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RI ESG Briefing, March 16: AMP Capital excludes tobacco and cluster munitions

The round-up of the latest ESG developments

Environmental

The trustees of Columbia University in New York have voted to support a recommendation from the Advisory Committee on Socially Responsible Investing (ACSRI) to divest from companies deriving more than 35% of their revenue from thermal coal production and to participate in the CDP’s Climate Change Program. “Divestment of this type is an action the University takes only rarely and in service of our highest values,” said University President Lee Bollinger.

The Investor Group on Climate Change, which represents major institutional investors in Australia and New Zealand, has reportedly warned the Australian Government that it must put a price on carbon if it is to unlock new investment in the electricity sector and drive an orderly transition to low-emissions power sources.

The 2° Investing Initiative, the climate change think tank, is to host a second webinar on March 23 to introduce the International Standards Organisation’s programme to create a set of climate standards, ISO14097.

NN Investment Partners, the former ING Investment Management, has suggested that high-tech companies within the onshore wind and solar photovoltaic power sectors offer the best opportunities for investors as the world transitions to cleaner energy. NNIP recently published a paper called Clean Energy: a look at the investment opportunities.

Social

AMP Capital, the Australian specialist with more than A$165bn (€118bn) under management, is to divest almost A$600m worth of investments in big tobacco, cluster munitions and landmines after a review of its ethical guidelines. AMP, Australia’s second-largest fund manager, will exclude A$440m of tobacco exposure and A$130m of cluster munitions and landmines. Tobacco makers have been excluded as “their products are highly addictive, cannot be consumed safely and impact non-users via second-hand smoke,” AMP Capital said in a statement. CEO Adam Tindall added: “We are not prepared to deliver investment returns to customers at any cost to society.”

City council officials in Berkeley, California, have reportedly voted unanimously to divest any company involved with President Trump’s border wall with Mexico, including not just contractors, but any company that designs, finances, or works in any way on the project. “Our city is one that is known for breaking down walls, not building them,” Mayor Jesse Arreguin was quoted as saying by the East Bay Express. It added that Oakland is also poised to ban wall-related firms following similar legislation passed this week. Berkeley meeting agenda.

PETA, the animal rights organisation, says it intends to escalate its activism against winter clothing manufacturer Canada Goose by purchasing sufficient shares at the retailer’s initial public offering to allow it to attend and speak at annual meetings. PETA has been campaigning against the Canadian firm over the treatment of animals in its supply chain. According to the FT shares sold in the IPO, which raised c$340m for the retailer, carry fewer voting rights than those held by existing shareholders.h6. Governance

CtW Investment Group, the US union affiliated advisory group, is reportedly calling for industrial group Caterpillar to implement significant new oversight measures. In a letter to the firm’s recently elected Chairman David Calhoun CtW asks the company to establish a special committee of independent directors to review Caterpillar’s tax strategy before the company’s shareholders meet in June. The letter also requests that Caterpillar replace PricewaterhouseCoopers (PwC) as the company’s external auditor due to a potential conflict of interest (PwC would be ruling on the legality of a controversial tax strategy that it developed).

Norges Bank Investment Management, the arm of the central bank that runs the Government Pension Fund Global, has published its third review of its work on responsible investment: During 2016 it voted at 11,294 shareholder meetings globally; divested from 23 companies; and raised ESG related governance issues at half of its 3,790 meetings with 1,589 companies. The fund has divested from a total of 210 companies in the last five years.

US-based proxy firm Glass Lewis has released its 2017 Proxy Paper Guidelines for Canada for the upcoming 2017 proxy season. The guidelines include four key changes from the previous year’s paper, including guidance on: 1) Director Overboarding; 2) Shareholder Rights Plans; 3) Say-On-Pay Proposals; and 4) Equity Compensation Plans. Link

Japanese tech company Toshiba has been placed under supervision by the Tokyo Stock Exchange whilst it is determined if the embattled company meets delisting criteria. Shares reportedly dropped as much as 8.1% in the wake of the order from the exchange. In September 2015 Toshiba’s stock was designated as ‘Securities on Alert’ due to an investigation into ‘inappropriate accounting processing’ at the company.

The Global Compact, the UN corporate sustainability initiative, has launched the Women’s Empowerment Principles, an online platform which helps global business leaders identify strengths, gaps and opportunities to improve gender equality and women’s empowerment. More than 170 companies worldwide participated in designing the ‘Gender Gap Analysis Tool’.

Directors of publicly traded corporations in the US state of Massachusetts owe fiduciary duties to the company and not to shareholders, a Supreme Judicial Court (SJC) has reportedly declared, according to a posting by law firm Nixon Peabody. The guidance was given in response to a claim brought forward by a group of EMC Corporation shareholders who allege that the board of directors breached its fiduciary duty in approving the acquisition of EMC by Dell Inc.

Audi, part of the wider Volkswagen Group, has reportedly had offices in the Bavarian city of Ingolstadt and other locations around Germany (including seven residences) raided by German prosecutors as the emission scandal escalates. Volkswagen has already agreed to pay $22bn in penalties and settlements in the United States after pleading guilty to its vast emissions deception. Audi reportedly accounts for a third ($15.5bn) of the group’s operating profits.