RI ESG Briefing, July 7: Shareholder campaign group plans climate resolution at Australia banks

The round-up of environmental, social and governance news

Environmental

The Australasian Centre for Corporate Responsibility (ACCR), the shareholder engagement and advocacy group formed last year, is leading a campaign to move a climate change resolution at Australia’s ‘Big Four’ banks – the Commonwealth Bank of Australia, National Australia Bank, Westpac and Australia and New Zealand Banking Group. It is working with the Asset Owners Disclosure Project (AODP) and 350.org.au and said: “If we can help our big banks take a responsible view of their fossil fuel investments it will be good not only for bank shareholders – it will be good for the long term health of the Australian economy and everyone’s environment.” It would also give Australia’s super funds “a chance to demonstrate their concern”. Link

Glasgow could become the first UK university to sell off its fossil fuel investments after an advisory panel examining the university’s investment policies this week recommended full divestment from its oil, gas and coal holdings. The University of Glasgow has an endowment of £130m (€163.7m), including investment in fossil fuel companies including Shell, BP, Chevron, Billiton, and Centrica totalling an estimated £19m.

The UK Methodist Church has voted to maintain its £58m investments in fossil fuels, despite pressure from churches, although it said it would review the policy, over the next year before making a final decision. The Methodist Church has investments in fossil fuel companies worth £58 million. This year’s Methodist Conference from June 26 – July 3 in Birmingham received six resolutions (“memorials”) about investments in fossil fuels from local Circuits or Districts, four of which called for divestment.

Social

A majority of German institutional investors (56%) is adhering to environmental, social and governance (ESG) criteria when they invest, according to a new study published by Union Investment, the Frankfurt-based asset management giant. The study was compiled for Union by the office of Henry Schäfer, Chair of Corporate Finance at the University of Stuttgart and a leading expert on German sustainable investment. Schäfer’s staff interviewed 215 German investors with €1.5trn in assets between them. They include companies with internally funded pension plans, pension funds, insurers, banks, asset managers as well as churches and foundations. Never before have so many German institutions said they are investing sustainably.

The UK’s Big Lottery Fund, which each year distributes £600m raised by the National Lottery to good causes, believes social investment is an important source of long-term sustainable financing for the social sector and wants to act as a catalyst for the market, its chair Nat Sloane said this week. It has launched the Social Investment Explained Guide to help charities and social enterprises navigate the market. The UK’s social investment market is estimated at £202m.h6. Governance

A survey of more than 1,000 members of occupational pension schemes in the UK by the National Association of Pension Funds (NAPF) has found that 60% are interested in their pension fund manager supporting the long-term sustainable performance of the companies in which they invest and that more than half (53%) would prefer their employer to choose a provider demonstrating strong stewardship activity, even if it is 10% more expensive. The NAPF’s report What do pension scheme members expect of how their savings are invested? says 39% of respondents do not know where their pension savings are invested, although 63% are interested in knowing, including the countries, sectors and specific companies. And 65% identify the level of costs and charges as a key factor for employers to consider when choosing a pension provider.

Shareholders at Tata Motors voted against the remuneration provisions for three senior executives (Ravindra Pisharody, Karl Slym and S Borwankar) at the Indian industrial group’s AGM on July 3, according to reports. While 70% of shares voted for management, support failed to reach the 75% threshold, with reports indicating that almost two thirds of institutional investors rejected the pay plan motion.

The Fonds de réserve pour les retraites (FRR), the €36.6bn buffer fund for France’s state pension system, and one of the world’s highest profile responsible investors with a five-member RI committee, is in the market for a fund manager to run a novel ‘factor-based’ investing strategy. Factor-based investing involves a rapid response passive exposure to a set of risk ‘multi-factors’ such as company value, size, quality, volatility and momentum within asset classes, rather than just exposure to the asset class itself. The FRR said the selected manager should be able to quickly implement a tactical, multi-factor coverage based on orders from the fund, which could then also be modified or withdrawn when required. The mandate will run for four years with a potential one-year roll over. FRR said the fund manager selected would have to be able to cover the potential currency risk of the strategy to a level of €500m. The final date for submission to the RFP is July 28th via the FRR’s tender platform

The $184.8bn (€136bn) California State Teachers Retirement System (CalSTRS) is reportedly under fire from the International Union of Bricklayers and Allied Craftworkers for allegedly failing to uphold its Responsible Contracting Policy. Local media report the issue relates to CalSTRS’ 94%-owned real estate developer LCOR’s Valley & Bloom development in Montclair, New Jersey.