RI ESG Briefing, June 7: US pension funds win ‘proxy access’ victory at Nabors

Environmental

The Australian government has pushed through legislation in the lower house setting up the planned A$10bn (€7.9bn) Clean Energy Finance Corporation. Australia will invest $2bn a year over five years from 2013-14 in the new entity. Link

The International Integrated Reporting Council (IIRC), the body which aims to create a globally accepted integrated reporting framework for financial, environmental, social and governance information, has named four new additions to its pilot programme. They are: The Clorox Co. (US); Tata Steel (India); Transnet (South Africa); and Rabobank (Netherlands).
IIRC Chairman Mervyn King and Herman Mulder, his counterpart at the Global Reporting Initiative, say “the time is ripe” for a global agreement on mandatory sustainability reporting at the forthcoming Rio+20 summit. The pair were writing in The Guardian.

Oxfam America, Calvert Investments and investor coalition Ceres has put together a 32-page guide for companies and investors on the physical risks from climate change. “Companies are already experiencing business impacts from weather-related phenomena that climate change is expected to make more common and/or intense,” it says. “This document is designed as a guide to help chart a course for companies to disclose and manage such risks.”

The $11.8bn (€9.5bn) Ohio Police & Fire Pension Fund plans an extra $175m of commitments to timber in the next few months, according to a report in Pensions & Investments citing a fund spokesman. It follows a 3% target allocation set up in 2010 and the appointment of its first timber managers, Forest Investment Associates and Hancock Timber Resources earlier this year, P&I added.

Social

Verka, the €1.8bn German ecumenical pension fund, says it is excluding companies judged unsustainable and relying on ESG ratings to select others. According to Verka, temporary exceptions to these rules can be made, as long as there are no sustainable alternatives and that the firms do not exceed 5% of assets. “Pure speculation, especially when it based on securities whose sustainability is questionable, is simply not done,” the scheme said. Verka also said it believed that ESG ratings would be used more to evaluate sovereign and corporate bonds.

Consulting firm McKinsey & Co. has published a report looking at how social impact bonds, such as the Peterborough prison bond in the UK, could be applied to the US market. The report is called From Potential to Action: Bringing Social Impact Bonds to the US and is said to be the “most thoroughly researched study of SIBs to date”.h6. Governance

CalSTRS, the California State Teachers’ Retirement System, and other big US funds have hailed their success in achieving board accountability via “proxy access” at drilling firm Nabors Industries – a first at a US public company. A majority of shareholders supported the resolution requiring Nabors to allow shareholder-nominated candidates for up to a quarter of the board’s seats. “This is a great day for shareholder democracy,” said Anne Sheehan, director of corporate governance at CalSTRS. “At last, shareholders will have a fair voice in the boardroom of a major corporation.”

Calvert Investments, the US fund management firm, says its resolution on board diversity at clothing firm Urban Outfitters has gained 39% shareholder approval – up from 22% in 2011. Calvert was joined by the Treasurer of the State of Connecticut, the Board of Pensions of the Evangelical Lutheran Church in America and the Benedictine Sisters of Mount St. Scholastica as co-filers.

A group of corporate governance advocates in the Philippines have got together to form the Shareholders’ Association of the Philippines (SharePhil), headed by Evelyn Singson, according to local media reports. The group includes former Philippine Stock Exchange President Francisco Lim as trustee, the Manila Bulletin reported.

Governance research firm GMI Ratings has issued a review of Danish wind turbine maker Vestas Wind Systems. It comes as Vestas is deleted from the MSCI Denmark index and the shares have slumped 87% in two years. Link

AXA Investment Managers, the fund manager with €528bn in assets under management, says it has partnered with Responsible Research, the environmental, social and governance (ESG) research provider specialised in emerging markets.

The board of Australian sustainable funds boutique Australian Ethical Investments is being targeted by a group of dissatisfied shareholders, according to reports. An extraordinary general meeting has been called for June 21, said the Sustainability Report. The company has A$599m (€466m) under management.