RI ESG Briefing, June 1: MIT, CalPERS, OECD, Global Compact, USS, NY Common

The round-up of the latest ESG developments


The Massachusetts Institute of Technology (MIT) has become the second US University, after Yale, to join the Carbon Pricing Leadership Coalition, a global partnership advocating the implementation of carbon pricing to combat climate change. The coalition, made up of more than 20 national and subnational governments, 90 major companies, and dozens of leading non-profit organisations, was launched at the Paris climate talks in November 2015.

The Institutional Investors Group on Climate Change (IIGCC), which represents 122 institutional investors managing €13trn in assets, has urged UK Prime Minister David Cameron to back proposals to cut greenhouse gases by 57% before 2032. Without the Government’s backing the IIGCC warns that investors would be reluctant to make investments in areas linked to preventing global warning, such as energy, citing uncertainty as the limiting factor.

Green investment banks have a role to play in bolstering uptake in energy efficient real estate, by helping to create a securitisation market for the sector, according to a report from the OECD. The report, Green Investment Banks: Scaling up Private Investment in Low-carbon, Climate resilient Infrastructure, highlights the need for standardised assets in the energy efficiency sector in order to enable pooling or bundling. The report said: “Green investment banks can increase standardisation by creating consistent loan documentation and technical assessment processes.”


Victoria’s State Government in Australia has revealed
it is in the early stages of exploring Social Impact Bonds (SIBs). As part of its 2016-17 budget AUS $700,000 has been provided to help deliver market testing and procurement phases of the first SIBs. The SIBS will be used to trial innovative interventions in complex areas of social disadvantage.

The UN Global Compact and Volans, the consulting firm headed by sustainability guru John Elkington, have announced a partnership to develop the “Breakthrough Innovation Platform” to drive new business models to advance the UN Sustainable Development Goals (SDGs). The aim of the platform is to “challenge and stretch prevailing business mindsets” into the “opportunity spaces” offered by the SDGs. Launching in September 2016, it will encompass anything from big data, artificial intelligence and the internet of things, to driverless vehicles, 3D printing and synthetic biology.

Sedex, the non-profit supply chains organisation, and the Business Social Compliance Initiative (BSCI), which focuses on factories and farms, have signed a Memorandum of Understanding to work together to enhance the sustainability efforts of their combined memberships.h6. Governance

A proxy access shareowner resolution filed by the California Public Employees’ Retirement System (CalPERS) at Old Republic International Corporation’s annual shareowner meeting has been passed. The proposal provides shareowners with the right to nominate directors to US property insurance firm’s board for the first time.

The New York State Common Retirement Fund has reportedly withdrawn a shareholder proposal at Priceline after the travel website agreed to include race and gender when it considers nominating board members. Pensions & Investments, citing a statement from New York State Comptroller Thomas DiNapoli, said the Priceline board of trustees is scheduled to hold its annual meeting June 2.

The Universities Superannuation Scheme (USS), the £49bn (€63bn) UK pension fund for academics – including experts funded by cancer charities, has come under fire for reportedly investing £211m in British American Tobacco last year, its fifth largest holding. The European Public Health Association recently called on all investors to divest their holdings in tobacco. USS’ holdings in tobacco weren’t the only ones subject to criticism, its largest holding, £344m in Royal Dutch Shell, was also seen as controversial.

OMS LLP – a new company that focuses on ‘human governance’, that’s to say management quality and capability – has become a signatory to the Principles for Responsible Investment (PRI). OMS says it “researches, rates and advises on effective Human Governance”. It says it’s “a brand new discipline that finally makes whole, the way we examine, value and engage with companies to generate true, lasting value for all stakeholders”.

For 2016, BNP Paribas Investment Partners says its voting policy has evolved to support all shareholder proposals that are “in line with our own climate change policy”. And it added: “We can expect continuous support on shareholder proposals in the future.” As part of the ‘Aiming for A’ initiative, it decided to co-file its first shareholder resolution this year, at Anglo American, Rio Tinto and Glencore. The firm went on: “We expect that the dynamic of the Aiming for ‘A’ proposal within the oil and gas sector will be similar to that in the mining sector, in order to push companies’ strategies for transitioning to a low-carbon economy.”

The European Parliament’s JURI Legal Affairs Committee is set to discuss amendments to European directives on the encouragement of long-term shareholder engagement and certain elements of the corporate governance statement on June 13. ‘Rapporteur’ Sergio Gaetano Cofferati is set to report back to the committee, according to a meeting agenda.