RI ESG Briefing, March 11: Non-binding London pension authority fossil divestment vote succeeds

Environmental

The London Assembly, which oversees the work of Mayor of London Boris Johnson, has today voted 15 to 3 in favour of a motion calling on the £4.8bn (€6.8bn) London Pensions Fund Authority to divest from fossil fuels over five years. The vote is non-binding but compels Johnson to publicly respond to the motion. In response, the LPFA told RI: “ As a pension fund we have a fiduciary duty to make investments where we see the best return for our stakeholders. This is our primary purpose. While this does mean that we currently hold direct investments in fossil fuels, they are less than 1% of our portfolio and as stated previously it is an area under constant review.” Alongside the vote, Campaign group Divest London protested outside Johnson’s City Hall offices. The group says it has tried without success to engage with LPFA Chair Edmund Truell on the issue. Link

A new solar ‘yield co’ has been proposed by two US solar firms, First Solar and SunPower. The two Nasdaq-listed companies have announced
the formation of 8point3 Energy Partners LP. It’s a limited partnership to own and operate a portfolio of selected solar generation assets. It has filed with the Securities and Exchange Commission for an initial public offering, with Goldman Sachs and Citigroup acting as lead book runners. Yield co’s are traded companies formed to own operating assets that produce a predictable cash flow and they have sprung up over the last few years, particularly in the renewable energy sector to protect investors against regulatory changes.

ESG intelligence provider RepRisk has announced that it will provide data to CDP, the investor-backed environmental data body formerly known as the Carbon Disclosure Project. The data will support CDP’s final review of companies identified as Climate Performance Leaders. It will mean “an additional level of accountability” for companies that CDP identifies as leaders, said CDP Technical Director Pedro Faria.

Social

Sustainability reporting body the Global Reporting Initiative (GRI) has teamed up with Spain’s Fundación ONCE on a new 48-page Disability in Sustainability Reporting, a guide to help organizations communicate their commitment to respecting and promoting the rights of people with disabilities. “This guide is a milestone for the integration of the issue of disability in sustainability reporting,” said Alberto Durán López, Executive Vice-President of Fundación ONCE. Over the course of 2015, the two will continue collaborating to provide additional support to organizations. A global webinar will be organized during the second quarter of 2015 to present the publication.h6. Governance

The National Pension Service (NPS) of Korea is reportedly planning to vote against the reappointment of some board members at industrial giant Hyundai over a controversial $10bn Seoul property deal. Reuters was citing an unnamed source with “direct knowledge” of the matter, where the NPS is the second-largest investor in the company. It would be a “warning signal” over Hyundai’s corporate governance issues, Reuters quoted the person as saying.

Prudential Financial, the NYSE-listed finance titan, has become the first company to adopt “proxy access” (the shareholder right to nominate director candidates) proactively – without having to face a shareholder proposal on the issue. Under a new bylaw amendment, it adopted a 3% shareholding for three-years threshold. The CorporateCounsel blog wondered whether it was a “coincidence” that the company’s corporate secretary is none other than former Counsel of Institutional Investors’ Co-Chair Peggy Foran.

New York City Comptroller Scott Stringer’s ‘proxy access’ campaign is gaining traction with a further five companies reaching deals. The New York Times reports that Whiting Petroleum, retailer Big Lots, healthcare company McKesson Corporation, stationery multinational Staples and most recently fashion firm Abercrombie & Fitch have reached agreements his office. Abercrombie & Fitch’s deal today (March 11) means it will put a proxy bylaw amendment to the vote after talks with the New York City Pension Funds, the Connecticut Retirement Plans and Trust Funds, the City of Philadelphia Public Employees Retirement System and the UAW Retiree Medical Benefits Trust. Stringer said: “Investors have galvanized around proxy access, and more and more companies are coming to the table.”

Deutsche Börse, the German stock exchange operator, has begun providing private investors with access to information about the German Sustainability Code, including what the Code’s ESG (environmental, social and governance) standards entail and which companies are signatories. Around 80 firms, including Deutsche Börse and several others listed on the blue-chip Dax equity index, have signed the Code, which was developed by the Germany’s Council for Sustainable Development (RNE).

Trillium Asset Management has withdrawn a shareholder proposal with Kansas City Southern, the New York-listed railway operator, following the company’s commitment to provide “strong reporting” of its political spending. The company, SRI specialist Trillium says, has made a public commitment to inform the trade associations that it belongs to that its membership dues are not to be used for political purposes. Trillium is assisted in its engagements with companies on political spending transparency issues by the Center for Political Accountability.