RI ESG Briefing, June 28: KKR, Sustainable Development Goals, GPIF, Hong Kong Stock Exchange

The round-up of the latest ESG developments


Private equity giant KKR will make “a significant investment” into an environmental services firm in the US, to help it enter the global market. Resource Environmental Solutions specialises in ‘de-risking’ projects on ecologically sensitive lands by “streamlining permitting processes [and] transferring liability”. The company also offers impact analyses and offers to limit “regulatory exposure when impacts cannot be avoided”. The investment size was not disclosed, but will be part of KKR’s pledge to invest more than $5 billion in companies claiming to support green and social improvements. The money will come from KKR’s eleventh Americas Private Equity investment fund and will be part of its ‘Green Solutions Platform’.

The state of Berlin in Germany is to divest from RWE, E.ON, Total and other firms “whose business model is contrary to the goal of climate neutrality”. Following a vote that garnered support from all parties, Berlin will now withdraw some €750 million of public-sector pension funds and implement new investment guidelines for the future. Earlier this month, Stockholm committed to divesting from fossil-fuel companies. Both moves were made on the back of citizen-led campaigns.

US utility Westar Energy has issued its first green bond, to finance a new wind project. The Kansas-based electricity provider sold $350m of 10-year notes, with a coupon (interest rate) of 2.55%. Proceeds will be used to support the construction of a $435m wind farm. JPMorgan, BNP Paribas and MUFG were managers on the deal. No second-party opinion was secured.

Swedish property firm Wallenstam has listed green bonds at the Nasdaq Stockholm. Proceeds from the SEK400m transaction are earmarked for wind assets.


Eighty-seven percent of chief executive officers (CEOs) say the United Nations Sustainable Development Goals represent an “essential opportunity” to rethink approaches to sustainability – while 49% say businesses will be the most important actor in their delivery, according to a new study by the UN Global Compact and Accenture, the consulting firm. The report is called The United Nations Global Compact-Accenture Strategy CEO Study 2016, Agenda 2030: A Window of Opportunity.

PWRI, a pension fund for disabled workers in the Netherlands which manages €7.6bn, is reportedly developing an “Inclusivity Index” which will rank the top 50 companies that have a strong track record of employing people with a work disability. Working with PSO, a foundation that measures corporate performance, the pension fund has also allocated a €50m tranche to be invested in approximately 35 companies from the index, likely to be followed by a further €50m next year, IPE reported. Other pension funds will eventually be given the option to invest in the index, too. The Netherlands’ Participation Act aims to have more than 125,000 disabled workers employed in the private and public sectors by 2026.h6. Governance

Japan’s $1.3tn Government Pension Investment Fund (GPIF), the world’s largest pension fund, is reportedly suing Toshiba for losses to the tune of about ¥900m ($8.6m) after the electronics giant’s accounting scandal sent its share price tumbling last year. At the time, Toshiba’s upper management were found to have been padding profits by overstating profits and creating a “pressurised” corporate culture that lead to business heads manipulating sales figures to meet targets. Shinichirou Mori, a spokesman for GPIF, was quoted as saying that the losses relate to shares bought by GPIF’s external fund managers in 2009 through a secondary share offering, and the damages sought equate to the value calculated to have been lost since then.

Oxfam Hong Kong has urged the Hong Kong Stock Exchange to improve ESG disclosure standards after its ‘Survey on the Hang Seng Index (HSI) Constituents’ Environmental, Social and Governance (ESG)’ found a third of companies lagged. The Hang Seng Index, a list of the largest 50 companies on the HKEX, has 16 companies with an ‘unstable’ ESG report, according to the survey. Oxfam Hong Kong calls on HKEX to mandate ESG disclosure, which was introduced on a ‘comply or explain’ basis this year. Link

The Business Council for Sustainable Development of Taiwan (BCSD-Taiwan), a non-profit business organization consisting of big Taiwanese companies, has published a survey of non-financial reporting in the country. The 33-page report (in English) was conducted with the Taiwan Stock Exchange and the Taipei Exchange.

UK disclosure regulations intended to rein in executive pay and make a definitive link between remuneration and performance are not working, a study published by the University of Cambridge’s Judge Business School and King’s College London has found. Researchers write than regulations introduced in October 2013, which also require UK firms to submit comparative data about the pay of executives and basic employees, have done little to narrow the differential. The study reports that companies have so much freedom to choose which information to include that disclosures are often unreliable, incomparable and “arbitrary”.

Communications firm Ericsson has met large shareholders to provide information about its anti-corruption programme, according to a Bloomberg report citing Nordea Asset Management’s head of responsible investment Sasja Beslik. The company has faced questions recently about its practices in a range of countries including Greece, Romania and China, the report added.

Campaign group the Australasian Centre for Corporate Responsibility (ACCR) is reportedly planning to file shareholder resolutions for the forthcoming annual general meeting (AGM) season in Australia in a bid to prompt companies towards greater disclosure of their direct and indirect political donations. The Sustainability Report said the group has released a report examining the level of disclosure around political donations in the country – and found there is insufficient transparency.