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RI ESG Briefing, March 16: CalSTRS, MSCI ESG Research, Kommuninvest, AIMCo, Sports Direct

The round-up of the latest ESG developments

Environmental

The $179.4bn California State Teachers’ Retirement System has released the results of a research study by consulting firm Mercer examining ways to mitigate investment risk and maximize value in the face of climate change. ‘Investing in a Time of Climate Change: California State Teachers’ Retirement System Portfolio Climate Change Risk Assessment’, seeks to gain better insight into the investment implications of climate change. The tailored study estimates portfolio return implications under four climate change scenarios and recommends appropriate actions.

SEB, the Nordic corporate bank, has been announced as one of the lead managers for Swedish local government debt office Kommuninvest’s inaugural US$600m green bond, the largest Nordic green bond yet. The issue received “very strong support” from the likes of AP3, AP4, CalSTRS, Erste Asset Management, Everence Financial and the United Nations Joint Staff Pension Fund, SEB said.

SunEdison, the New York-listed renewable energy development company, said
today (March 16) it was delaying the filing of its Annual Report on Form 10-K for 2015 beyond the extended due date of March 15, 2016 citing “material weaknesses in its internal controls over financial reporting”. MarketWatch said the stock tumbled 6.3% in premarket trade and that it has plunged 59% year to date.

More than 450 academics and general staff at the Australian National University (ANU) are reportedly urging the university to divest its remaining holdings in fossil fuel companies. In 2014, ANU sold A$16m (€10.7m) worth of shares in fossil fuel firms, including oil and gas developer Santos. They have petitioned ANU’s Vice Chancellor to get it to exit holdings said to be worth A$45m. The Vice Chancellor, physicist and Nobel laureate Brian Schmidt, has agreed to take up the petition with the university’s board.

Social

Israel has launched its first social impact bond to help tackle Type 2 diabetes, according to reports. Reuters said some 2,250 Israelis would be helped to make lifestyle changes that could prevent the disease developing under a scheme to be financed by private investors. It added that Social Finance Israel and its partner UBS would sell a $5.5m social impact bond to domestic and international investors.

Nearly 80 US colleges and universities, foundations, investment firms, and non-profits make up the Founding Members of the new Intentional Endowments Network (IEN). It said that after an 18-month pilot phase building a peer-network and learning community, the launch of a more formal membership program was “an exciting milestone”.

Campaign group ShareAction has published what it says is the first ever independent ranking of the UK’s top automatic-enrolment workplace pension providers. The nine pension providers covered control £1.9trn in assets under management. “Our independent analysis of their investment policies and transparency aims to identify areas of concern and best practice, so as to drive a race to the top,” it said. Reclaiming Ownership: A survey of governance and Responsible Investment at UK automatic-enrolment pension providers is available here. Governance

MSCI ESG Research has announced a record year of growth in 2015, with revenues growing 33% over 2014 to $38m, counting 47 of the top 50 global asset managers as clients. Eric Moen, Managing Director of MSCI ESG said: “Controversies like the Volkswagen scandal are a wakeup call to investors who may have previously overlooked ESG research and analysis. We believe this is a tipping point for ESG integration.” Announcement

The Alberta Investment Management Corporation (AIMCo) has reached an agreement in principle to recover US$219m on behalf of investors in life insurer Genworth Financial, together with the Fresno County Employees’ Retirement Association. The case is pending in the US District Court for the Eastern District of Virginia, and marks the largest securities class action recovery in that jurisdiction, Edmonton-based AIMCo said. The lawsuit alleged that Genworth made false and misleading statements about its long-term care insurance business.

The BBC reports that Sports Direct chief Mike Ashley is the subject of a formal summons to Parliament to give evidence about the treatment of his workers on June 7. It said he previously declined an invitation to appear before the Business, Innovation and Skills select committee and that he accused MPs of creating a “media circus”. He has been warned he could be in contempt of Parliament if he ignores the summons; the move follows a BBC investigation into the firm’s work practices.

The $279.2bn (€251bn) US pension giant CalPERS has revised its corporate governance principles to include a provision that asks companies to prove the independence of board directors who serve more than 12 years. This would ensure that boards “have a fresh perspective and are more diverse.”

Staying with CalPERS, the scheme has been named as a plaintiff in a lawsuit against Volkswagen filed by German attorneys TILP. The suit seeks €3.25bn from VW over the latter’s alleged failure to, in a timely manner, disclose the rigging of its diesel engines to pass emissions tests that would mean a violation of German securities laws. TILP said CalPERS was one of 278 institutional investor plaintiffs from 14 countries. There are currently dozens of complaints against VW with a court in Brunswick. It is to decide next month which of them will get the German equivalent of the US class action suit.

The United Nations Global Compact, the corporate sustainability initiative, has announced a new global effort to help put an end to all-male panels at events. It was announced by new UNGP Executive Director Lise Kingo at the Women’s Empowerment Principles Annual Event, held in conjunction with the 60th Commission on the Status of Women. “Too often, I’ve been the only woman on a panel. It is time that we challenge the status quo and stop making excuses – there is no shortage of qualified women.”