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RI ESG Briefing, June 25: Bank of America likely to review coal financing policy

The round-up of environmental, social and governance news

Environmental

Bank of America says it continues to review its coal policy “closely” and that in 2013 it met with stakeholders, including environmental groups and reviewed peer policies surrounding coal. “Based on these discussions, we anticipate updating our coal policy in 2014,” the bank said it its new Corporate Social Responsibility Report. The bank, which has come under fire for financing coal projects, added: “We agree that climate change is happening, and that society needs to transition from high-carbon to low-carbon energy. Our strategy is to help accelerate a transition to the renewable and alternative energy sources that will play an integral and growing role in the future of energy — rather than to preclude business with more traditional energy sources, like coal.”

Lloyds Banking Group has launched the Helping Britain Prosper ESG (environmental, social and governance) bond where proceeds will be loaned to small and mid-sized businesses with a social or environmental aspect. ESG research house Sustainalytics created the bond’s framework which includes a quarterly use of proceeds report, which will be reviewed externally and last for the lifetime of the bond. It will be a benchmarked, sterling dominated bond with a 4.5-5-year maturity expected.

ORIX Corporation, the Japanese financial services group that owns Dutch fund manager Robeco, has begun construction on a large-scale 8.7MW solar power plant in Yokkaichi City, Mie Prefecture. The facility is expected to start operations in November 2015. In April, ORIX said it is developing 425MW of solar power at more than 200 sites across Japan, including both rooftop and large-scale facilities.

Social

The UK has become the first Western country to sell an Islamic bond – with its five-year ‘sukuk’ issue today (June 25) drawing orders of more than £2bn, more than 10 times the intended £200m raising. It is being launched as part of a push to make London an Islamic finance hub.
Financial advisers create barriers between clients and social investment due to strict regulatory rules around investment suitability, suggests a new report. The report, compiled by the UK’s Social Investment Research Council, also finds IFAs tend to be reluctant to recommend social investments due to a lack of a track record in the market. The report calls for ‘modest’ adjustments to the Financial Promotion Regime so it takes account of social investment.

The Vancouver City Savings Credit Union (Vancity), the Canadian financial co-operative with 492,101 member-owners, has launched an alternative to payday loans where members can borrow up to C$1,500 and be approved in about an hour. “The Vancity Fair & Fast Loan is a low cost, long term alternative to help members get out of the cycle of debt and build their credit history,” said Linda Morris, Vancity’s senior vice-president of business development, member and community engagement.h6. Governance

NEI Investments, the Canadian C$6bn (€4.1bn) mutual funds group, has responded to the Canadian Securities Administrators’ request for comments about proposed new guidance on proxy advisory firms. The authorities had concerns about conflicts of interest, the transparency and accuracy of vote recommendations, and the development of proxy voting guidelines. NEI said it would “not be helpful for CSA to issue its own guidance for proxy advisors at this time” and questioned whether it is the biggest priority for regulatory reform within the proxy voting system. “Furthermore, we believe the issues covered by these proposals are of more concern to issuers [companies] than to institutional investors.”

Norway’s NOK5.4trn (€654bn) Government Pension Fund has signalled a move to being a more active, long-term investor in its latest strategy document. The number of companies in which the fund has at least a 5% stake will rise from 45 to 100. The number of companies under “deep analysis” will be doubled to 1,000.

The Local Authority Pension Fund Forum (LAPFF), which represents 60 public sector funds in the UK, has advised its members to vote against the board at advertising and marketing group WPP, according to reports. WPP will be subjected to the first binding vote by shareholders over its pay plan during its annual meeting in London on June 26, the Guardian said. It added that about 30% of shareholders were expected to abstain or oppose the board.

UK retailers must have a policy on sourcing ethical products in order to stamp out human rights abuses in their supply chains, Jenny Willott, the consumer affairs minister, has said. Willot said retailers ignoring consumer concerns about forced labour and dangerous working conditions could risk putting them out of business. The call comes after an investigation by The Guardian newspaper found prawns from Thailand sold in the UK were produced with slave labour.

US natural gas firm Cheniere Energy’s decision to postpone its annual general meeting by three months could signal a battle with shareholders over executive compensation at the firm – whose CEO Charif Souki was the highest paid US CEO last year – according to a Bloomberg report. It added that proxy firms ISS, Glass Lewis and Egan Jones have advised clients to vote against Cheniere proposals that would allow it to boost its executive pay. “It’s just over the top,” Egan Jones MD Kent Hughes was quoted as saying.