RI ESG briefing, March 6: Shareholder Rights Project gets 79% support for proposals

The round-up of environmental, social and governance news

Environmental

Environmental campaign group the Rainforest Foundation has released a new study into the effects of palm oil cultivation on the Congo Basin. “There is a real and growing risk that some of the serious, negative environmental and social impacts resulting from rapid expansion of palm oil production in Indonesia and Malaysia, such as widespread deforestation, social conflict and dispossession, could be repeated in the Congo Basin,” the report says. ‘Seeds of Destruction; Expansion of Industrial Oil Palm in the Congo Basin – Potential Impacts on Forests and People’ is available here.

The UK government-backed Ecosystem Markets Task Force – headed by Ian Cheshire, CEO at retail group Kingfisher, has published its final report – stating the business case for “why nature matters”. It makes a series of practical recommendations to assist the development of new environmental markets. The five main recommendations cover: biodiversity offsetting; anaerobic digestion and bioenergy on farms; local woodfuel supply chains; nature-based certification and labelling; and water cycle catchment management. The government will issue its official response later this year.

The Environmental Defense Fund (EDF) last month partnered with Citi to host a conference to explore ways to fund energy efficiency projects in California. The Innovations in Energy Efficiency and Distributed Generation Finance II event saw keynote addresses from former Colorado Governor Bill Ritter and California State Senator Kevin de León.

Social

Not-for-profit Nicaraguan microlender Fundacion para el Desarrollo Socioeconomico Rural (FUNDESER) plans to launch a $3m public bond issue in April 2013, according to a report on the MicroCapital site. It cited general manager Rene Romero Arrechavala as saying it would be the first NGO in Central America to issue bonds to the public.

The UN Principles for Responsible Investment (PRI) has issued a progress report on its Principles for Investors in Inclusive Finance (PIIF) initiative. The PIIF project was launched in 2011 to provide a framework for responsible investment in inclusive finance.h6. Governance

The Shareholder Rights Project (SRP) headed by Harvard Professor Lucian Bebchuk says that proposals to limit staggered board elections (‘board declassification’) that it has submitted on behalf of investors have already gone to a vote at six US companies so far this year. “These proposals all passed by substantial majorities, receiving average support of 79% of votes cast,” the SRP says, adding it reflects the on-going strong support for board declassification among institutional investors. The proponent of all six motions was the Massachusetts Pension Reserves Investment Management Board and companies affected include big names such as Jacobs Engineering Group and Rockwell Collins.

Deminor, the Brussels-based shareholder engagement and loss recovery firm, says it is investigating a January 29 profit warning by Milan listed oil and gas contractor Saipem, which caused its share price to plunge 34%. It said: “Deminor is currently evaluating the possibility to take legal action to recover losses suffered by institutional investors.”

A US civil trial date of August 25 next year has been set to cover accusations that oil giant BP fraudulently misled shareholders before and after the 2010 Gulf of Mexico oil spill, according to a Reuters report. Investors headed by the New York State Common Retirement Fund and four Ohio pension funds have claimed losses of up to 40% of their investments following the explosion of the Deepwater Horizon rig.

There does appear to be a link between securities class actions and say-on-pay ‘no’ votes, according to GMI Ratings. The governance research firm says a number of clients have asked whether ‘no’ votes bear any relationship to class action lawsuits. “In both 2011 and 2012, Russell 3000 companies that experienced [class action suits] were roughly twice as likely as index companies generally to experience Say on Pay ‘no’ votes of 10% or more,” writes Managing Director Agnes Grunfeld.