RI ESG Briefing, July 26: LAPFF, Carbon Tracker, Ontario Teachers’ Pension Plan, Cubico, PLSA


The Local Authority Pension Fund Forum (LAPFF) and the Carbon Tracker Initiative (CTI) have launched a new report advising oil and gas companies about why a business model compliant with a 2-degree climate change scenario could be less risky than ‘business-as-usual’. CTI research shows that a 2-degree model would provide equal – and in some cases superior – returns for shareholders as a traditional growth trajectory during periods of low oil prices. It also provides a checklist for investors in oil and gas companies to ask of companies in order to best assess the riskiness of their investment.

The US Government has thrown its weight behind electric transport by adding the sector to its list of eligible technologies under a $4.5 billion loan guarantee programme. The Department of Energy’s Loan Programme Office amended documents and called for applications to support electric vehicle charging facilities – both hardware and software. “Loan guarantees can be an important tool to commercialise innovative technologies because these projects may be unable to obtain full commercial financing due to the perceived risks associated with technology that has never been deployed at commercial scale in the United States,” it said. The Obama administration also announced plans this week to start regulating the aviation industry in relation to pollution and climate change.

A new report has set out six ways in which private money can provide $57tn worth of green infrastructure investment which, its authors say, is necessary to transition cities to a low-carbon future. The New Perspective on Climate Finance for Cities report from Siemens, Citi and the C40 Cities Climate Leadership Group suggests emissions trading schemes and green bonds could be the two most lucrative sources of green investment for cities, adding that the latter provides long-term security and a potential windfall of $42bn.

Two of Canada’s largest pension investment managers, the CA$116.8bn Public Sector Pension Investment Board (PSP Investments) and the CA$171.4bn Ontario Teachers’ Pension Plan (OTPP), have strengthened a commitment to invest in renewables and water infrastructure by buying out a one third stake held by Banco Santander in Cubico Sustainable Investments, which the three investors co-founded in May 2015. The terms of the deal are not disclosed. At launch, Cubico held assets worth $2bn in 18 projects. Its portfolio now comprises 22 assets located in Brazil, Italy, Ireland, Mexico, Portugal, Spain, United Kingdom and Uruguay, with a total capacity of 1.62 GW. PSP and OTPP are now the sole shareholders on a 50-50 basis.

The Climate Bonds Initiative (CBI) is working to assess and develop criteria for climate-friendly investment into the hydro power sector with the aim of stimulating investment in water infrastructure. A new division dubbed the Hydropower Working Group will then use the criteria to develop a risk screening tool for investors and issuers, paving a potential path for certifying green bonds in the sector. Members of the working group include CEO of the International Hydropower Association Richard Taylor, Deputy Director of Norway’s Ministry of Petroleum and Energy, Oivind Johansen, and Jamie Skinner from the International Institute for Environment and Development.h6. Social

US fund manager TIAA – formerly TIAA CREF – has denied allegations that it has bought land in Brazil acquired illegally. According to farmlandgrab.org, the Agrarian Prosecutor for the Court of the Brazilian state of Piaui has issued an order for the cancellation of lands illegally acquired by businessman Euclides De Carli who according to reports sold some of the land to TIAA. TIAA has told the Financial Times that allegations of wrongdoing “are inaccurate and without merit”. De Carli has also denied wrongdoing.

The European Investment Bank Institute has offered free support to 24 Luxembourg-based charities, social enterprises and NGOs. It is offering translation services, volunteering hours, donated computer equipment and training programmes around fundraising and access to EU funds.


The most generously paid CEOs tend to oversee companies that deliver the worst returns, even when pay and performance are measured over the course of many years, according to a new study from corporate governance researchers MSCI. The firm’s analysis of almost 800 executives at 429 large- and mid-cap US firms across 10 years also showed that the best returns are found at companies with modestly-paid chiefs. MSCI found that $100 invested in the 20% of companies with the highest-paid CEOs would have grown to $265 over 10 years, while the same amount at companies with the lowest-paid would have grown to $367. The firm concluded that not only are the value of CEO pay packets hard to determine, thanks to a focus on short-term reporting, but also that the traditional wisdom of promoting performance with higher salaries could well be flawed.

UK prime minister Theresa May reportedly plans to “reform capitalism” in a bid to stamp out reckless corporate behaviour. According to reports, the comments were made by May’s spokeswoman following a government report into practices at UK-based retailer BHS. The report describes BHS as suffering from a “systematic plunder” at the hands of its former owners, Sir Philip Green and Dominic Chappell, before going bankrupt this year. It follows a similar report on Sports Direct, comparing the firm’s warehouse to “a Victorian workhouse” and flagging up “serious corporate governance failings” by CEO Mike Ashley. The spokeswoman is reported to have said the government would “look carefully” at corporate governance policies.

The Pensions and Lifetime Savings Association (PLSA) has provided guidance for investors and fund managers to help them to ask for more detailed information about human capital from companies. The toolkit, titled “Understanding the worth of the workforce”, recommends that pension schemes press firms for metrics including gender diversity, staff turnover, the frequency of workplace accidents and illnesses, investment in staff development and detailed pay ratios. The PLSA’s Policy Lead; Stewardship and Corporate Governance, Luke Hildyard, also encouraged the association’s members to seek reports that took a “narrative” style. He added: “Existing and pending reporting regulations will provide some further insight into this area of corporate reporting but we believe this will be of greatest value when seen in the context of a company’s culture and working practice”.