Return to search

RI ESG Briefing, July 29: Schroders to incorporate climate change into long-range forecasts

The round-up of the latest ESG news

Environmental

Schroders, the London-listed asset manager with £319.5bn (€455bn) under management, says it will now look to incorporate climate change effects into its long-range forecasts. In analysis that draws on Raj Thamotheram and Howard Covington’s work on “forceful stewardship”, the firm’s Chief Economist and Strategist Keith Wade and Economist Marcus Jennings conclude that “we should act sooner rather than later to avoid potential future costs”. “Recognising that quantifying the impact of climate change on shareholder’s investments is critical in creating an incentive to act, we will be looking to incorporate climate change effects into an extended long-run return forecast for different asset classes,” they write in their latest paper on the impact of climate change.

The $4bn (€3.6bn) Vermont Pension Investment Committee (VPIC) has voted not to consider divesting from fossil fuels. According to reports, VPIC chairman Stephen Rauh stressed the board’s fiduciary duty to beneficiaries of the retirement system. “We were not created as an agent of social change,” Rauh said. The state treasurer’s office estimates around $263.4m is invested in fossil fuel companies. Douglas Moseley of consulting firm NEPC, recommended against divestment, saying that there would be transaction fees and a change to the portfolio’s risk balance. Matt Considine, Vermont’s director of investments, said divestment would be a $9m hit annually to the pension fund with no discernable environmental benefit. Divestment would be “a symbolic gesture”. Link

German renewable project developer BayWa says it has sold its biggest wind park in the US yet to NorthWestern Energy (NEW), a power utility, for €130m. The wind park is located in South Dakota and went on stream last May after nine months of construction. Outfitted with 43 turbines, the facility has a power capacity of around 80MW. According to Munich-based BayWa, that is enough green power to supply 31,000 households. Chief Executive Matthias Taft said it showed the firm’s commitment to expanding renewable power in North America.

Social

The Global Impact Investing Network (GIIN) and Nairobi, Kenya-based Open Capital Advisors have released a study of impact investing in the East Africa region. The Landscape for Impact Investing in East Africa is a “state of the market” analysis of the impact investing industry in the region. It covers Kenya, Uganda, Tanzania, Ethiopia, and Rwanda—plus chapters on six additional countries in the region. The study was produced with support from UK aid from the UK Government through the Department for International Development’s Impact Programme. It follows the first such study produced by the GIIN, The Landscape for Impact Investing in South Asia.

Deutsche Bank says it has acted as the arranger for $150m (€138m) in debt finance provided to Africell, a mobile phone firm. The money is to be used to finance Africell’s expansion in the Democratic Republic of Congo and Uganda. Investors in Africell’s debt include the International Finance Corporation, which put up $35m, as well as South Africa’s Government Employee Pension Fund, Banque Libano Francaise and EcoBank RDC. Peter Wharton-Hood, Deutsche’s Head of South Africa said Africell operates “in a socially responsible and impactful manner.” Announcement. Governance

The Securities and Exchange Commission (SEC) is reportedly about to complete a rule that would require companies to disclose the pay gap between chief executives and employees. The Wall Street Journal, citing people “familiar with the issue” said the pay ratio move would put in place a measure “without broad exclusions” that had been sought by companies. It would be a “setback” to companies and their trade groups, it added. The article states that the SEC intends to allow companies to exclude 5% of its overseas workforce from the measure.

The University of California System’s chief investment officer Jagdeep Singh Bachher has reportedly called for more endowments and foundations to embrace environmental investing. “We need to catch up,” he was quoted saying at an event sponsored by the Principles for Responsible Investments in California by Pensions & Investments. It added the institution, whose which signed up to the PRI in 2014, has committed more than $1bn to clean and alternative energy. The university’s office of the chief investment officer manages around $90 billion for the university’s endowment, pension fund and investment pools, P&I added.

The European Commission has issued a status report on the implementation of UN Guiding Principles for Business and Human Rights (the “Ruggie Principles”). The ‘Staff Working Document’ presents the EU’s activities in implementing the UNGPs and promoting progress in business and human rights. But campaign group the European Coalition for Corporate Justice (ECCJ), while welcoming the document as a potential “useful contribution to the policy debate” said it “lacks focus and a clear identification of policy priorities”.

A former executive at Google, Sukhinder Singh Cassidy, is launching a database of potential female board candidates, according to Forbes. The BoardList is a database currently in beta testing of candidates of more than 600 women who could serve on private company boards, it said quoting the executive, who is now CEO at video-shopping site Joyus. “It’s an unrealized opportunity,” she was quoted saying. The candidates are sorted by expertise and nominated by an inaugural group of about 60 Silicon Valley executives.

Illinois Governor Bruce Rauner last week signed in a new law that will guide state pension systems in not investing in companies that boycott Israel. The measure was sponsored by Democratic state senator Ira Silverstein and approved unanimously by both Illinois’ Senate and House. The law establishes the Illinois Investment Policy Board to be made up of appointees from Rauner’s office and the state employee pension systems. A statement from Silverstein’s office adds: “A list of companies openly boycotting Israel or those friendly with Iran, Sudan or other anti-Semitic entities would be maintained to advise investment policy.” Link