their investment strategies, says Michael Baldinger, CEO of sustainability boutique RobecoSAM. “Companies still face the challenge of convincing investors to embrace sustainability as a means of generating shareholder value,” Baldinger said, introducing the company’s latest Sustainability yearbook. “Starting with their own corporate pension funds, industry leaders are in an ideal position to encourage investors to integrate sustainability into their investment strategies.”

Sustainalytics, the ESG research house, has identified ‘10 companies to watch in 2014’ in a new report that provides examples of companies facing risks across a range of environmental, social and governance (ESG) issues. It focuses on factors that are expected to change not only Sustainalytics’ assessment, but also the market’s view of a company. The goal of the report is to aid investors in uncovering these “hidden” risks. The companies are: Adani Enterprises; Anadarko Petroleum; Bendigo and Adelaide Bank; Canadian Natural Resources; Corbion; G4S; Ranbaxy Laboratories; Smithfield Foods Inc. & Shuanghui International; and Thales.

A new conflict mining resource has been set up. Seven industry associations, analytics firm Source Intelligence and law firm Schulte Roth & Zabel have teamed up to address the Securities and Exchange Commission’s (SEC) new conflict minerals compliance regulation. The Conflict Minerals Resource Center will support over 15,000 member companies, they said.

Proxy firm Institutional Shareholder Services is to launch a new version of QuickScore, which benchmarks a company’s governance risk against other companies in the Russell 3000 Index. QuickScore 2.0 will launch on February 18. “Expanding upon the original methodology, QuickScore 2.0 marks a significant development in how ISS helps institutional investors evaluate the governance risk in their portfolios,” ISS said.

Compensation advisory firm Pay Governance has formed strategic affiliate relationships with two newly founded executive compensation consulting firms — Pay Governance Japan and Pay Governance Korea. The latter were founded by Naohiko Abe and Ryan Park respectively; both are former senior executive compensation consultants at Towers Watson.