RI ESG Briefing, July 30: Effective boards likely to disclose climate risks – study

Environmental

The Council of Economic Advisers, which advises the US President, has released a report on the economic consequences of delaying action to stem climate change. The report finds that delaying policy actions by a decade increases total climate change mitigation costs by about 40%, and failing to take any action would risk substantial economic damage. Meanwhile, Mindy Lubber, President of advocacy group Ceres, told the Senate Budget in testimony yesterday (July 29) that “combating climate change is one of the greatest economic opportunities of the 21st century — spurring innovation, creating jobs, and strengthening corporate bottom lines”.

US renewable energy firm NRG Yield says it will issue a 10-year, $400m (€298m) bond to help it finance the acquisition of America’s biggest wind park. It said proceeds would be used for its $870m purchase of the 947MW Alta Wind wind farm. Elsewhere, Taiwan-based tech firm Advanced Semiconductor Engineering has sold the first green bond from Asia’s private sector. The US$300m three-year bond received more than US$2bn in orders, according to a Reuters report.

SOAS (the School of Oriental and African Studies) at the University of London has reportedly announced that it has agreed to temporarily freeze investments in fossil fuel companies, pending a decision about whether to divest from the industry to be taken later in the year. It follows similar decisions by other colleges worldwide and a student campaign.

Social

The Global Impact Investor Network’s (GIIN) Investors’ Council has four new members. They are: Athena Capital, the multi-family office and investment manager with around $5bn in assets under management; Bridges Ventures, the UK-based specialist; the Kresge Foundation, the Michigan-based foundation with more than $3bn in AUM; and LGT Venture Philanthropy, the Zurich-based global impact investor. GIIN is a not-for-profit organization dedicated to increasing the scale and effectiveness of impact investing.

Sustainalytics, the ESG research house, has mapped out the landscape for responsible investment 
in Latin America. The Spanish-language report entitled Inversión Responsable y Sostenible: Visión General, Prácticas Actuales y Tendencias (Sustainable and Responsible Investing: Overview of Current Practices and Direction) was commissioned by the Colombian Securities Exchange. The exchange recently announced it would join the Sustainable Stock Exchanges Initiative.h6. Governance

Firms with effective boards are more likely to disclose climate change risks, according to a new study by the CGA-Canada Accounting and Governance Research Centre (CGA–AGRC) at the Telfer School of Management at the University of Ottawa. “An effectively governed firm can be expected to voluntarily disclose climate change risks to increase its transparency to investors and enhance its economic performance,” said lead author Professor Walid Ben Amar. The study used a sample of 559 observations collected from companies listed on the Toronto Stock Exchange (TSX) between 2008 and 2011.

Sarah Smart, the chair of the UK charity sector pensions provider the Pensions Trust, has recounted her first attendance at a FTSE100 annual general meeting – at British Land where she made the case for the real estate firm becoming an accredited Living Wage employer. “What a joy it was to go to my first FTSE 100 AGM,” she said in a blog posting for campaign group ShareAction. Smart noted how British Land, which owns shopping centres, appears committed to the Living Wage. The problem, though, is that its tenants, retailers, are “unwilling to agree to a hike in their service charges which is driven by paying everyone the Living Wage”.

Ecclesiastical Investment Management, the UK-based socially responsible ethical investment specialist, has put the cost of corporate misconduct at $150bn (€112bn) since 2009. “The past five years have, arguably, witnessed the near breakdown of business probity,” writes Neville White, head of SRI policy & research at Ecclesiastical in a 16-page report looking at some key areas that have gone wrong which attempts to “monetise, conservatively, just how much shareholder value has been destroyed by corporate malfeasance”.

Proxy firm Institutional Shareholder Services (ISS) has kicked off its annual global policy formulation process by inviting institutional investors, corporate issuers, corporate directors and other market constituents to participate in its 2015 proxy voting policy survey. This year’s survey will cover a number of key issues for consideration for the 2015 proxy season, including the evaluation of equity plans, board diversity, jurisdictional approaches to the application of ISS policies, and pay for performance evaluations. The survey results will be released in mid-September ahead of an open comment period in October. February 1 is the date for implementation of the updated polices.