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RI ESG Briefing, June 12: New York theological seminary the latest to divest fossil fuels

The round-up of environmental, social and governance news

Environmental

The trustees of Union Theological Seminary in the City of New York have voted unanimously to begin divesting fossil fuels from the school’s $108.4m endowment. It said it has become the world’s first seminary “to take this dramatic step in the fight against global climate change”. “Climate change is affecting this globe, it’s killing people, and it’s going to destroy what the world looks like as we know it,” said Michael Johnston, the chair of Union’s investment committee and a former Executive Vice President with asset management giant Capital Group.

The insolvency administrator for German wind energy firm Prokon is considering suing the embattled firm’s former chief executive, Carsten Rodbertus, for allegedly embezzling up to €500m in assets from investors. According to German press reports, Prokon’s administrator Dietmar Penzlin has uncovered evidence that Rodbertus borrowed huge sums for his personal use – such as buying a Cessna aircraft for parachute jumps. Rodbertus firmly denied the charge, saying that any of the losses that Prokon’s investors must bear stem from Penzlin’s intention to break up the firm. Next up is a special shareholders meeting on July 22.

Leaf Clean Energy, the London-listed environmental investor that is planning an “orderly realisation” of its assets, says it will hold an extraordinary general meeting on July 1 to review investment policy, changes to its articles of association and the conversion of its shares into redeemable shares. Leaf has emphasised it is not considering liquidation.

Social

A “feedback loop effect” is starting to be seen in corporate human rights reporting, according to consulting firm PwC. That’s where “the requirement to report on social and environmental issues and performance is actually encouraging companies to think harder about what they should be doing in these areas”. Rachel Poole, Sustainability and Corporate Reporting specialist at PwC, said in a blog posting: “With the growing global pressure on resources and the challenges over the very purpose of business, we’re starting to see evidence that suggests companies who are transparent about their social and environmental performance are enjoying a lower cost of capital.”

CARS Inc., the information service for US community investors, has changed its name to Aeris. The Philadelphia-based group’s goal is to help make Community Development Financial Institution (CDFI) loan funds a recognized asset sub-class in the fixed income markets. It also launched a portal for data and analytics on the financial and impact performance of community investments called Aeris Cloud.h6. Governance

UK campaign group ShareAction has launched an online petition calling on retailer Tesco – UK’s biggest private sector employer, to pay its staff a Living Wage. The petition will be delivered to the Tesco board at its AGM in London on June 27.

Japan’s Financial Services Agency says 127 investors such as asset managers, trust banks, insurers and pension funds, have committed to the country’s new Stewardship Code. The new guidelines require investors to disclose how they vote at company AGMs and deal more closely with company management. Signatories include about every major Japanese institutional investor, a senior FSA official was quoted as saying by Reuters.

Dutch pension funds PMT, PME and PFZW, which own shares in Vinci, Hochtief and Hyundai, say they will discuss with the construction firms allegations of labour rights violations related to the construction of a football stadium for the 2022 World Cup in Qatar. The announcement follows a report commissioned by FNV, the Dutch trade union confederation, which said the schemes were invested in firms that colluded in suppressing the human and labour rights of the stadium’s workers. According to a report in Financial News, examples include forcing migrants to work by requiring that they obtain a visa to leave Qatar. The firms played down the allegations while football governing body FIFA had no comment.

CtW Investment Group, the union pension fund-linked investment advisor, has said it is “deeply troubled” by reports that drugstore firm Walgreen may reincorporate in Switzerland as part of a “tax inversion” strategy. In a letter to the company, Executive Director Dieter Waizenegger said: “Re-domiciling overseas would likely be detrimental to the interests and rights of long-term shareholders, heralding a step backwards in the company’s corporate governance.” He urged the company to commit to remaining in the US.

The most prevalent shareholder proposal in the US so far in 2014’s voting season (with 51 resolutions) has been for independent chair, according to law firm Davis Polk citing ISS data. Four such proposals have passed so far, some by very narrow margins. At Allergan, the proposal received just over 50% in favor. And more than 60% of shareholders supported the proposal at Health Care REIT and a similar number backed an independent chair at Vornado Realty. Link

Twenty global institutional investors including the Ontario Teachers’ Pension Plan, Baillie Gifford and the California Public Employees’ Retirement System have reportedly called on major companies in Japan to appoint more external directors to their boards. The call to improve corporate governance was addressed to 33 firms in a joint letter from the investors, according to a Nikkei report.