RI ESG Briefing, July 1: $1.2trn investor coalition backs Obama plan on fugitive methane emissions

The round-up of the latest ESG news


Investors with a collective $1.2trn, including the New York State and City comptrollers, CalPERS and CalSTRS have come out in support of the Obama administration’s efforts to regulate fugitive methane emissions from the oil and gas sector. In 2012, institutional investors representing over $20trn in assets spoke up in support of the International Energy Agency’s ‘Golden Rules for a Golden Age of Gas’. The investor statement said: “As widely diversified, long-term investors with holdings in the oil and gas industry, we share a vested interest in the industry’s long-term success. At the same time, we are investors in renewable energy and support the transition to a renewable energy economy. Therefore, consistent with our fiduciary duties, we are concerned that methane emissions pose a serious threat to climate stability.”

Affiliates of Citi, Santander Bank and the Royal Bank of Canada have put together a C$287m (€206.6m) construction loan facility for a 204MW wind project being developed by Vancouver-based Alterra Power and Connecticut-based Starwood Energy Group. The loan for the Shannon wind project in Texas is supported by a C$219m tax equity investment commitment supplied by subsidiaries of Citi and Warren Buffet’s Berkshire Hathaway Energy.

The Lutheran World Federation (LWF) has announced that it will exclude fossil fuel companies from its investments and calls on their member churches to follow suit. The LWF Council called on its member churches “not to invest in fossil fuels and to support energy efficiency and renewable energy companies, and to encourage their institutions and individual members to do likewise.” Link


Australia’s Federal Minister for Social Services Scott Morrison has signalled strong government interest in exploring social impact bonds, praising the NSW Government for its trial ‘social benefit bonds’ tackling family support and child welfare. Speaking to the Australian Council of Social Services National Conference, Morrison said private investment would have a bigger role to play in tackling social problems. Meanwhile, an A$100m (€69.3m) impact investment fund has launched in Australia to seed social ventures. Link

UK social bank Big Society Capital is consulting on a new transparency policy, including publishing anonymized data on investments made to social sector organisations and an abridged version of its internal investment manual. It follows criticism in March from the Alternative Commission on Social Investment who argued social investment in the UK needed “less hype and more transparency”. Responses are requested by August 14.

To promote jobs and growth in Europe, the European Commission and the European Investment Fund (EIF) have launched a programme called EaSI which they say will mobilise more than €500m in finance for social and micro-enterprises. They said the new finance should be achieved through a €96m guarantee to be provided between 2014 and 2020. EaSI targets “individuals who wish to start or further develop their own social and micro-enterprises – in particular, people who have difficulties entering the job market or accessing finance”.h6. Governance

Columbia University has become the first college in the US to divest from private prisons following student protest, reports CNN. It means the university’s $9bn endowment will sell its estimated 220,00 shares in private security firm G4S and shares in the Corrections Corporation of America, the largest private prison company in the US. The Columbia Prison Divest campaign started in 2014, similar campaigns are happening at US educational institutions, including Cornell, Brown, Berkeley, and UCLA.

Almost 60% of German institutional investors respect ESG (environmental, social and governance) criteria when they invest, a new survey from German asset manager Union Investment shows. The precise figure, 58%, was ten points higher than the result for 2013, when 48% of German investors said they took ESG into consideration. This time around, 80% of the investors also said they could not imagine not investing sustainably in some way. The survey is conducted on behalf of Union by Stuttgart University’s Professor Henry Schäfer, who interviewed some 200 investors, among them asset managers, banks, pension funds and insurers, with €3trn in assets.

New research from Standard Life Investments suggests that improvements in corporate governance at Japanese companies have the potential to raise the value of the Japanese stock market by 15% to 30%. A Japanese corporate governance code was implemented earlier this year, alongside a Japanese stewardship code. Govinda Finn, Senior Japan Analyst, Standard Life Investments, said: “There is hope that a transition to a more market based engagement approach will encourage businesses in Japan to make better investment decisions and boost shareholder value.”

Los Angeles Fire and Police Pensions is reportedly exiting its holding in Remington Outdoor, the gun manufacturer linked to the Newtown school massacre in 2012. LA Daily News cited LAFPP general manager Ray Ciranna as saying the $50,000 investment was being dropped for financial, not ethical, reasons.

Consumer goods multinational Unilever has released its inaugural report on human rights based on the UN Guiding Principles developing by Professor John Ruggie. It is the first company to produce a detailed, stand-alone report using Ruggie’s UN framework for businesses on human rights. Paul Polman, CEO, Unilever said: “As we look ahead to the agreement of the UN Sustainable Development Goals in September and to the prospect of a global climate agreement in Paris at the end of the year, it is a fitting time to open an honest discussion about human rights.”

Major European banks are not yet sufficiently aware of the business risks deriving from environmental and social factors like climate change, water scarcity or sustainable production, according to a KPMG survey conducted with the support of environmental campaign group WWF. The ‘Ready or Not’ report assesses the sustainability integration in the European banking sector and finds it has an incomplete appreciation of how major environmental and social developments and trends create risks and opportunities. “Many banks lack a broader view of the financial consequences of environmental and social issues, affecting their operations and corporate clients,” said Barend van Bergen, partner at KPMG Sustainability.