RI ESG Briefing, June 9: ACSI, Nasdaq, UKSIF, PRI hits $59trn, ESMA on proxy firms

The Australian Council of Superannuation Investors (ACSI), has issued a statement about Phil Spathis, who passed away over the weekend following a lengthy illness. “Phil was a driving force behind ACSI, working alongside the late Michael O’Sullivan to establish the organisation. Phil was the sole staff member of ACSI in the early years and his determined work and leadership built the organisation in to a recognised voice on corporate governance in Australia and internationally,” it said. “On behalf of all at ACSI, we extend our deepest sympathy to Phil’s wife Yvonne, his children Arthur and Athena, and his extended family.”

Environmental

Nasdaq Stockholm has unveiled a new list, Nasdaq Stockholm Sustainable Bonds. It will include 12 bonds from the start, with a total nominal value of over SEK5.4bn (€576m); new bonds will be added on a continued basis. The exchange cooperated with Sustainalytics, the ESG research house, to develop the criteria for the new offering “to provide investors with a comprehensive view of sustainable investment alternatives”.

The Future Fund, the Australian sovereign wealth fund, has reportedly led a $40m fresh funding round for Delhi-based solar power company Applied Solar Technologies (India). Livemint, citing company officials, said AST’s existing private equity investors Bessemer Venture Partners, Capricorn Investment Group and the World Bank’s arm IFC also participated in the round.

UKSIF, the UK Sustainable Investment and Finance Association, has said the new G7 commitment to decarbonize the economy is only credible if the UK Government acts on fiduciary duty. It “must seize an imminent opportunity” to ensure pension funds invest in line with that commitment, the group said.

Georgetown, which has an endowment fund worth $1.5bn (€1.3bn), has become the latest US-based university to divest from fossil fuels. Georgetown said in a statement that its board of directors passed a resolution directing the fund to pull out of coal investments. Those investments, along with ones in oil and gas, make up around 2% of the endowment fund. Other US universities that have decided to exit coal include Stanford, the University of Maine and the University of Washington.

Social

The Principles for Responsible Investment says its signatory base now represents $59trn of assets under management as of April 2015, a 29% year-on-year increase. “This comprises just over half of the world’s institutional assets (across equity markets capitalisation and outstanding bonds and loans),” the PRI said. The PRI now has nearly 1,400 signatories worldwide. Investors have begun to realise that their “collective financial muscle” can be used to effectively engage policy makers on issues such as climate change, said PRI Managing Director Fiona Reynolds.

Campaign group ShareAction has called for European pension beneficiaries’ interests to be reflected in the European Union’s Capital Markets Union (CMU) project. Echoing other bodies such as Eurosif, it noted how the “bumper” green paper in February launched by the European Commission made just one mention of Environmental, Social and Governance risk to investors, and just one mention of consumer distrust of the financial services industry. CEO Catherine Howarth said beneficiaries’ interests “must be a central concern” of the union or it will be seen as “a vehicle for special interests in the financial sector rather than a reform benefiting European citizens as a whole”.h6. Governance

The European Securities and Markets Authority (ESMA), the European regulator, has published a Call for Evidence on the impact of the Best Practice Principles for Providers of Shareholder Voting Research and Analysis (BPP) – the proxy advisory industry group set up following an ESMA request. “The purpose of this Call for Evidence is to gather information on how stakeholders perceive the most recent proxy seasons to have evolved and to assess the extent to which new trends or changes in proxy advisors’ approaches have developed,” ESMA said. It will consider all comments received by July 27, and will publish the final results of its review at the end of the year.

ShareAction has created an online campaign targeting marketing and advertising giant WPP for its proposed £43m pay package for its CEO Sir Martin Sorrell. WPPVoteNo.org lets pension and other savers write to their funds asking them to vote no on Sorrell’s pay at the company’s AGM today (June 9). Glass Lewis and ISS have also recommended a vote against the pay package. £43m makes Sorrell’s pay package by far the highest in the FTSE 100, twice that of his closest rival, whose 2014 remuneration was £20m.

The California State Teachers’ Retirement System (CalSTRS) has announced
that it has consented to private equity firm Cerberus’ proposal allowing it to exit its economic interest in Remington Outdoor, the gun maker implicated in the Sandy Hook shootings – ending a two-year divestment effort.

CalSTRS also said it would vote against a proposal by Toyota Motor Corp to issue “Model AA” shares – as they would be closed to investors outside Japan. The giant fund owns just 4.3m (0.1%) of the car firm’s shares but the move follows the introduction of a new corporate governance code; shareholder advisory firm Institutional Shareholder Services is also advising against the plan, though rival Glass Lewis is in favour, saying it could mean greater flexibility, Reuters reported.

F&C Investments’ sales and distribution arms are reportedly set to rebrand as BMO Global Asset Management, as the venerable, £165bn fund house integrates with its new parent Bank of Montreal. Investment Week, citing F&C documents, said it would mean F&C would become the European centre of BMO Global Asset Management as of this July. It added the firm declined to comment. F&C was acquired by the Canadian concern for £700m just over a year ago.

Global index provider FTSE Russell and the Johannesburg Stock Exchange are working together to develop a new ESG index series. Head of the SRI Index and Sustainability at the Johannesburg Stock Exchange, Corli Le Roux said: “This transition represents the next generation in our evolutionary work to promote ESG disclosure, building on the achievements of the SRI Index and the great strides that South African corporates have made in this regard, and will enable us to respond to the growing need amongst investors seeking to integrate sustainability considerations into their investments.”

One of the UK’s largest investors, Legal & General Investment Management (LGIM), has written to the boards of all FTSE350 companies saying it supports recent regulatory changes that removes the requirement of companies to disclose financial reports on a quarterly basis. The letter, directly from LGIM chief executive Mark Zinkula, says reporting which focuses on short-term performance is not necessarily conducive to building a sustainable business.