RI ESG Briefing, July 23: CalPERS, KKR, Rainforest Action Network, World Federation of Exchanges

Environmental

Private equity giant KKR has agreed to buy an 80% stake in Gestamp Asetym Solar, the solar photovoltaic developer and operator from Gestamp Renewables. The investment is funded by KKR Global Infrastructure Investors II, a $3.1bn global fund. The partners have committed to fully support Gestamp Solar´s plan to have in operation up to 2.5GW of installed capacity by 2020. Bank of America Merrill Lynch acted as financial advisor to Gestamp Solar and the deal is expected to close before the end of 2015. Link

The New York State Environmental Facilities Corp. (EFC), which finances waste management and water projects on behalf of New York’s government, reportedly plans to issue $475.1m (€434m) worth of green bonds. According to the trade publication Bond Buyer, EFC will issue the triple ‘A’-rated bonds over the next two weeks and use the proceeds for clean water and drinking projects throughout New York. Bond Buyer also quoted Tracey Boyd, EFC’s Deputy Finance Director, as saying the bonds would be independently certified as green. Other US states that have issued green bonds include Massachusetts and Connecticut.

New York’s Public Service Commission has approved $150m in state funding for the New York Green Bank to help it reach its ultimate threshold of $1bn, according to reports. The Capital New York said the bank – established by Governor Andrew Cuomo in 2013 – now has $368 million in state funds.

Social

Campaign group the Rainforest Action Network is publishing guidance for Japanese financial institutions in respect of their obligations under Japan’s new Corporate Governance Code, which came into effect in June. The guide identifies specific environmental, social and governance risks that financial institutions face in providing financial services to clients with links to tropical deforestation, and provides policy recommendations for addressing them, RAN said. It added it has found that Japan’s banking sector is one of the largest sources of capital to producers and traders of palm oil, pulp and paper, and tropical timber.” Home page.

The World Federation of Exchanges, the trade association of 64 stock, futures and options exchanges, has released a survey showing investors are increasingly studying the sustainability practices and policies of companies as a factor in their investment decisions. It said 39% of respondents to the global exchanges survey (22 out of 56) stated they had received ESG-related queries from investors, of which 10 said that such inquiries are on the increase. It said it shows how ESG concerns are becoming widespread among global capital market participants. The survey came ahead of the inaugural conference under the ASEAN CAP10 Sustainability Series jointly organised by Bursa Malaysia and WFE in Kuala Lumpur on July 23.h6. Governance

The $304bn California Public Employees’ Retirement System (CalPERS) says it made “significant progress” during the 2015 proxy season, where it voted to improve the rights of shareholders to nominate corporate directors – commonly referred to as proxy access – as well as the Environmental, Social, and Governance (ESG) policies of companies in which the fund invests. “We’re pleased that many companies’ policies are evolving thanks to the outcome of our votes,” said Ted Eliopoulos, Chief Investment Officer for CalPERS. “Important changes in board leadership and environmental strategies will help strengthen these corporations and, in turn, CalPERS’ investments.”

A coalition of Lloyds Banking Group shareholders, including private investors and pension funds such as the Royal Borough of Kensington, have secured a significant gain for their case seeking damages of a reported £350m (€496m) over Lloyds’ ill-fated takeover of Halifax Bank of Scotland. Yesterday, a High Court judge ruled Lloyds must release details of legal advice it received in the run-up to its takeover. Lloyds can appeal the ruling. The Lloyds Shareholder Action Group, which is represented by law firm Harcus Sinclair, is suing the bank and five of its former executives, alleging they were misled over the true financial position of HBOS at the time of the deal. The case is expected to be heard next year.

Management executives at the 30 companies traded on Germany’s blue-chip Dax index earned an average of €3.4m in 2014, up slightly from €3.3m in 2013 but still 54 times more than salaried employee at a Dax company. This is one of the key findings of joint study done by corporate governance specialists at Munich’s Technical University and German shareholder association DSW. Volkswagen Chief Executive Martin Winterkorn was by far the highest paid Dax manager in 2014, earning a total of €15m. He was followed by Bill McDermott, CEO of software firm SAP (€7.9m); and Karl-Ludwig Kley, CEO at pharmaceuticals firm Merck (€7.8m). The lowest paid Dax executive was Reinhard Ploss, CEO of German chipmaker Infineon, who got €2.1m.

New Zealand’s Business Day has run an in-depth look at where assets in the country’s voluntary long-term savings scheme known as KiwiSaver are invested. “KiwiSavers fund a dizzying array of activity from building drones to owning Disney princesses,” the report said. “And often, global headlines from deep sea oil exploration protests here, to Russian pressure on Ukraine have a direct KiwiSaver link too.” Campaigners at Oil Free Wellington said: “The shocking revelations that KiwiSaver funds are being invested in oil exploration and weapons manufacturers displays the need for the growing divestment movement.”

US executive compensation consulting firm Pay Governance has released analysis which it says finds that the SEC’s recently proposed pay-for-performance proxy disclosure requirements “may force companies to display a pay-for-performance misalignment that is incorrect”. While the SEC’s intention was to clarify pay-for-performance analysis and disclosure, Pay Governance sees “several problematic provisions” in the proposals.