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RI ESG Briefing, March 19: Pension funds win subprime Citigroup settlement

The round-up of ESG news

Environmental

CalSTRS, the California State Teachers Retirement System, has welcomed a closer environmental data collaboration between RobecoSAM and the investor-backed Carbon Disclosure Project (CDP). The sustainable fund management firm will now ask listed companies the same climate change questions as those developed by the CDP in an attempt to improve the comparability of sustainability data – and cut the number of requests for environmental information to companies. It will form part of RobecoSAM’s annual corporate sustainability ranking process. The two organisations are investigating additional areas of cooperation, they added. The move was welcomed by Anne Sheehan, director of corporate governance at CalSTRS, who said it would “facilitate broader use of environmental data by investors consistent with CalSTRS’ longstanding efforts to raise awareness, address investment risks and capturing opportunities associated with environmental issues”.

The Inter-American Development Bank (IDB) is launching a Biodiversity and Ecosystems Services Program to help Latin America and the Caribbean “leverage its natural capital to achieve sustainable development”. The program will support measures and projects that integrate the economic value of biodiversity and ecosystem services into key productive sectors and infrastructure.

A new academic study in the US has found that wind power can still provide a hedge against rising natural gas prices, even given current low gas prices driven by the shale gas boom. “At least from a hedging perspective, this long-term hedge value is arguably more important than whether or not wind is competitive as a natural gas fuel saver in the near term,” concludes Mark Bolinger of the Lawrence Berkeley National Laboratory. The study is called Revisiting the Long-Term Hedge Value of Wind Power in an Era of Low Natural Gas Prices.

Social

Social investor Invested Development has become a certified ‘B Corporation’ – meaning it is one of 700 companies which uses “the power of business to solve social and environmental problems”. Invested Development manages the BSP Fund, which launched in 2011 to provide seed-stage investments to for-profit social enterprises, mostly in emerging markets. Last year it developed the Impact Factoring Fund (IFF), which uses factoring to provide working capital to growth-stage companies.h6. Governance

Investors including the Arkansas Teacher Retirement Systems and Louisiana Sheriffs’ Pension and Relief Fund have won a $730m settlement in a financial crisis-related class action suit against Citigroup. The investors had contended they were misled by misstatements and omissions in the 2006-8 period. Citi denies the allegations and is settling “solely to eliminate the uncertainties, burden and expense of further protracted litigation”. The investors were represented by law firm Bernstein Litowitz Berger & Grossmann (BLB&G), which said it comes after more than four years of protracted litigation. “It is the second largest recovery in a securities class action brought on behalf of purchasers of debt securities, as well as the second largest settlement arising out of the subprime meltdown and financial crisis,” BLB&G added.

Ethos, the Swiss governance foundation, has commended real estate company Mobimo’s decision to request an advisory shareholder vote on political and charitable spending. “This is the first time that a Swiss listed company implements such a vote allowing shareholders to give their opinion on a very sensitive issue,” Ethos says.

A draft European Parliament proposal for UCITS (Undertakings for Collective Investments in Transferable Securities) fund managers to have their bonuses capped like bankers has met with dismay, according to a report in the Financial Times. The FT said the plans would also call for up to 60% of variable pay to be deferred and largely paid in units of the funds themselves. There are some 35,000 mostly retail UCITS funds with a combined value of €6.36trn.

Starbucks, the US coffee chain, is facing a shareholder motion calling on it to “adopt a policy prohibiting the use of corporate funds for any political election or campaign.” The proposal has been tabled by John Harrington, chief executive of California-based Harrington Investments for the company’s annual meeting on March 20. Link

Governance firm GMI Ratings says its GMI Analyst offering now provides environmental, social and governance (ESG) coverage of more than 6,000 companies in developed and emerging markets worldwide. It added it expects to add another 500 companies to the ESG model by the end of this year – based on requests from clients and prospective clients.