RI ESG Briefing, January 30: PRI Academic Network quarterly focuses on fiduciary duty

The round-up of environmental, social and governance news


Denmark’s Socialist People’s Party has quit the government coalition over a controversy surrounding Goldman Sachs’ acquisition of a stake in DONG Energy, the world’s largest offshore wind park builder and operator. As RI has been reporting, the issue stems from an announcement last year that Goldman and two Danish pension funds, ATP and PFA, would acquire stakes in the company. Meanwhile, DONG announced today (January 30) that the Danish Parliament’s Finance Committee has approved the deal. It said: “All the regulatory approvals necessary to implementing this agreement are thus ensured.”

The $176bn California State Teachers’ Retirement System (CalSTRS) has said its Global Equity Sustainable Investment Program has grown to $780m (as of June 30, 2013) from $645.9m the year before. It outperformed the benchmark in the non-U.S. portfolio by 3.10%, the fund added, in the latest annual report of its Green Initiative Task Force, or “Green Team”. As for its fixed income green program, 34.7% of the portfolio is in debt securities that are included in the Barclays MSCI U.S. Credit Sustainability Index, up 900 basis points from 2012.

Citigroup reckons renewable-energy companies will start to get more funding from the fixed income markets as banks trim their lending to the sector, according to a Bloomberg report quoting the bank’s head of environmental finance, Michael Eckhart. It quoted him adding that green bonds backing clean-energy and environmental ventures could account for up to 20% of the global bond market within 10 years.


Canada’s Responsible Investment Association (RIA), formerly known as the Social Investment Organization, has launched its RI Academy and advisor certification program. The new professional training program will offer financial advisors and other investment professionals online courses on risk management strategies associated with environmental, social, and governance (ESG) analysis. “We decided to change our name to be more in line with the terminology used by the growing community of global investors, governments, and academics who are making responsible investment a priority,” said RIA’s Chief Executive Deb Abbey. “The name change, the RI Academy and certification are all part of a strategic effort to capitalize on the momentum behind ESG analysis as an essential risk management strategy, and bring it to the forefront of mainstream financial conversations.” Link

Root Capital, a US-based nonprofit agricultural lender, today released a new briefing detailing the financial benefits linked to conducting due diligence on the social and environmental practices of borrowers and investees. The series, supported by the Citi Foundation and The Skoll Foundation, aims to stimulate discussion and debate about issues important to the fields of smallholder agricultural finance, small and growing business, and impact investing that ultimately lead to improved livelihoods for smallholder farmers.h6. Governance

The Principles for Responsible Investment’s PRI Academic Network has released its second RI Quarterly. The theme is fiduciary duty, and reviews seven articles on the topic. “Defining fiduciary duty is straightforward – a legal duty for one party to act in the interests of another party – but interpreting what that means in practice can be highly subjective,” says the PRI’s Director of Policy and Research Helene Winch in an introduction to the 18-page document.

A group of 17 US Senators, led by New Jersey Democrat Robert Menendez have written to Securities and Exchange Commission (SEC) Chairwoman Mary Jo White expressing disappointment about the agency’s failure to include any rulemaking relating to disclosure of corporate political spending in its 2014 agenda and asked for confirmation of when this investor protection measure would be addressed. The Senators wrote: “While we understand that the SEC has much on its plate right now, we believe that disclosure of corporate political spending would have great value for investors and should also be a top priority.” They went on to say: “The ability of corporate executives to spend company resources for political purposes without shareholders’ knowledge raises significant investor protection and corporate governance concerns.”

Engaged Capital, the activist investment group, has responded to the announcement from clothing firm Abercrombie & Fitch that it has added three new directors to its board, eliminated its shareholder rights plan, and separated the Chairman/CEO roles. “While a good first step, we believe these reactive changes alone will not be sufficient to put the company back on a course towards creating shareholder value,” said Chief Investment Officer Glenn Welling. Engaged Capital has a partnership with Governance for Owners (GO), the UK engagement specialist that is backed by pension giants Railpen and CalPERS.

Russell Investments, the US-based multi-management specialist that is a signatory to the PRI, may be up for sale according to reports. Pensions & Investments quoted officials at Russell’s parent Northwestern Mutual Life Insurance as confirming it is exploring strategic alternatives, including a possible sale.

Spainsif, the Spanish social investment forum, and the Consumers Associations, ASGECO and CECU, have signed an agreement to promote the demand of the SRI retail products in the country. There are three main themes: training, awareness and research.

A resolution on genetically modified crops at US chemicals firm Monsanto submitted by John Harrington, head of the SRI firm of the same name, won 6.51% support at the company’s annual meeting in Missouri on January 28. Harrington had wanted the company to prepare a report “assessing actual and potential material financial risks or operational impacts” of GMO issues.