RI ESG Briefing, July 17: CDP welcomes mandatory UK carbon reporting vote

Environmental

CDP, the former Carbon Disclosure Project which requests environmental information on behalf of 722 investors, has welcomed the UK Parliament’s decision this week to approve the introduction of mandatory greenhouse gas reporting in the UK. Assuming approval by the Lords (Upper House), all London-listed companies will be obliged to comply. “CDP would like to see the legislation develop further in this direction, when the expected legislative review takes place in 2015,” said CDP’s Co-Chief Operating Officer Frances Way.

The World Bank says it will now “only in rare circumstances” provide financial support for new greenfield coal power generation projects. Instead it will scale up its work helping countries develop the less carbon intensive natural gas. The bank has also confirmed its intention to increase support for hydropower projects. “It’s a pragmatic set of directions for energy development,” said Rachel Kyte, the World Bank Vice President for Sustainable Development. “We need to ensure that everyone is reaping the benefits of modern energy by 2030, and we need to do so sustainably.” Link

Separately, the World Bank’s IFC private finance arm has said it will collaborate with the World Green Building Council (WorldGBC) to scale up the construction of green buildings in emerging markets. They said the new partnership shows a “shared commitment to playing a leadership role in transforming the built environment and mitigating climate change”.

Social

Old Mutual, the London and South Africa-listed life assurance, asset management, banking and insurance provider, has bought a controlling stake in Faulu Kenya, the first Deposit Taking Microfinance company to be licensed by the Central Bank of Kenya and the second largest in East Africa. Faulu has more than 400,000 customers via a 100-outlet distribution network.

Trust in European financial companies has returned to the levels seen before the LIBOR rate-rigging scandal, according to Thomson Reuters TRust Index for the second quarter of the year. The index measures trust in the top 50 global financial institutions.h6. Governance

Pharmaceutical giant GlaxoSmithKline (GSK) says it is “deeply concerned and disappointed” by allegations of fraud and ethical misconduct in its China operations. “Such behaviour would be a clear breach of GSK’s systems, governance procedures, values and standards,” it said.

Shareholders in the US submitted approximately 820 proposals for company annual meetings so far this year, up from around 739 in 2012, according to a client alert from law firm Gibson Dunn & Crutcher LLP citing data from Institutional Shareholder Services (ISS). The most common proposal topics were political contributions and lobbying (115 proposals), board declassification (79) and independent chair (70).

The Shareholder Rights Project, which works on behalf of public pension funds to improve corporate governance at US listed companies and is headed by Harvard Professor Lucian Bebchuk, has issued its half-year update. The SRP, which operates on behalf of eight leading institutional investors, said that 77 S&P 500 and Fortune 500 companies declassified their boards of directors during 2012 or the first half of 2013 as a result of its activities.

A research project looking at Institutional Investor Activism and Corporate Governance has got the go-ahead. Researchers Craig Doidge, Alexander Dyck and Aazam Virani of the University of Toronto and the University of Oklahoma’s Hamed Mahmudi will focus on how the Canadian Coalition for Good Governance (CCGG), which represents about 40 Canadian institutional investors, has improved the governance of Canadian corporations. They will show that CCGG’s success rests on its efforts to create common knowledge at low cost and to lower the costs of collective action. The project is among four to win funding from Canada’s Rotman International Centre for Pension Management.

Asset management employees earning more than €1m at UK banks have seen their pay fall by nearly 50%, according to European Banking Authority figures reported by the Financial Times. Data showed that high earners had the steepest pay decline in Europe, down from €2m in 2010 to €1.2m in 2011, the FT said.