RI ESG Briefing, March 15: France’s €9.8bn Ircantec divests 18 coal firms

Environmental

Ircantec, the €9.8bn French public pension scheme, which has responsible investment principles as a significant part of its strategic decision making, has revealed that it pulled €46m in assets out of 18 European and international companies with exposure to coal in late 2016 because it said the business was incompatible with the COP21 2 degrees global warming target. The fund did not name the companies divested. On top of the coal divestment programme, Ircantec said a new, more diversified asset allocation strategy adopted at the end of 2016 as a result of low interest rates and their impact on future risks, was also part of a ‘solidification’ of its status as an engaged responsible investor, with close attention being paid to the 2 degrees threshold. Notably, the fund reinforced its shareholder engagement and voting policy on climate change. Ircantec – or to give it its full name in French: L’institution de Retraite Complémentaire des Agents Non Titulaires de l‘État et des Collectivités Publiques – is a pay-as-you-go second pillar pension structure created in 1970.

Ontario Teachers’ Pension Plan, the C$170bn (€121.4bn) Canadian pension fund, is facing growing pressure from its members to divest the reported C$24.8bn it currently has in fossil fuels. Attempts to get a vote on the issue at the Annual General Meetings of the Ontario English Catholic Teachers’ Association (OECTA) and Ontario Secondary School Teachers’ Federation have been unsuccessful to date.

Royal Dutch Shell has reportedly announced that it is divesting ‘most’ of its Canadian oil sands interests. The Local Authority Pension Fund Forum (LAPFF), the UK’s voluntary association of public sector pension funds with combined assets of approximately £175bn, has welcomed the news seeing it as a sign that the firm appears to be taking measures to mitigate its exposure to climate risk.

Social

The New Zealand Superannuation Fund, the NZ$33.9bn (€21.5bn) sovereign wealth fund, has responded to an enquiry about its holdings in controversial palm oil producer Wilmar. The fund stated that its shareholding in Wilmar is a ‘passive one held by virtue of our ‘owning the market’, and that ‘both palm oil and human rights continue to be high priorities for our engagement programme’. Singapore-headquartered Wilmar has been robustly criticised in recent years over the existence and degree of human rights abuses and illegal deforestation in its supply chain.

Several German and Austrian sustainability networks (FNG, CRIC, ÖGUT and ökofinanz-21) have sent an open letter to German Finance Minister, Wolfgang Schäuble and Bundesbank President, Jens Weidmann calling on them to establish an international strategy for creating a sustainable financial market consistent with the Sustainable Development Goals. It comes ahead of the G20 meeting in Baden-Baden this month.h6. Governance

The Principles for Responsible Investment has launched a proxy vote declaration system. “This is a voluntary opportunity for investors to publicly declare how they intend to vote on shareholder resolutions around environmental, social and corporate governance (ESG) issues filed or co-filed by PRI signatories in advance of the upcoming 2017 proxy season,” it said. It added it has received demand from a range of signatories who have requested greater transparency in proxy voting decisions by the investment community. “Based on the positive experience of other initiatives such as Aiming for A and Carbon Asset Risk and the strong positive feedback when tracking voting intentions on lobbying resolutions last year, the PRI has decided to launch this vote declaration system for all shareholder resolutions filed or co-filed by PRI signatories this year.”

Japan’s giant Government Pension Investment Fund (GPIF) has issued a call for applications for passive managers for Japanese equities. “In order to strengthen our stewardship activities going forward, GPIF calls for new passive managers for Japanese equities,” the fund said. GPIF added that it would “review comprehensive business model, including investment process, stewardship activity policy, organization and fee structure”.

SRI firm Trillium Asset Management says it has successfully withdrawn two shareholder proposals – one on sustainability reporting and one on minimum wage reform – at American restaurant chain, Chipotle Mexican Grill. Chipotle has committed to publishing a comprehensive sustainability report (including its discussion on minimum wages). Trillium’s proposal was co-filed alongside Domini Impact Investments and Reynders McVeigh Capital Management.

ShareAction, the UK-based campaign group, has released its latest survey: Lifting the Lid: Responsible Investment Performance of European Asset Managers. The survey examines and ranks the responsible investment (RI) practices of 40 of the largest asset managers (managing £18tn in assets) across 10 European countries. The survey found a large disparity in the quality RI practices between managers despite 39/40 being signatories to the Principles for Responsible Investment.

Sports Direct, the scandal-hit UK sports retailer, is to appoint a worker representative to its board as it tries to recast itself as an enlightened employer in the wake of recent controversies over working conditions. Sports Direct has begun searching among its 23,000 staff for a suitable representative. Sports Direct was recently denounced by a UK parliamentary committee for its treatment of employees, being likened to a ‘Victorian workhouse’. Link

The Global Reporting Initiative (GRI), the international standards organisation, has hosted a seminar with the Nigerian Stock Exchange and Ernst & Young, entitled ‘Sustainability and Corporate Governance: Building Long Term Value’.