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RI ESG Briefing, March 5: Vanguard writes to c.500 companies on engagement and governance

The round-up of the latest environmental, social and governance news

Environmental

Danish wind turbine firm Vestas says it has sold €400m worth of its seven-year corporate bonds to European investors. The bonds, which will list on Luxembourg’s bourse on March 11, pay a coupon, or interest rate of 2.75%. The bond’s bookrunners were Citigroup, HSBC, Nordea and Société Générale. Said Marika Fredriksson, Vestas’ Chief Financial Officer: “The bond underlines Vestas’ strong position as a leader in the renewables industry.”

US photovoltaic (PV) firm SolarCity has taken legal action against a decision by Arizona power utility SRP to impose a fee of $50 (€45) per month on the supply of solar power through SRP’s grid. In a blog post, SolarCity said: “SRP customers who generate their own power must pay additional charges that other SRP customers do not. We have filed a lawsuit in federal court, asking it to stop SRP’s anti-competitive behaviour.” People using SolarCity’s PV equipment account for half of SRP’s 15,000 customers.

Seven research projects aimed at confronting climate change have reportedly been awarded grants in the first year of Harvard President Drew Faust’s $20m Climate Change Solutions Fund. Faust, under pressure from students over fossil fuel divestment, said: “Universities have a critical role to play in generating innovations that will lead the transition to clean, affordable, and renewable energy sources, and Harvard is committed to advancing such efforts as we continue to serve as a model of sustainability for institutions around the world.”

Social

‘Responsible tax for the common good’ is a new project from CoVi, the think tank founded in 2014 by former ResPublica Managing Director Caroline Macfarland. It “explores the meaning and purpose of responsible tax for the common good and what responsible tax behaviour and tax advice looks like in this context”. It aims to explore the issues from tax principles, purpose, and policy, to what responsible tax practice can achieve. The project is sponsored and supported by KPMG in the UK. Link

Deutsche Bank has published a study on the impact its VG Microfinance-Invest Nr. 1, which ran from 2007 to 2014, has had. According to the study, the fund’s investments in microfinance institutions (MFIs) in emerging markets provided around 3m people with access to capital and significantly increased the number of borrowers in rural areas. Seven of the MFIs the fund invested in also became regulated and licensed to offer savings deposits, the study said.

A UK court has sentenced Paul Coyle, the former Treasurer of UK retailer WM Morrison Supermarkets, to 12 months in prison for insider trading, Reuters reports. Coyle pleaded guilty to using confidential information to trade shares of Morrison’s proposed joint venture partner Ocado, an online retail delivery service, between January and May 2013. Coyle made a profit of roughly £79,000 (€109,000) from the scam. Beyond the prison sentence, Coyle was fined £218,000.h6. Governance

Mutual fund giant Vanguard has written to the chair or lead director of approximately 500 of its largest holdings to stress the importance of effective engagement for both shareholders and boards. It says the “best boards” work to seek feedback and perspectives independent of management – with engagement as a dialogue with both parties listening to and informing each other. “Please know that when you talk, we listen,” writes Vanguard’s Chairman and CEO William McNabb.

Consulting firm EY (Ernst & Young) has published a report on women on US boards which finds that 16% of S&P 1500 board seats are held by women – less than the proportion of seats held by directors named John, Robert, James and William! Elsewhere, proxy firm Glass Lewis has published “Mind the Gap: Board Gender Diversity in 2014”, which looks at the current state of gender diversity in the boardroom in 14 markets.

US multinationals Intel and General Electric, and US glass manufacturer Corning have failed in their attempts to block a shareholder resolution asking them sign up to a corporate code of conduct for American companies doing business in Palestine and Israel from campaign group Holy Land Principles. The Securities Exchange Commission dismissed the arguments made by all three companies for not tabling the resolution. Holy Land Principles has also proposed the same resolution with tech multinational Cisco Systems.

Proxy access update: US retailer Whole Foods has postponed its annual general meeting till September 15, the latest twist in the ongoing saga in the US around “proxy access”. Energy companies Exxon Mobil Corp, Chevron Corp AES and Southern Company have all failed in attempts to block shareholder resolutions on director nominations from New York City pension funds as part of a campaign led by Comptroller Scott Stringer. And fast food firm Yum! Brands has announced that it will implement a proxy access by-law following discussions with its largest shareholders. Elsewhere, Zach Oleksiuk, the Americas head of corporate governance and responsible investment at Blackrock has said it may vote against board members who exclude proxy access proposals.
Meanwhile, the proxy access campaign mounted by Stringer has scored a qualified success, with Arch Coal agreeing to let shareholders vote on a modified version of Stringer’s original proposal at its annual meeting on April 23. According to a press report, Arch Coal has included in its proxy materials a proposal that would let shareholders with a 5% stockholding in the firm for three years to nominate one-fifth of its board. The proposal is, however, less than what Stringer is demanding – namely 3% stockholding for three years. Stringer therefore criticised it as “a transparent attempt to insulate itself from accountability to shareowners.”