RI ESG Briefing, January 31: Hermes Investment Management targets Siemens on climate change

Environmental

Hermes Investment Management, the £30bn asset manager owned by the UK’s BT Pension Scheme (BTPS), will ask Siemens for a commitment to enter into a dialogue about the effects of climate change on the German technological conglomerate’s business model, at its annual meeting on the 31 January 2018. It has also said it will support the election of all Siemens’ supervisory board.

Oil giant Shell is reportedly facing increasing anger over allegations that its gas drilling activities have caused earthquakes in the Groningen province of the Netherlands, causing hundreds of millions of euros worth of damage. Dutch MPs, angry that the oil firm is attempting to distance itself from the incidents, are calling for an emergency debate to discuss the issue.

California’s Treasurer, John Chaing has objected to a proposed giant gold mine in Alaska in which the state has a financial stake. In a letter, Chiang cited “disturbing threats this project poses to the pristine environment, to fishing, to the economy, and to the indigenous peoples of the Bristol Bay region”. California’s two giant pension funds hold almost $100m in First Quantum stock, the Vancouver-based company backing the Pebble Mine project.

Social

Responsible business consultant Acre has released research on the concept of a ‘Social Board’. Working with business leaders that Acre says included CEO and chairs from FTSE350 firms, directors at global investment companies and sustainability experts, the report explores the use of specialist appointments to boards and mechanisms that empower responsible business initiatives from within organisations. Acre names five priority action points for companies, including board diversity, stakeholder advisory panels and the appointment of Chief Society Officers.

AP2 – the second of Sweden’s four state pension buffer funds – has been named as an investor on the World Bank’s C$1bn gender-equality social bond, issued earlier this month. The bond – by far the largest of its kind – is aligned with the UN Sustainable Development Goals (SDGs) and seeks to promote economic growth and reduce poverty through the empowerment of women and girls. The World Bank does not elaborate on how it chooses to allocated proceeds. The SEK336bn (€34bn) pension fund did not disclose how much it invested in the issue.

Blackrock should be probed over its shorting of Carillion, according to UK trade union, Unison, the FT reports. Unison, whose members include former Carillion workers, called for a probe of what it called “a conflict of interest”. According to a UK Financial Conduct Authority register, BlackRock Investment Management UK shorted Carillion on the last working day (12 January) before the construction company was placed in compulsory liquidation (15 January).h6. Governance

Proxy access is “firmly established as a market standard” in the US, New York City Comptroller Scott M. Stringer, stated on the launch of the New York City Pension Funds’ 2017 Post-Season Report, which highlights that 440 companies (60 % of them constituents of the S&P 500) have enacted meaningful rules to let long-term investors nominate board directors. That’s a growth of 7,200% in three years, according to Stringer’s office. After the rejection of the SEC’s universal proxy access rule, Stringer recalled, the NYC Fund’s initiative (the Boardroom Accountability Project) launched in 2014 as a response, has seen companies targeted on board diversity, excessive CEO remuneration, and exposure to climate change risk.

The US Securities and Exchange Commission (SEC) is considering sweeping changes that would shelter companies from shareholder lawsuits in a bid to encourage more US companies to go public, Bloomberg reports. It has reportedly signalled that it’s open to considering whether firms should be able to force investors to settle disputes through arbitration, limiting the bad publicity and high legal costs triggered by litigation. The move would anger many investors who see the right to sue a crucial shareholder protection against fraud and other securities violations.

The UK Department for Business, Energy & Industrial Strategy (BEIS) has commissioned research into the issue of share buybacks, as part of the Government’s corporate governance reforms. It said in a statement that it is seeking to understand whether, by buying back their own shares, companies could be inflating executive pay. PwC has been appointed consultant for the project, with the support of London Business School’s Professor Alex Edmans.

Voya Investment Management, the US fund firm (formerly ING Investment Management in the US) with $541bn under management, has joined the Principles of Responsible Investment. CEO, Christine Hurtsellers, said: “Increasingly, many of our clients are making ESG considerations in their investment choices”.

Mainstream active management house Man Group has launches a podcast series on sustainability, which it describes as a series of interviews with “thought leaders from around the world about what we can do today to build a more sustainable world tomorrow”. Topics include corporate governance reforms in South Korea, accounting practices for assessing rights as part of ESG, natural capital accounting, tobacco divestment, economic inequality and climate finance education.