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RI ESG Briefing, January 31: Visa political contributions motion gets 37% backing

The round-up of environmental, social and governance news

Environmental

A Dutch court in The Hague has ruled that oil major Royal Dutch Shell is partly responsible for pollution in the Niger Delta in southern Nigeria and that it should have prevented sabotage at one of its plants, according to media reports. The court ordered Shell to pay unspecified damages to one farmer, but dismissed four other claims. The suit had been brought by the farmers and Friends of the Earth in 2008.

The $1.9bn (€1.4bn) Seattle City Employees’ Retirement System is set to discuss at an investment committee meeting the request from city mayor Mike McGinn that it divest its shares in large oil and gas companies because of climate change. The Financial Times reported it was a visible result of Bill McKibben’s 350.org campaign. The fund has investments worth $17.6m in ExxonMobil and Chevron.

When it comes to unlisted investments in emerging markets, German institutions overwhelmingly prefer renewable technology, according to a survey by Imug, an ESG research firm based in Hanover. In the survey of 170 institutions, 42% said renewables were by far the most interesting opportunity. This was followed by infrastructure (26%), microfinance (16%), as well as farmland, small-to-midsize enterprises and the financial sector (11% each). Only 5% said they regarded commodity investments in the emerging markets as interesting. Unlisted funds were preferred over direct investments. Imug, which specialises in ESG research for German churches and foundations, conducted the survey on behalf of DEG, the private sector finance arm of Germany’s development bank KfW. Link

Social

The Global Impact Investing Network (GIIN), which promotes sustainable social investment, has now reached 107 members with the addition of 11 new organisations. They are: Bohemian Impact Investments, Association of the Luxembourg Fund Industry (ALFI), Advanced Investment Partners, Envest Microfinance Fund, Conservation Forestry Partners, Citadel Capital, GPS Capital Partners, Blue Haven Initiative, Global Alliance for Clean Cookstoves, EcoEnterprises Fund and Palash Palli Unnayan Sangstha.

Two new members have joined the Global Alliance for Banking on Values, a network of the world’s leading sustainable banks. They are France-based Crédit Coopératif and Bolivian microfinance institution Banco FIE. The Alliance now comprises 22 of the world’s leading sustainable banks, from Asia, Africa, Latin America to North America and Europe. Link. Governance

A motion tabled by US sustainable fund manager Boston Common and the Unitarian Universalist Association on political contributions at financial services firm Visa’s annual general meeting this week received strong 37% support. Boston Common’s Meredith Benton spoke at the AGM in favour of the resolution, pointing out that proxy advisory firm ISS had recommended a vote in favor of the proposal.

A new academic study has found that active ownership, where investors successfully engage with companies, leads to “improvements in operating performance, profitability, efficiency, and governance”. The study by London Business School’s Elroy Dimson, Boston College’s Oguzhan Karakas and Xi Li of Temple University, analysed a database of engagements with US public companies over 1999–2009 that addressed environmental, social, and governance concerns. “They are followed by a one-year abnormal return that averages 1.8%, comprising 4.4% for successful and zero for unsuccessful engagements,” the researchers say. “Firms are more likely to be engaged, and engagements are more likely to be successful, if the target firm is concerned about its reputation and if it has higher capacity to implement corporate social responsibility changes.” Link to Active Ownership

The Harvard Institutional Investor Roundtable convened on January 24, bringing together the top governance officers of leading public pension funds, mutual funds, and other institutional investors, both from the US and from elsewhere. The institutions represented have more than $13trn in assets under management. The Roundtable is an event of the Harvard Institutional Investor Forum, directed by Lucian Bebchuk and operated by the Harvard Law School Program on Institutional Investors and Program on Corporate Governance. Link

UK Business Secretary Vince Cable has written to the Chairman and CEOs of the last seven FTSE 100 firms with all-male boards, urging them to take action to increase the number of women in the boardroom. It comes on the back of the announcement by Randgold Resources that Jeanine Mabunda Lioko has joined as a non-executive director. The remaining companies are Antofagasta, Croda, Glencore, Xstrata, Kazakhmys, Melrose and Vedanta. “This is not about equality, this is about good governance and good business,” Cable said.