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RI ESG Briefing, June 24: UK green bank seeking investors for £1bn wind fund

The round-up of environmental, social and governance news

Environmental

The UK’s Green Investment Bank has announced that it aims to raise a £1bn (€1.25bn) fund to encourage new private investors to invest in offshore wind farms in the UK. The fund will acquire equity stakes in operational offshore wind projects – with the bank “seeking a suitable group of strategic, long-term co-investors” to participate in what it termed an “innovative capital raising exercise”. The new fund will be managed by a GIB subsidiary which is currently regulated by the Financial Conduct Authority (FCA) and will be seeking permission from the FCA to become a regulated fund manager. The bank said: “Equity investments in operational wind farms can offer a compelling opportunity for investors seeking long-term, inflation-linked returns. These attributes can be well matched to the needs of long-term infrastructure investors such as sovereign wealth funds and pension funds.”

Green bonds are to be part of the French government’s new energy financing package, according to reports. Reuters said it’s part of a package of tax breaks loans to help renewable energy account for 40% of the country’s electricity by 2030, from 14% now. Under the plans, state investment bank BPI France will set up a fund – distributed by commercial banks – to back firms specializing in thermal insulation and renewable energy. And state-owned Caisse des Depots would provide €5bn of low-interest loans.

The New York State Environmental Facilities Corporation, which provides low-cost capital, financing, and technical assistance for environmental projects, has issued a $213m green/water bond, according to industry advocacy group the Climate Bonds Initiative. There were 30 bookrunners on the AAA-rated bond, the initiative added. Proceeds will be used to provide financial assistance to local governments to finance and refinance drinking water projects as well as to refund certain bonds previously issued.

Social

The European Commission has published a new standard to allow social enterprises to “better measure and demonstrate” their social impact – to assist in their discussions with partners, investors, and public sector funders. It’s hoped it will help European social enterprises benefit from funding via the European Social Entrepreneurship Funds (EuSEF) and the new Employment and Social Innovation programme (EaSI). The report has been endorsed by an expert group on social entrepreneurship (GECES) set up by the Commission. Link

Aaron’s Inc., the US lease-to-own retailer that was caught up last year in a spyware scandal, has been removed from the Calvert Social Index, for no longer meeting the index’s standards for governance and ethics. In addition, SPX Corporation, the New York-listed industrial group, was deleted as it no longer meets standards for nuclear power. In 2013, Aaron’s was sued by customers for allegedly using spyware on rented computers and agreed to a settlement with the Federal Trade Commission.h6. Governance

A group of US responsible investors have filed a shareholder proposal with logistics giant FedEx asking it to “respond to reputational damage” from its association with the ‘Washington DC football team’, whose “Redskins” name is seen as disparaging to Native Americans. Fedex has current naming rights to the team’s stadium, FedExField. “The team name, ‘Redskins’, is a dehumanizing label that characterizes people by skin color,” the group said, adding it has “long-standing hateful and offensive connotations”. The proposal is being lead filed by the Oneida Trust of the Oneida Tribe of Indians of Wisconsin; co-filers are Mercy Investment Services and Calvert Investments. It has the support of Boston Common Asset Management, Walden AM and Trillium AM.

A lawsuit brought by the Lothian Pension Fund and others against drugs firms Pfizer and Wyeth was appropriately dismissed, according to an appeals court, cited by Legal Newsline. The City of Edinburgh, which administers the fund had claimed they made false and misleading statements regarding trials for Alzheimer’s drug Bapineuzumab, the report added. The case dates back to 2008.

A decision in the US Supreme Court yesterday (June 23) is being hailed as a victory for shareholder rights in class action cases. The court issued a favorable opinion in the Halliburton Co. v. Erica P. John Fund case – known as “Halliburton II”) – preserving investors’ long-standing right to “invoke a presumption of reliance at the class certification stage”. It was a “significant victory for institutional investors” said specialist law firm Robins Geller Rudman & Dowd.

Shareholders in clothing retailer Abercrombie & Fitch backed – by a 55.3% vote – a proposal filed by the New York City Retirement Systems and others that called for ‘proxy access’ – that’s to say to give shareholders the ability to nominate directors, according to Pensions & Investments. Funds supporting the motion included the Connecticut Retirement Plans & Trust Funds, the Philadelphia Public Employees Retirement System, the Canada Pension Plan Investment Board, the California State Teachers’ Retirement System, the Florida State Board of Administration and the Ontario Teachers’ Pension Plan, the report added.

The House Financial Services Committee will reportedly act if the Securities and Exchange Commission (SEC) fails to address what is seen as the undue influence wielded by the two leading proxy advisory firms (Institutional Shareholder Services and Glass Lewis). Republican Patrick McHenry was speaking at an American Enterprise Institute event on proxy advisers, according to Bloomberg BNA. He called on the SEC to repeal two 2004 staff “no-action” letters that may have inadvertently entrenched the firms. And the commission should also identify “transparency, efficiency and accountability measures” for the industry.