RI ESG Briefing, June 23: Dutch court judgement, LGS, ATP, AVF, OHS, SOCO

The bite-sized round-up of all the other latest environmental, social and governance news.

Environmental

A Dutch court has declared the government’s climate policy illegal and ordered it to cut its emissions by at least 25% within five years, in a landmark ruling, reports The Guardian newspaper.
The judges ruled that government plans to cut emissions by just 14-17% compared to 1990 levels by 2020 were illegal, in a decision that could have implications for similar court cases: Link to story

Australia’s A$9bn (€4bn) Local Government Super (LGS) has won SuperRating’s Infinity award for leadership in sustainable and responsible investment for the fourth time, according to reports. The fund now has more than $5bn invested in responsible investment strategies while its Sustainable Australian Shares option in the fund returned 20.9% in the year to May, according
to Investment Magazine.

“We could end up with more onshore wind projects than we can afford,” said the UK’s Energy and Climate Change Minister Amber Rudd in a statement to Parliament on the ending subsidies for onshore wind. She warned this could lead to either higher bills for consumers, or other renewable technologies, such as offshore wind, losing out on support. She went on: “It is therefore appropriate to curtail further subsidised deployment of onshore wind, balancing the interests of onshore developers with those of bill payers.

Edinburgh University has denied that it is putting its research income “above the moral imperative of mitigating human-induced climate change”. Writing on fossil fuel divestment in The Scotsman, Andy Kerr, executive director of the Edinburgh Centre for Carbon Innovation and a member of the Fossil Fuel Working Group at the University of Edinburgh, says: “We do not believe that a blanket divestment policy from fossil fuel extraction companies is the way forward. Instead, we propose to divest where alternative energy sources exist, and engage and improve performance where they do not.”

European exchange group Euronext has teamed up with corporate responsibility ratings firm Vigeo to launch a new ESG Index called the Euronext-Vigeo EM70. This index distinguishes 70 companies from a universe of 900 listed companies in developing countries which have the highest performances in corporate responsibility based on their ratings by Vigeo. Companies’ weighting in the index, calculated by Euronext, is correlated with the score assigned by Vigeo. The index components are reviewed and updated twice a year, in June and in December.

Social

Danish pension giant ATP has reportedly become the latest Danish pension fund to sell out of Dublin-based airline Ryanair amid an escalating labour dispute. IPE.com reported the funds are dumping the low-cost carrier in the context of a disagreement about whether local airline staff should be included in higher-paying Danish collective bargaining wage contracts. The report cited ATP confirming it had sold its DKK25m (€2.4m) Ryanair holding. Others to have divested include Industriens Pension and PensionDanmark, the report added.

The World Bank’s private sector arm the International Finance Corp (IFC) is reportedly working returning to the market for Islamic bonds, or sukuk. Reuters, quoting an IFC spokesperson, said the IFC has plans to issue sharia-compliant debt after summer in the Gulf region. “This is very much work in progress,” the news agency quoted Alexandra Klopfer as saying, adding the IFC last sold a $100m five-year sukuk in 2009.Switzerland’s CHF33bn (€27bn) first-pillar pension fund AHV has decided to stop investing in agricultural commodities in future, according to its 2014 annual report. The fund said it based its “new concept” for commodity investments on “political sensitivity” to investments in food, agriculture and livestock.
In 2014, its commodity holdings made a -8.2% return.

Governance

The Hong Kong stock exchange has published
conclusions to its concept paper on weighted voting rights. The paper sought views on whether governance structures that give certain persons voting power or other related rights disproportionate to their shareholding (WVR structures) should be permissible for companies listed or seeking to list on the Exchange’s markets. The bourse has concluded that “there is support for a second stage consultation” on proposed changes to its listing rules on the acceptability of WVR structures. A proposal will be put forward in the third/fourth quarter.

Canada: the Ontario Securities Commission (OSC) says it won’t be mandating additional ESG disclsoures. In its latest statement of priorities (SoP) for the year to March 31, it said companies already have an obligation disclose material environmental and governance issues, adding: “We have not concluded that it is appropriate at this time to mandate additional ESG disclosures. As a result we will not be amending the SoP to include these issues.” Link

The UK’s £6.7bn (€9.4bn) Church Commissioners have reportedly backed a move to remove the chairman of controversial oil exploration firm SOCO International. The Church Times said it follows the Commissioners saying they could exit their £2.8m holding in SOCO over its activities in the World Heritage site at Virunga, in the Democratic Republic of the Congo.

US banking, custody and asset management giant State Street has disclosed that it has received a ‘Wells notice’ from the Securities and Exchange Commission (SEC). “As previously reported,” State Street said
, “the investigation includes our use of consultants and lobbyists and, in at least one instance, political contributions by one of our consultants during and after a public bidding process.” The Wells notice informs the firm that the SEC staff intends to ask the Commission for permission to bring a civil enforcement action that would allege violations of the securities laws.

The Council of Institutional Investors, the US industry body representing around $3trn in assets, has named Amy Borrus as its new interim executive director. Her appointment follows the recent resignation of Ann Yerger, CII’s executive director since 2005. Borrus, formerly CII’s deputy director, will serve as interim executive director while a committee of the board conducts a search for a permanent executive director.

The Harvard Law School Program on Corporate Governance and the Harvard Law School Program on Institutional Investors convened the Harvard Roundtable on Shareholder Engagement on June 17. The event brought together investors with aggregate assets under management exceeding $16 trillion. The event was co-organized by Lucian Bebchuk, Stephen Davis, and Scott Hirst.