RI ESG Briefing, March 23: Varma Mutual, SASB, sustainable cocoa, OECD, Japanese stewardship, Deutsche Börse

The round-up of the latest ESG developments


Varma Mutual, Finland’s largest pension insurance company with assets of €42.9bn, has published its 2016 Annual and Corporate Social Responsibility Report – which for the first time accords with the standards set by the Global Reporting Initiative (GRI). Emphasising Varma’s commitment to ‘mitigating climate change’ the report shows that in 2016 significant reductions were made in the carbon footprints of its listed equities (22%) and corporate bonds (25%). In May 2016, the organisation set targets to reduce the footprints of its equities, corporate bond, and real estate holdings over the next five years by 25%, 15%, and 15% respectively.

The Journal of Environmental Investing has announced a call for papers for its upcoming issue, ‘The State of Environmental, Social and Governance (ESG) Data and Metrics’. The journal is interested in papers from all fields of study that address the current challenges investors face when attempting to integrate ESG data in their decision-making. 500-word abstracts will be accepted until April 30, 2017.

German environment minister Barbara Hendricks has proposed a partnership on resource efficiency for G20 member countries. Speaking at a conference, Hendricks said: “We need a strong partnership of all large economic powers so that we don’t keep exceeding our planet’s limits.”, Clean Energy Wire reported. At the same event, the International Resources Panel (IRP) found in a report that smarter use of resources could add 2 trillion dollars annually to the global economy. The resource efficiency partnership allows the members to dialogue on the matter and learn from each other by sharing best practice cases, Hendricks said.

Pattern Energy Group, the Californian-based wind energy firm, has closed C$263m in project financing for the 147MW Mont Sainte-Marguerite wind farm. The project, financed by Manulife, Caisse de Dépôt et Placement du Québec, and Bayerische Landesbank, will result in the construction of 46 wind turbines in the Chaudière-Appalaches region of Quebec. Link


The UK’s Prince Charles has thrown his weight behind the development of sustainable cocoa, resulting in pledges from some of the world’s largest chocolate companies to move towards more responsibly-sourced cocoa. Ferrero, the Hershey Company, Mars Incorporated, Nestle, Olam and Touton, Barry Callebaut, Blommer Chocolate Company, Cargill, Cemoi, Ecom and Mondelez have all joined the sustainable cocoa and forestry initiative, which was launched by The Prince’s International Sustainability Unit, the World Cocoa Foundation and the Sustainable Trade Initiative. It is backed by the World Bank, the IFC, the World Resources Institute, UN Environment, the Tropical Forest Alliance, Greenpeace and Oxfam. The first meeting took place last week, attended by government representatives from Cote d’Ivoire, Ghana, Germany, the Netherlands, France, Switzerland, Norway and the UK.

Bangladesh’s lucrative $1bn tanning industry has come under scrutiny amid reports of ‘hellish’ working conditions and intense environmental degradation in the Hazaribagh region of Dhaka. Working conditions in Bangladesh’s textile industry have been under scrutiny since 2013 after an eight-storey factory collapsed in the city killing 1000 textile workers.

Japanese life-insurance giants Meiji Yasuda Life and Nippon Life are reportedly diversifying their respective investments with a special focus on socially responsible debt: Meiji Yasuda is reported to be replacing its current 400bn yen growth-sector investment target, introduced in 2013, with an expanded 500bn target for sustainability investments and loans. And, Nippon Life has reportedly unveiled a new plan to invest 200bn yen in bonds conforming to ESG principles between 2017 to 2020.h6. Governance

The Sustainability Accounting Standards Board’s new two-tier governance structure will take effect on April 1, with an oversight body, the SASB Foundation Board of Directors, and the SASB as such focusing on standard-setting activity. Also on April 1, the consultation to comment on SASB’s provisional standards comes to an end. SASB expects to codify the definitive version of its standards, which cover 79 industries, by the end of 2017.

California Democrats have proposed a bill that would require the $312bn California Public Employees Retirement System and the $202bn California State Teachers Retirement System to identify and liquidate any holdings in companies working on President Trump’s Mexican wall within a year.

The OECD has published a reviewed version of its Methodology for Assessing the Implementation of the G20/OECD Principles of Corporate Governance. This updated Methodology aims at assessing countries “qualitatively against what they could and should achieve in relation to the Principles and to provide a framework for identifying policy options to improve corporate governance”.

After the recent launch of a stewardship code in South Korea, Daishin Financial Group will reportedly provide proxy advisory services to institutional investors through a new unit of its Daishin Corporate Governance Research (formerly Daishin Economic Research Institute). The newly created governance unit will compete in the market with peers such as Sustinvest or Korea Corporate Governance Service. Link

Draft revisions to the Japanese Stewardship Code are due to be finalized, reports the Nikkei newspaper. In January this year, Japan’s Financial Services Agency initiated an expert panel to examine how to eliminate concerns about the appropriateness of voting rights. Among the revisions expected to be in the new draft Code are proposals aimed to install mechanisms that prevent conflict of interests. The main part of the Code revision is focused on individual disclosure of voting results, which are, in many cases, disclosed in aggregated form only. It looks likely to expect shareholders to disclose voting records or explain why is not disclosed.

German exchange organisation Deutsche Börse has announced that it will be launching its Sustainable Finance Initiative in Frankfurt on the 23 May 2017. The initiative aims to establish new ‘interdisciplinary structures for sustainable entrepreneurship’.

BMO Global Asset Management (BMO) has predicted that remuneration is set to be top of the shareholder agenda this voting season, continuing the upward trend from last year. BMO voted against management on 52% of remuneration proposals in 2016, an increase of 8% compared to 2015.

SRI firm Trillium Asset Management has successfully withdrawn an ESG shareholder proposal filed with US retailer Tractor Supply Company. The proposal was withdrawn after the company agreed to set quantitative greenhouse gas reduction targets (covering both scope 1 and scope 2 emissions).

The University of California will reduce investments in Dakota Access Pipeline associated firms, Energy Transfer Partners and Sunoco Logistics from $50m to $19m – with a view to divest completely.

UK sustainability network UKSIF has announced the date of its annual Ownership Day – 27 April 2017. Focusing on the ‘materiality of climate change to investors’ speakers will include: The Pensions Regulator, Institute and Faculty of Actuaries, Transition Pathways Initiative, ClientEarth, the Taskforce on Climate-related Financial Disclosures, and the EAPF.