RI ESG Briefing, June 2: NZ Super, TIAA, ATP, Investor Group on Climate Change, Social Stock Exchange

Environmental

The New Zealand Superannuation Fund has reduced its stake in Z Energy, the listed fuel distributor comprising some of the former assets of Shell New Zealand, to 1.5% from around 10%. It sold 36.4m shares and will retain around 5.8m shares. Nigel Gormly, NZ Super’s Head of International Direct Investment, said Z Energy had giving a gross return to date of around 48% p.a. The fund initially invested NZ$209.8m (€128m) in purchasing Z Energy, alongside Infratil, in 2010. The fund has now received NZ$1.1bn in proceeds from the investment. The transaction was completed via an underwritten block trade by UBS.

Leading Danish pension fund ATP has reportedly objected to criticism over its climate change investment stance from campaign group WWF. IPE.com cited a report from the WWF as saying none of the country’s large pension funds were aiming to divest their investments in oil and coal. The news report said labour fund ATP condemned the report’s methodology, adding it didn’t reflect the reality of Danish pension fund investment. A spokesman was quoted as saying the WWF report was “blatantly over-simplified”.

The Investor Group on Climate Change (IGCC), the Australasian investor body, has “published”:HTTP://WWW.IGCC.ORG.AU/NEWS/4051914 seven climate change policy priorities which investors believe are critical for managing risk and unlocking investment in low carbon finance opportunities. “The seven policy priorities identified by investors have to be part of the climate change policy response in Australia to build investor confidence and get capital moving”, said IGCC Chief Executive Emma Herd.

Social

The UK’s Financial Ombudsman Service, which arbitrates disputes between consumers and financial services firms, is reviewing a complaint made against the Social Stock Exchange (SSE). The complainant, affordable housing social enterprise Uprise Community, alleges SSE has a lack of governance and transparency. Tony Cross, Director of Communications at the SSE, told RI: “The Financial Ombudsman Service (FOS) is obliged to look into complaints raised with them, however we believe the complaint to be without merit or substance. It should be noted that it is the complaint – not the Social Stock Exchange – that is under review by the FOS. This complaint has been raised by a company which has been neither client of ourselves or of Kession [the hosting firm which handles regulation for the SSE].”

Germany-based impact investment adviser Finance in Motion has made its first direct investment, purchasing an equity stake in Aqua-Spark, a global investment fund based in the Netherlands that finances sustainable aquaculture projects. Terms of the deal were not disclosed. Finance in Motion advises impact investment funds that manage more than €1.6bn. Finance in Motion Managing Director Florian Meister said: “We firmly believe that our investment in Aqua-Spark will produce both positive ecological and social impacts.”h6. Governance

TIAA, the US financial services giant, has been named lead plaintiff in a consolidated class action alleging that Valeant Pharmaceuticals International fraudulently inflated its stock price, according to court documents. New Jersey federal judge Michael A. Shipp also named Robbins Geller Rudman & Dowd as lead counsel.

The London Stock Exchange Group (LSEG) has warned the high-level Task Force on Climate-Related Financial Disclosures (TCFD), the high-level G20 body chaired by data tycoon and former New York Mayor Michael Bloomberg, that there is a risk of a proliferation of “confusing” sustainability metrics – and urged the TCFD to recognize existing climate disclosure regulations. The exchange, which is merging with Germany’s Deutsche Boerse, said: “There is a risk of increasing regulations on corporate disclosure that are not aligned which will increase costs for companies and issuers and create a confusing array of similar but different metrics that do not help global investors and those wishing to measure and model systemic risks.” In its response to the TCFD’s Phase 1 report, it urged the task force to recognize existing laws and regulations, which often already require disclosure of climate-related risk.

The Nairobi Securities Exchange board has reportedly said all listed companies trading on its platform must report on ESG measures. Board chairman Eddy Njoroge said: “We must communicate openly about our financial, social and environmental practices that global institutional investors use to evaluate individual company performance. This will help you build trust and confidence in your companies bringing in higher returns.”

Campaign group ShareAction has launched an online campaign where people can ask their pension scheme or ISA provider to vote against the £70m pay packet for Sir Martin Sorrell, CEO of advertising firm WWP. WPP’s AGM is on the 8 June. ShareAction argues that Sorrell’s prospective pay deal is three times that of the next highest paid FTSE 100 CEO. Separately, governance advisory firm PIRC has reportedly advised shareholders to oppose the WPP pay report given Sorrell’s “excessive” pay.

Carol Bowie, Head of Americas Research at Institutional Shareholder Services, has posted findings from the ISS 2016 Board Practices Study onto the Harvard Law School Forum on Corporate Governance and Financial Regulation. It looks at the structure and composition of boards and individual director attributes at Standard & Poor’s US “Super 1,500” companies. “Based on analysis of public filings (primarily proxy statements) related to shareholder meetings occurring from July 1, 2014, through June 30, 2015, the study reports that annual board elections and majority vote standards for those elections are now the norm across the S&P 1500,” Bowie writes.

A shareholder rebellion is reportedly brewing at financial services firm Old Mutual, according to the Financial Times. It said shareholders are angry it has proposed a payout of 1,000% of base salary for CEO Bruce Hemphill. It quoted leading investors as saying they were considering a vote against the planned maximum payout for Hemphill because of the “unusual nature and size” of the offer.