RI ESG Briefing, March 22: White House water strategy, Princeton, ShareAction, Arjuna Capital

Environmental

The White House, announcing its sustainable water strategy today (March 22), has said that CDP is introducing water security into its supply-chain program. The Executive Office of the President said: “Through CDP’s supply-chain program, companies will use water data from more than 1,500 suppliers to shift $218bn worth of corporate procurement spending to support sustainable water use.” It added that Ceres, the Climate Bonds Initiative, the Alliance for Global Water Adaptation, CDP, and the World Resources Institute are launching a Water Climate Bonds Standard and that the San Francisco Public Utilities Commission expects to be the first issuer to align a forthcoming bond sale with the standard. Link

A student group is petitioning Princeton’s administration to have the university’s $22.7bn (€20.2bn) endowment divest from coal and, eventually fossil fuels, according to the Daily Princetonian. The petition is the second from the group, which calls itself ‘The Princeton Sustainable Investment Initiative (PSII).’ PSII’s first petition, circulated last year, called on the university’s endowment to sign up to the Principles for Responsible Investment (PRI) and report its carbon footprint via the CDP. However, that petition was ultimately rejected by Princeton’s administration, the campus newspaper said.

The Green Investment Bank (GIB) has taken steps to ensure that its mission of green finance is maintained after its upcoming privatization. According to press reports, GIB’s articles of association have been amended to create a ‘golden share,’ the holder of which will be given a veto right. The holder of the share is furthermore expected to be a committee whose three members will be picked by the Royal Society, Scotland’s Institute of Chartered Accountants and Scotland’s Law Society. GIB’s privatisation could bring in as much as £4.2bn (€5.3bn) in proceeds for the UK government.

Social

A new report has found that the UK social investment market is worth £1.5bn (€1.9bn). Big Society Capital, the social investment incubator, estimates that at least 3,000 charities and social enterprises are benefitting currently from social investment. Social investment deal-flow in the 2015 calendar year saw around £428m of deals offered to about 700 charities and social enterprises, it added.

New UK government procurement rules that aim to ban public bodies including local councils and universities from refusing to award contracts to certain companies on ethical grounds show “pure contempt for our democracy” says MP Richard Burden. Writing in the Bromsgrove Standard, he said: “Perhaps it’s no surprise to see the Government so unwilling to listen to genuine concerns about banning ethical boycotts. After all choosing a highly politicised agenda over consulting the public is in itself unethical and shows pure contempt for our democracy – just like the ban.”h6. Governance

Institutional investors across the world are ready to engage with and contribute to the Sustainable Development Goals, finds a report published by ShareAction. The campaign group surveyed 52 institutional investors based in every region of the world with over £4trn assets under management and found that 95% of respondents plan to engage with investee companies about issues covered by the 17 SDGs. The goals were adopted by 193 countries at a UN Summit in September 2015 and cover social, environmental and economic targets for global development. The report is called Transforming Our World Through Investment.

Gender pay disparity is the subject of a new comment letter asking that listed US firms should be required to disclose data on the issue, according to the Wall Street Journal. It said the letter comes from former top investment banker Sallie Krawcheck, who now heads up the Ellevate Network and Joseph Keefe, CEO at asset manager Pax World. Pax World and Ellevate work together on the Pax Ellevate Global Women’s Index Fund.

Socially responsible investor Arjuna Capital has succeeded in getting Exxon Corp. to include in its proxy materials a proposal that the oil giant return capital to shareholders instead of investing in what Arjuna says are “potentially stranded carbon assets.” Arjuna said that while Exxon dodged the proposal last year on the grounds that it had increased its dividend, the Securities and Exchange Commission (SEC) approved it for Exxon’s annual general meeting (AGM) this year. Shareholders in Chevron, an Exxon peer, will vote on the same proposal from Arjuna at its AGM on May 25.

Staying with Arjuna, the firm has also scored a victory at Amazon, as the online shop must include in its proxy materials a proposal asking it to commit to closing any ‘gender pay gaps’ that exist. Amazon had sought to have the proposal excluded on the basis of it being too vague. But the SEC rejected the move, paving the way for a vote on the motion at Amazon’s AGM in June. As 2016 began, Arjuna filed proposals regarding possible gender pay gaps at several US tech firms, including Apple, Intel, EBay, Google, Microsoft and Facebook. Link

The Corporate Human Rights Benchmark (CHRB), the first ranking of the world’s largest publicly listed companies on their human rights performance, has now begun its pilot benchmark process. The final scores will be available in November 2016. The 2016 pilot benchmark will rank the top 100 companies in the agricultural products, apparel, and extractive industries using a rigorous methodology, developed over two years and in consultation with over 400 companies, industry associations, investors, governments, civil society representatives, academics and lawyers. Link

Company boards in the UK should warn their shareholders if they consider the UK’s renegotiation of its membership of the European Union and potential exit to be a principal risk, says financial watchdog the Financial Reporting Council (FRC) in an open letter to investors ahead of the annual general meeting season.