RI ESG Briefing, June 18: BlackRock in Swedish windfarm deal with Arise AB

The round-up of Environmental, Social and Governance news

Environmental

Swedish renewables firm Arise says it has entered into a non-binding agreement with a fund managed by BlackRock on the sale of the Brotorp wind farm in Sweden. The agreement will comprise 46.2 MW, as well as construction and asset management by Arise on behalf of BlackRock. The deal, terms of which weren’t disclosed, is subject to due diligence and debt financing. Arise is 10% owned by Swedish state pension fund AP3. Announcement

The International Finance Corporation (IFC), the World Bank arm which provides support to the private sector in developing countries, has issued the first green bond denominated in the renminbi, the Chinese currency. According to the IFC, proceeds from the RMB500m (€59.2m), three-year bond will go toward funding renewable and energy efficiency projects in emerging countries. The bond’s sole bookrunner was UK bank HSBC, and the IFC said investors in Europe and Asia were among the bond’s buyers. Its yield is 2% per annum.

Allianz Global Investors, which last September launched its first renewable fund for institutional investors, has bought the 19.5MW Great Glemham solar park in Suffolk, eastern England for an undisclosed amount. It said a loan accounted for 70% of the purchase price and money from the fund, known as AREF, the remaining 30%. AREF launched with €150m in seed money from investors.

Newsweek Magazine has incorporated data from RepRisk in its 2014 Green Rankings of the reputation and environmental impact of some of the world’s largest companies. The data is used to assess the overall reputation of a company, which makes up 20% of its final score. Newsweek, in partnership with Corporate Knights Capital, ranks the 500 largest listed firms in the US, and the 500 largest globally, based on their environmental impact, management and disclosure practices. Link

Social

US responsible investors have welcomed a new federal bill requiring corporate disclosure on trafficking and slavery risks, the Business Supply Chain Transparency on Trafficking and Slavery Act, 2014. The Interfaith Center on Corporate Responsibility (ICCR), a coalition of 300 investors with assets under management of over $100bn, Calvert Investments and Christian Brothers Investment Services, said it would require company disclosures on auditing and verification, risk assessments, training, remediation plans and accountability mechanisms for trafficking and slavery risks, which they said were ‘material’ investment risks, and part of corporate responsibility in respecting the UN Guiding Principles on Business and Human Rights. Similar legislation in the UK is being proposed under the Modern Slavery Bill, which has also seen a coalition of investors representing £195bn in assets calling for the inclusion of a Transparency in Supply Chains (TISC) clause.h6. Governance

The Ethical Council for the NOK5.3trn (€650bn) Norwegian Government Pension Fund is looking into allegations that a Thai food company in which the fund has a NOK250m stake sources its prawns from ships that rely on slave labour. “The Council is aware of criticism of the working conditions in the fishing industry in Thailand and the allegations of forced labour, which is why we will do some research on this,” Ola Mestad, Head of the Ethical Council, was quoted as saying by a Norwegian newspaper. It follows a report in the Guardian newspaper, which looked at CP Foods.

The General Board of Pension and Health Benefits, the largest faith-based pension fund in the US with approximately $18bn in assets, has confirmed it sold its stake of around 110,000 shares in security firm G4S due to its role in operating prisons. The New York Times cited the board’s Chief Investment Officer David Zellner as saying in an interview it was in response to concerns that the company supplies equipment used in Israeli jails and in the occupied West Bank. “We are waiting to conduct additional research after our board of directors meets in July to review and discuss the broad range of our investment policies—we may have additional comments after their deliberations,” the board said in a statement.

Nordea Investment Management will remain invested in two Israeli banks, Mizrahi Tefahot and Hapoalim, both of which have been boycotted by Dutch pension fund giant PGGM, after the Nordic financial group said it had satisfactorily reviewed their activities in the Palestinian occupied territories. The fund manager told the Financial Times both had effective “systems in place to manage their risks” after meeting with bank representatives in Israel in March.

The latest Canadian Mutual Fund Proxy Voting Survey has been released by the Responsible Investment Association. The study investigated voting patterns of 25 fund families representing a cross-section of Canada’s mutual fund industry. A key finding is that “across the board, RI funds opposed management on both management and shareholder resolutions far more often than the larger non-RI fund groups”. Link

The UK’s Association of British Insurers (ABI) trade body is to merge its Investment Affairs division with the Investment Management Association (IMA), the trade body for the £5trn asset management industry, at the end of this month, with the merged entity changing its name to The Investment Association from the beginning of 2015. Helena Morrissey, CEO of Newton Investment Management, becomes the new Chairman of The Investment Association, replacing Douglas Ferrans, also Chairman of Insight Investment, who steps down after four and a half years in the role.