RI ESG Briefing, March 8: JP Morgan, T. Rowe Price, Finansinspektionen, Egan Jones

The round-up of the latest ESG news

Environmental

Investment bank JPMorgan Chase is to stop direct financing of all new coal mines and new coal power plants in developed countries in the wake of the COP21 climate accord, according to the Financial Times. It said the US bank has included coal projects alongside child labour on a list of “prohibited transactions” in the latest version of its environmental and social policy. “We believe the financial services sector has an important role to play as governments implement policies to combat climate change,” the policy says.

Former opposition Labour Party leader Ed Miliband – alongside a range of civil society figures – has called for the UK Parliament to enact a law to make the carbon emissions target agreed at COP21 legally binding. He’s a signatory to a letter to The Guardian alongside fellow MPs as well as figures such as Nigel Topping, CEO of the We Mean Business Coalition, James Thornton at Client Earth and Catherine Howarth of ShareAction. There was also a statement of support from a range of leading companies.

The Swedish financial regulator has reportedly said that pension providers should consider stress testing their portfolios for climate changes risks and stranded assets. IPE reported that while Finansinspektionen ruled out further regulation in the immediate future, it told the government it saw the benefit of institutions considering such risks when conducting scenario analyses.

Campaign group ABP Fossil Free, which wants the Dutch civil service pension giant to divest from fossil fuels, has said that ABP’s investments in the world’s biggest coal, oil and gas companies dropped by €5.3bn over the past year. It said the fund “appears to have drastically reduced its holdings in fossil fuel companies such as Royal Dutch Shell (value of holdings down by 72%), Chevron (-75%), Total (-79%) and BP (-53%) and entirely stopped its investments in 15 fossil fuel companies such as coal giant Peabody Energy”.

Social

What’s being termed a “showdown” on gender pay equity in Silicon Valley is in the offing. Seven of America’s biggest tech companies – including Facebook, Microsoft, Amazon, Google and eBay – face 2016 proxy season votes from SRI firm Arjuna Capital to follow the lead taken by Intel on February 3 in announcing that it has achieved 100% gender equity on pay. And Apple says it has 99.6% equal pay. Arjuna said the AGM votes are scheduled thus: eBay (May); Amazon (now opposing resolution at the US Securities and Exchange Commission); Expedia (June); Google (scheduled for June); Adobe (“dialogue with company now underway”); Facebook (June); and Microsoft (“resolution now being filed ahead of shareholder meeting in December”).

Alliance Trust has reportedly pledged to add more women to its board. The Financial Times said it comes after a troubled six months for the venerable investment trust that saw its only female directors – including Katherine Garrett-Cox – leave. Chairman Lord Smith was quoted as saying he was “acutely aware” of the lack of gender diversity on the current board.h6. Governance

US asset management titan T. Rowe Price reportedly plans to vote against directors at companies with two share classes during the forthcoming proxy season. Reuters reported that the $763bn (€692.8bn) giant would allow portfolio managers to vote against the policy if warranted, adding the firm will be sending a message to boardrooms and could boost efforts by activists to equalize voting rights at some established companies. It quoted T. Rowe Price’s head of corporate governance Donna Anderson as saying it adopted the new policy last month.

Egan Jones Proxy Services, the US advisory firm, has introduced new guidelines covering “numerous new shareholder proposals regarding health, GMO products, greenhouse gas emissions, recycling, energy conservation and other social and environmental issues”. These have been added to all versions of Egan-Jones’ Proxy Voting Guidelines. Its first recommendation under the new rules is at coffee firm Starbucks, where it suggests an OPPOSE vote on a human rights proposal filed by conservative think tank the National Center for Public Policy Research at Starbucks’ AGM on March 23.

The International Corporate Governance Network (ICGN) has published a new a report on corporate culture and the “red flags” of a bad culture with the Institute of Business Ethics and ICSA: The Governance Institute. It points to “high levels of corporate stress, flawed remuneration policies, complex legal structures, a tendency for takeovers to proliferate, and lax financial discipline” as potential signs of a poor corporate culture. It represents the conclusions of a workshop of senior regulators, company directors and executives and investors convened by the three organisations last December.

The draft Natural Capital Protocol Consultation and piloting program has now closed. With over 50 companies piloting the Protocol and nearly 500 organizations registering to provide comment, organisers are confident there is now enough “knowledge and experience” to go into global Protocol and Sector Guides, which are due to be launched on July 13. When complete, the Natural Capital Protocol will be a global standardized framework for business to measure and value its direct and indirect impacts and dependencies on natural capital. Link

The role of corporations in global governance remains a much overlooked area of study, according to Christopher May, a Professor in the Department of Politics, Philosophy and Religion at Lancaster University. He writes that while corporations are often viewed as either the subjects of global governance, within their extended international supply chains corporations have a significant governance role which is worthy of study in its own right.