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RI ESG Briefing, July 30: CalSTRS votes against founder Agarwal and auditor Deloitte at Vedanta

The round-up of environmental, social and governance news

Environmental

CDP, the environmental NGO formerly known as the Carbon Disclosure Project, has teamed up with Eurizon Capital for new research that says growth prospects at the largest companies in the metals and mining sector are significantly threatened by water risks. But companies that are taking action now to manage water strategically are better financial performers. Eurizon, the asset management arm of Italy’s Intesa Sanpaolo Group, has around €177bn in assets under management.

The World Bank’s private finance arm the IFC has announced a BRL150m (€49.7m) equity investment in CPFL Renováveis, the leading Brazilian renewable energy generation company, as part of its Initial Public Offering (IPO). Proceeds from the primary offer of shares will be used to fund the development and construction of renewable energy projects and for potential acquisitions of projects generating electricity from alternative sources, such as wind, small hydros and biomass.

The UK’s new Green Investment Bank is among the backers of a new 15.8MW wood-fuelled biomass in Northern Ireland, via its cornerstone investment in private equity firm Foresight’s UK Waste Resources & Energy Fund. GIB CEO Shaun Kingsbury said: “Our mission is to crowd in private sector capital, so I’m especially pleased to see that every pound of GIB investment brought in more than £3 of private funding.”

Social

German insurance industry association GDV has failed to get its members to agree to a voluntary exclusion of cluster bombs and land mines – deemed illegal by the UN – in their investments. Following unilateral bans on the weapons at some of the association’s biggest members like Allianz and Munich Re, the GDV had sought to have all its 470 members voluntarily agree to the measure. Industry sources said the lobby expected to release a statement concerning the matter late last year. But a GDV spokesman told RI that investment standards could only be established by individual members and not by the association. “We are, however, noticing that our members are increasingly preoccupying themselves with the principle of sustainable investment,” he added.h6. Governance

The California State Teachers Retirement System (CalSTRS), the $165.8bn (€124.8bn) pension fund, has voted against executive chairman and founder Anil Agarwal and the re-appointment of auditors Deloitte at India-based, London-listed mining group Vedanta. Vedanta holds its annual meeting on August 1 and as well as Agarwal, CalSTRS has voted against directors Deepak Parekh, Euan Macdonald, Aman Mehta and Geoffrey Green. Fellow US investor the Florida State Board of Retirement has also voted against newly appointed Parekh, chairman of Housing Development Finance Corporation, as well as against Green and Mehta. The SBA has also voted against approving Vedanta’s remuneration report. Unlike CalSTRS, it is backing Deloitte’s re-appointment, according to advance voting intentions.

Consumer goods giant Unilever is looking to replace auditing firm PwC after 26 years in order to comply with new rules from the UK’s Financial Reporting Council (FRC). “To maintain Unilever’s position at the forefront of good governance, we have decided to put our statutory audit work out to tender with the intention of nominating a new external auditor for 2014,” Unilever said. The FRC has said that companies should consider changing their auditor at least every decade though only a few major companies have done so, according to a Reuters report. Banking giant HSBC, with KPMG since 1991, has said it will put the work out to tender.

A new study from German sustainable rating agency Oekom suggests that less than a third of the world’s biggest insurers qualify for its sustainable rating; of those that qualify, only half are barely considered to be sustainable by the agency. The study began with a universe of 106 mostly US and UK listed insurers. But 75 were omitted for not providing enough information about their handling of environmental, social and governance (ESG) issues. Of the 31 insurers scrutinised, only 16 were grouped in the “Prime” [sustainable business] category. Link