RI ESG Briefing, January 3: $31trn Investor Stewardship Group celebrates first birthday

Environmental

A US congressional committee on climate change has reportedly been reformed after the Democrats have regained control of the House after the midterm elections. The Select Committee on the Climate Crisis, as it is now known, was dissolved in 2011, when Republicans took the majority. Nancy Pelosi, the likely speaker, has appointed Florida congresswoman Kathy Castor as chair, calling her a “proven champion for public health and green infrastructure”.

In Canada, Justin Trudeau’s government has started rolling out a “backstop” carbon tax on provinces that don’t have a carbon pricing mechanism already in place. The rollout, scheduled to be completed by April, will see consumer rebates issued to offset the increased costs. The policy has drawn staunch opposition from the likes of Conservative Opposition leader Andrew Scheer, who saw in the new year vowing to fight the tax, Ontario’s populist premier Doug Ford, and Scott Moe, premier of Saskatchewan, who launched a legal challenge to stop the policy last year.

The European Investment Bank (EIB) has granted
its first EIB Green Loan to Endesa, Spain’s largest electric utility company. The €335m financing will be used to build 15 wind farms and three solar photovoltaic plants. Although the EIB has financed projects dedicated to combating climate change before, this is the first time it has described the arranged as a “green loan”.

The Energy Efficiency Financial Institutions Group (EEFIG) is inviting banks, insurers and investors to participate in its first working group, focused on developing an energy efficiency taxonomy to inform the work of the European Commission and Technical Expert Group (TEG). The deadline for expressions of interest is January 11.

Social

More than half of investors want to see “hard evidence” on the impact of ESG investing, according to a new Axa IM survey of 2000 people. The survey found that 38% of consumers wanted certification from a trusted industry or government body that they were investing responsibly, while 10% wanted an endorsement from people well-known in their field.

The Federal Court of Australia has ordered that a class action lawsuit against BHP Group over a Brazilian mine collapse can proceed, media reports have confirmed. The court put two similar suits on hold in order to cut costs and reduce court overlap. Led by former BHP shareholder Vince Impiombato, the legal challenge claims shareholders sustained losses as a result of deceptive conduct and failures in disclosure around the 2015 Fundao dam collapse, which killed 19 and spilled about 40 million cubic meters of sludge over communities and into the river and ocean.

The Government Pension Fund of Thailand has become a signatory to the Principles for Responsible Investment (PRI).

Glasgow City Council, the administering authority to the Strathclyde Pension Fund, is looking to appoint an investment manager to manage a private corporate debt mandate with sustainability criteria.h6. Governance

The Investor Stewardship Group (ISG), an investor-led initiative comprising 60 investors with more than $31trn in combined assets under management, is celebrating its first birthday. ISG was established in January 2017 to develop “the Framework”, a set of standards of investment stewardship and corporate governance for US institutional investors and boardroom conduct. Since its development, the Framework has been endorsed as “the definitive US corporate governance code” and been published in several key reports and manuals for investors.

A new global voting policy at Canada Pension Plan Investment Board (CPPIB) will see it vote against chairs at investee companies with no women board directors. CPPIB has already been active working to improve gender diversity in Canada, voting at shareholder meetings of 45 Canadian companies with no women directors and undertook efforts to engage with these companies. A year later, nearly half of those companies had appointed a woman director.

War on Want, a human rights and anti-poverty campaign group, has welcomed HSBC’s divestment from Israeli tech firm Elbit Systems. In a subsequent statement to The Jerusalem Post, HSBC said the decision was over the production of cluster munitions and not “the result of campaigning by the Boycott, Divestment and Sanctions movement”.

Over 100 RBS shareholders have renewed a bid to establish a “shareholder committee” intended to improve the bank’s corporate governance and shareholder engagement. RBS will put this proposal to a vote at its AGM in May 2019. At last year’s AGM, UK Government Investments (UKGI), representing 75.3% of the votes cast, voted against a similar resolution, deciding the outcome. 5.5% of the non-UKGI votes were in support of the proposal.

The Investor Responsibility Research Center Institute (IRRC), the nonprofit research organisation, is winding down, a development it says it has been preparing for more than five years. In July last year, the IRRC selected the John L Weinberg Center for Corporate Governance as its successor organisation, handing over a grant of more than $1m. The Weinberg Center will make IRRC research available, continue the IRRC Institute Investor Research Award, and expand its own research efforts.

SHARE, Canada’s Shareholder Association for Research and Education, has announced its new US & Global Equities Shareholder Engagement Program, which it says is “a new way for SHARE’s community to extend its influence and advocate for a sustainable, inclusive and productive economy”.

Consulting firm AccountAbility has announced a collaboration with a group of global companies on a pilot project developing case studies of firms applying the AA1000 Accountability Principles.

Business risk and sustainability solutions firm ELEVATE has acquired BSD Consulting (BSD), an international consultancy for sustainable management and development.