RI ESG Briefing, July 23: Starbucks deleted from German green index

The round-up of environmental, social and governance news

Environmental

The pivotal role institutional investors can play in decarbonizing the global economy has been argued by Achim Steiner and Julie Fox Gorte in a newspaper opinion piece. Steiner is the executive director of the UN Environment Project while Fox Gorte is senior vice-president of Pax World Investments and co-chair of the Asset Management Working Group of UNEP FI. “We need to ask how institutional investors, as the owners and creditors of important segments of the global economy, can begin to play a driving role in decarbonising it across all industry sectors, regions and asset classes,” they write in the Guardian.

Temasek Holdings, the Singapore state investor, has sold its 5.34% stake in Beijing-based, Hong Kong-listed Chinese wind and solar project developer Huaneng Renewables Corp., according to reports. Temasek sold 155.5m shares at an average HK$2.8 according to a Hong Kong exchange filing cited by Bloomberg News. Fidelity’s FIL Ltd. this month lifted its stake to 13.11%, it added.

Social

US coffee giant Starbucks has been booted out of the Naturaktienindex (NAI), a green equity index targeted at German retail investors, following the scandal over its tax affairs earlier this year. Horst Hamm, head of the committee that decides the composition of the 30-member index, said that while Starbucks’ record on fairly traded coffee was good, its tax policies contradicted the principle of sustainability. By ejecting Starbucks, “the NAI is sending a signal against the massive use of tax loopholes which are now being heavily criticised by the affected governments,” Hamm added. Starbucks was replaced by coffee firm Green Mountain.

Christian Super, the A$720m (€504m) Australian superannuation fund that applies Christian principles to its investments, has made a $4.5m allocation to microinsurance by investing in LeapFrog Investments, according to a report citing fund CEO Peter Murphy. The Sustainability Report quoted Murphy as saying ethical investment “shouldn’t be defined about what we don’t do, it should be defined by what we do do.”h6. Governance

CtW Investment Group, which works with US labour unions worth over $250bn, has reacted to the retirement of J.P. Morgan directors Ellen Futter and David Cote. CtW had engaged the bank’s board over the competency of its Risk Policy Committee and spearheaded a ‘vote no campaign’ against the pair as well as risk committee chair James Crown. “Futter’s and Cote’s resignation is a good first step. We hope that the Board will now completely overhaul how it manages risk and actively seek shareholder input on new directors given the strong vote of no confidence at the annual meeting,” said Dieter Waizenegger, Executive Director of the CtW Investment Group, who said the bank’s failings were exposed by the “London Whale” trading debacle.

The final communiqué from the meeting of G20 Finance Ministers and Central Bank Governors in Moscow on July 20 reiterated the importance of long-term financing for investment, including in infrastructure and SMEs, for sustainable growth and job creation. Ministers welcomed the OECD’s “High-Level Principles of Long-Term Investment Financing by Institutional Investors” and called on the OECD “to identify approaches to their implementation in consultation with participants”. The document went on: “We will undertake further work on measures to facilitate greater intermediation of global savings to generate long-term financing for productive investments, including in infrastructure. We will explore how private sources of financing and capital markets can be better mobilized.” Link

The Canada Pension Plan Investment Board (CPPIB) has denied claims that it has excluded silver mining company Excellon Resources. The United Steelworkers union, which has criticised CPPIB in the past, had made an announcement welcoming what it said was a decision by the investor to divest the company. But a CPPIB spokesperson said Excellon was no longer held as it was dropped by one of the indices it replicates in its passive portfolio.

Switzerland-based pharmaceuticals giant Novartis has reportedly cut its pay for former Chairman Daniel Vasella, after his initial $77m exit deal provoked public outrage. The Basel-based company will now pay Vasella a package of CHF2.7mn in cash and around CHF2.2m in shares. He would also be paid a minimum of $250,000 a year for consulting services, the Wall Street Journal added.