RI ESG Briefing, June 20: €3bn fund needed to boost Clean Development Mechanism – report

Environmental

A fund of up to €3bn is needed to have a “material impact” on carbon credits (Certified Emission Reductions, CERs) under the Clean Development Mechanism, according to a new reported backed by the United Nations Framework Convention on Climate Change and its Kyoto Protocol (UNFCCC). “The analysis in this paper suggests that an existing-project fund in the region of €2.5–€3.0 billion would be required to have a material impact on CER prices,” says the 52-page document The market impact of a CDM capacity fund prepared by consultants Vivid Economics.

Insurance giant Swiss Re says it has applied the Principles for Sustainable Insurance (PSI) for the first time – and that it screened 170 business transactions based on environmental, social and ethical criteria in 2012; 23 transactions were stopped. The Principles were launched at the “Rio+20” event last year, developed by the United Nations Environment Programme’s Finance Initiative (UNEP FI). The PSI board will convene at Swiss Re’s HQ in Zurich in July. A global strategy and work programme will be finalised at the initiative’s second annual meeting in Beijing in November. Signatories to the PSI have grown to around 60 leading insurers – doubling the number at launch. Link

Social

Investment consultant Mercer reckons “recent storms, droughts, industrial accidents, and scandals” have raised the profile of sustainability and responsibility issues at companies, the media, pension plans, endowments and foundations. “Investors are beginning to recognize the risks and opportunities that sustainability issues represent,” said Craig Metrick, US Head of Responsible Investment at the firm.

A new online tool has been launched to monitor supply chain issues in the electronics industry. The Electronic Tool for Accountable Supply Chains (E-TASC) has been developed by the Global e-Sustainability Initiative (GeSI) in partnership with supply chain network EcoVadis and is already in use by major firms such as Alcatel-Lucent, Deutsche Telekom and Vodafone. Link. Governance

The fifth report from PharmaFutures, the investor-led drugs industry dialogue, has been released. Pathways to Value, was presented at an event held at the Universities Superannuation Scheme (USS). A key finding is that drugs firms need investors’ backing to deliver over the long-term. Participants in the project alongside USS include Fidelity Worldwide Investment, J.P.Morgan Asset Management and Robeco.

The Indian government plans to review the guidelines governing executive pay practices, according to the Economic Times. The paper quoted officials saying existing guidelines have been in place for decades and might not be necessarily reflect “the current economic scenario of the country”.

Argentina’s Nobel Prize-winning human rights figure Adolfo Pérez Esquivel has accused the country’s Supreme Court of betraying the interests of Argentines and other Latin Americans with its decision freeing Chevron from an embargo aimed at compensating victims of oil and chemical spills in the Amazon rainforest in Ecuador. Link

New research published by the European Corporate Governance Institute (ECGI) looks at stock market returns, corporate governance and “capital market equilibrium”. Researchers Bruno Maria Parigi, Loriana Pelizzon and Ernst-Ludwig Von Thadden propose a model that incorporates corporate governance into the basic capital asset pricing model (CAPM). They write: “The model predicts that in equilibrium the quality of corporate governance correlates positively with beta and idiosyncratic volatility and negatively with returns on assets.”

Israel-based drugs firm Teva Pharmaceutical Industries has reportedly agreed to settle an Israeli class action for US$1.3m, as well as publishing its senior executives’ pay in regulatory filings. The action, brought by law professors Sharon Hannes and Ehud Kamar, claimed Teva violated Israeli and US laws by failing to disclose individual pay rates.