RI ESG Briefing, July 7: Entire fixed income market should think about ESG, says PRI’s Reynolds

Environmental

The entire fixed income market should be thinking about environmental, social and governance (ESG) factors, says Principles for Responsible Investment Managing Director Fiona Reynolds. Contrasting the current relatively small green bond market with the rest of the fixed income market, she said: “So while I support green bonds, I want the whole fixed income market, for example, to think about ESG factors and not just say ‘it’s OK that we’ve got this little tiny allocation over there [to green bonds]’.” In an interview with The Banker, she added: “Otherwise you can see an investor who goes and puts some money in to something that they consider good, and that might be this tiny part of the money they’ve got to invest – but with the rest of their money they can actually go and do a whole lot of harm.”

8minutenergy Renewables, the US independent solar developer, has secured a $21m letter of credit facility with Rabobank for utility-scale solar development activities across North America, including supporting the execution of Power Purchase Agreements and Interconnection Agreements. “We commend Rabobank for their progressive approach, and for structuring an innovative credit facility that is secured by cash-flow generating assets held by 8minutenergy,” said Martin Hermann, CEO and Founder of 8minutenergy. Thomas Emmons, Head of Project Finance at Rabobank North America Wholesale, said the bank looks forward to providing additional capital.

An unnamed institutional investor has agreed a $40m funding deal with cleantech firm FuelCell Energy. The Nasdaq-listed company said it had entered into a definitive agreement to sell the equivalent of just under 6.9m shares of common stock and warrants for up to 8.2m shares in a direct offering worth $40m. “The company intends to use the proceeds from this offering to support project financing, working capital, and for general corporate purposes,” it said.

Social

AustralianSuper, the 2m-member A$75bn (€50bn) super fund, has merged its sustainable investment options into into one, the Socially Aware option. It said: “The Socially Aware option’s approach to sustainable investing was updated to reflect our members’ views and aims to generate long-term returns.” It doesn’t invest in shares of companies which: have investments in fossil fuel (coal, oil & gas) and uranium reserves; have been flagged as having human rights, labour, environmental or governance controversies; or are tobacco, cluster munitions or landmine producers.

The Natural Capital Coalition is launching a ‘Protocol Application Program’ to support businesses as they apply the protocol and sector guides. The Protocol provides a standardized framework for business to identify, measure and value their impacts and dependencies on natural capital. The Protocol Application Program will support businesses through regular webinars and materials, as well helping to introduce them to trainers and technical advisors who can help them improve their decision making. The Program will be run by the University of Cambridge Institute for Sustainability Leadership (CISL) and will commence from mid-September 2016. Link. Governance

Brazil’s Association of Capital Market Investors – Amec – has released the draft version of Amec Stewardship Code for public consultation. The ultimate objective of the code is to help institutional investors fulfill their fiduciary duties before clients through the exercise of their rights. Amec CEO Mauro Rodrigues da Cunha said: “Every institutional investor has individual fiduciary duties before its clients that go beyond the sale and purchase of shares. Shares give them not only the right to a flow of funds, dividends, and capital gains, but also to several political rights. To ignore such political rights means to not faithfully meet fiduciary duties.” The final version of the code will be introduced during the 2016 Amec Investor Forum on October 27.

Change is in the air for shareholders during this summer’s voting season at Japanese companies, Panasonic, Kawasaki Kisen Kaisha (K-line), and Toshiba, according to Sustainalytics’ Governance Brief. It said that following the 2015 adoption of the revamped Japanese corporate governance code, investors are seeking governance improvements at listed companies. For example, at K-line, 43% of shareholders voted against the reappointment of Eizo Murakami as President, nearly 30% more than in 2015. And at Panasonic, 33% of shareholders voted against the reappointment of Kazuhiro Tsuga as President, while “foreign investors were overall dissatisfied over the lack of shareholder consultations when implementing takeover defense measures”

Fund management giant BlackRock has issued a new ViewPoint titled “Exploring ESG: A Practitioner’s Perspective,” which sets out its views on ESG issues from the perspective of a fiduciary investor acting on behalf of asset owners. “Environmental, social, and governance (ESG) factors are an increasingly prominent factor in determining the long-term value of a company. ESG data spans a range of issues, including measures of company carbon emissions, labor and human rights policies, and corporate governance structures.”

The Principles for Responsible Investment (PRI) has published a Policy Briefing about the revision to the European pension fund directive, officially the Institutions for Occupational Retirement Provision, or IORP2. “The draft, due before the European Parliament in Autumn 2016, puts specific requirements on European IORPs to evaluate Environmental, Social and Governance (ESG) risks and disclose information to current and prospective scheme members,” the PRI says. The briefing summarises the key ESG-related clauses.

The Investment Association, the UK funds sector trade body, has hailed a government initiative to boost female boardroom presence. Commenting on the launch of the Hampton-Alexander Review, Andrew Ninian, Director of Corporate Governance and Engagement, said: “Improving female representation in British business, both in senior leadership positions and on company boards is important to benefit company performance, investor returns and the UK Economy as a whole.” Announcement