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RI ESG Briefing, June 16: Toyota AGM approves controversial new share class

The round-up of the latest ESG news

Environmental

VicSuper, the A$15bn (€10bn) Australian superannuation fund, is reportedly conducting research with its beneficiaries to gauge potential demand for an investment option addressing climate change. The potential offering would either divest from fossil fuels and carbon intensive companies, or favour firms actively reducing their climate impacts, the Sustainability Report said, citing said the fund’s corporate responsibility manager, Kirsten Simpson.

The Guardian, the UK newspaper which is running its own fossil fuel divestment campaign, has conducted an analysis of which global pension funds are facing risks from exposure to the coal sector. It examined the ownership of the biggest 50 listed coal firms and found the largest is held by South Africa’s Public Investment Corporation. The paper said PIC has an $8bn stake, “which represents a huge 6.1% of all its funds”. Other funds named included APG, TIAACREF, the Canada Pension Plan Investment Board and the Universities Superannuation Scheme (USS) and West Yorkshire Pension Fund. Link

OECD Watch reports that the Dutch National Contact Point has accepted a case filed by Friends of the Earth against Rabobank for failing to conduct due diligence on investments in Indonesian palm oil operations and has initiated a process of mediated dialogue.

Social

The New Zealand Superannuation Fund and AMP Capital have reportedly expressed initial interest in New Zealand’s first social impact bond programmes focused on helping people with mental health problems find employment. The New Zealand government has allocated NZ$28.8m (€18m) to kick start the project. Potential investors told the New Zealand Herald that they are open to the concept but are awaiting details, including how returns are structured. But the programme has already come under fire, most recently from New Zealand’s national nursing body, which fears social impact bonds are a way to privatise mental health services.

The first impact investment circle in Denmark has launched this month. The launch event had over fifty participants from a range of Danish business including Danske Bank, the Social Capital Fund Denmark and the Carlsberg Foundation. The goal of the event was to appeal to Danish foundations and investors about forming an impact investment circle. Speakers for the evening included the US ambassador to Denmark Rufus Gifford. Link

Camden Council, a local authority in London, has come under fire
for investing a reported £60m in guns, cigarettes and fizzy drinks. A Freedom of Information request found the local authority had this year invested about £40m in tobacco companies, £11m in confectionary and £10m in some of the world’s largest military companies. The council hit back telling local newspaper the ‘Ham&High’ it had a “legal responsibility” to get the best return. It said it had held stock in tobacco “for many years” describing it as a “classic defensive stock in times of economic uncertainty”.

Sweden’s Andra AP-fonden (AP2) has launched its 2015 Female Representation Index – revealing that the percentage of women on the boards of companies listed in Stockholm has continued to rise. The figure is now 27.9%, against 24.7% last year and the second largest increase since records began. And the proportion of women in executive managements is up to 19.5%. Link. Governance

Shareholders in car giant Toyota today (June 16) reportedly approved a controversial new class of stock with the stated aim of bringing in long-term investment. Reuters reported that around 75% of shareholders voted in favour of the new ‘Model AA’ share class (named after its first car). The move, resisted by foreign investors such as CalSTRS and others, will see the creation of up to 50m unlisted shares which must be held for five years. Advisory firm ISS had advised against the development. Company President Akio Toyoda was quoted telling the AGM: “No one will be disadvantaged by these shares.” It comes as a new corporate governance code comes into effect in Japan.

Law firm Robbins Geller says it has secured $50m recovery for shareholders against St. Jude Medical in a case where the lead plaintiff was the Building Trades United Pension Trust Fund. The case, dating back to 2010, alleged that St. Jude, a medical device manufacturer based in St. Paul, Minnesota, defrauded investors by utilizing heavily discounted end-of-quarter bulk sales to meet quarterly expectations.

Five years on from the launch of the Financial Reporting Council’s (FRC) Stewardship Code, trade body the Investment Association’s annual report finds that investment managers, life companies and pension funds are committed to engagement, but that there is still room for improvement. The report highlights that respondents increased the human resource dedicated to engagement by 19 per cent in the year to 30 September 2014. Furthermore, over 80 per cent of this increased resource is represented by portfolio managers and analysts.

There has been a 76% in the number of clients using Bloomberg’s ESG data, according to the media giant’s new 2014 Impact Report. It said just over 17,000 customers now user the data. Bloomberg collects ESG data from published company material and integrates it into its equities, Bloomberg Intelligence and fixed income platforms. The firm covers more than 11,000 companies with ESG data and more than 7,500 companies with executive compensation data in 65 countries. The report is the first to use Sustainability Accounting Standards Board (SASB) standards in its reporting, not-for-profit body SASB said.

Agriculture multinational Monsanto has adopted proxy access amendments to the company’s bylaws. The changes enable eligible Monsanto shareowners to have their own director nominees included in the company’s proxy materials, along with candidates nominated by Monsanto’s board of directors.

Dutch pension asset management giant APG, which runs assets for ABP, the €340bn Dutch civil servants’ pension fund, has confirmed a claim by an NGO that it has invested in companies which are involved with nuclear weapons. However, those companies are based in the five nuclear powers as defined by the 1970 Nuclear Non-Proliferation Treaty – namely the US, the UK, China, Russia and France. According to the Dutch NGO “Stop Wapenhandel,” APG, on behalf of ABP, has allocated €1.1bn to the firms in question. While not commenting on the level of investment, an APG spokesman said: “Our client ABP is allowed to invest in those companies, which range from companies with a focus on weapons development to aviation companies like Boeing, that are involved in producing parts of systems that are used for nuclear weapons.”