RI ESG Briefing, June 29: Thomson Reuters, Masdar, Social Stock Exchange, CtW, ProxyMonitor.org

Environmental

News and data giant Thomson Reuters has released its latest Global 500 Greenhouse Gas Performance 2010-2015: 2016 Report on Trends – revealing greenhouse gas (GHG) emissions data from the world’s 500 largest businesses (Global 500). The report was written in collaboration with BSD Consulting, a global sustainability consultancy, and shows for the first time that the Global 500 are beginning to grow their businesses and manage their emissions at a rate that follows the global scientific consensus on the risks of climate change. “This is a change from previously tracked data and a sign of progress,” it said.

A consortium led by Masdar, the green energy firm owned by Abu Dhabi investment fund Mubadala, is reportedly aiming to raise an $800m loan to help fund the 800MW third phase of Dubai’s solar park. Reuters, citing CEO Mohamed al-Ramahi, said a consortium is in talks with banks including National Bank of Abu Dhabi, First Gulf Bank and Union National Bank to provide project finance.

The private sector in South Africa should step up to fund infrastructure development as government’s ability to lend more for this purpose is increasingly restricted, according to remarks attributed to Code for Responsible Investing in South Africa (CRISA) chair John Oliphant. He was quoted addressing the Moneyweb Renewable Energy Business Breakfast at which he said the R4.4trn of pension fund savings in the country – he is a former Principal Executive Officer at South Africa’s giant Government Employees’ Pension Fund (GEPF) – should be accessed for this purpose and renewable energy projects are well suited for the investors’ needs.

Social

The UK’s Social Stock Exchange has launched a regional offshoot as part of a 12-month pilot. The Liverpool and Wirral Social Stock Exchange has identified 100 interested businesses in the area and aims to raise up to £75m in capital from local investors. Earlier this month, the Social Stock Exchange appointed Colin Melvin, Global Head of Stewardship at Hermes Investment Management, as its new chairman.

Australia’s New South Wales government, the first to trial social impact bonds in the country, has allocated A$10m to social impact investment targeting high youth unemployment. NSW Treasurer Gladys Berejiklian said: “Social benefit bonds (the Australian term for social impact bonds) are an innovative way to bring together the resources and expertise of private investors, not for profit organisations and government to tackle important social issues.”h6. Governance

CtW Investment Group, the US union affiliated advisory group, has written to Tesla to reiterate its “long-standing” concern over corporate governance at the electric car firm in the wake of its proposed acquisition of SolarCity. “The market’s hostile reaction to the deal demonstrates Tesla’s failure to establish a corporate governance structure that inspires confidence that the terms are being negotiated in the best interest of Tesla investors,” wrote Executive Director Dieter Waizenegger. “This is particularly questionable when six out of our seven board members have ties to SolarCity.” CtW said the core problem is the “continuing dominance” of the board by entrepreneur Elon Musk, who it concedes is a “brilliant and innovative entrepreneur”. But CtW argues that entrepreneurs, no matter how talented, cannot manage a large publicly traded corporation such as Tesla alone.

Companies in the US will have faced a record number of climate-related shareholder proposals in the 2016 AGM season, according to research by ProxyMonitor.org, the website sponsored by the conservative think tank the Manhattan Institute’s Center for Legal Policy. It said 58 such proposals appeared on the ballots at Fortune 250 companies so far this year. Other findings include the fact that five environmental proposals received at least 40% shareholder support and that the 23 proposals at Fortune 250 companies which pertain to climate change or greenhouse gas emissions have received 26% support. The most active sponsors of environmental proposals include As You Sow (27 proposals), SRI firms Trillium Asset Management (17) and Green Century Capital (21), Tom Borelli’s policy-based investment vehicle Free Enterprise Action Fund (20) and the New York State Common Retirement Fund (16).

Brazilian exchange BM&FBOVESPA has presented proposed new regulations for the Special Corporate Governance Segments (Novo Mercado and Level 2 corporate governance). It said it started the second phase of the evolution process of segments that bring together companies with the Exchange’s highest corporate governance practices. A public consultation will run until September 9, followed by a ‘closed hearing’ from November 7-February 6 next year.

A study by Harvard Business School researcher Dylan Minor has found that CEOs with more stock options are more likely to break laws. When ranked by how high a proportion of a CEO’s total equity remuneration was made up of stock options, executives at the top 1,500 US firms were far more likely to be involved with environmental law-breaking and disasters than their equivalents who were paid in stock alone. CEOs with larger stock options than not were also at increased odds of being investigated by the SEC, too. Minor writes in the Harvard Business Review that paying CEOs with stock options is “an effective way to incentivize financial performance through risk-taking”.