RI ESG Briefing, May 13: PGGM backs Western Sahara human rights motion at Potash

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

Environmental

A new report by the UN Environment Programme (UNEP) has found that redirecting financial flows towards efficient, clean and inclusive economic activities in Asia Pacific and away from polluting, resources intensive activities is “crucial” to the region’s future sustainable growth and prosperity. It says the region needs an annual investment of US$2.5trn. The findings come in a new study called Aligning the Financial Systems in the Asia Pacific Region to Sustainable Development. The report will be discussed by ministers and senior governmental representatives from over 35 countries at the First Forum of Ministers and Environment Authorities of Asia Pacific on May 19-20 in Bangkok.

ORIX, the Japan-based financial conglomerate that owns fund firm Robeco, is eyeing new power development such as wind power and biomass as it expands its electric power business, focused to date on its “mega-solar” projects. It is also looking to expand its asset management business, via the global expansion of Robeco and “new M&A” it said in its latest earnings report. Link

Social

Think tank The New Zealand Initiative has launched a report on the viability of social impact bonds (SIBs) in New Zealand. Despite some barriers, it finds there is potential for SIBs in the country and recommends establishing a special Treasury unit to approve SIB programmes and have philanthropists replace the role of government as commissioner of SIBs. New Zealand’s Ministry of Health is currently developing a model for SIBs and its minister of finance Bill English has emphasised the need for outcomes-based measurement and social investment.

The China Social Investment Forum (China SIF) held its 26th event on May 11, a roundtable discussion with Ethix SRI Advisors, the Sweden-based consulting firm, in Tsinghua University on the theme ‘the Value of the UN Global Compact’. The event attracted around 40 guests including companies, institutional investors, social organizations, consultancies, academic experts and media participated the roundtable.

The Australian reports that billionaire Melbourne investor Alex Waislitz has challenged state and federal governments, Australia’s sovereign wealth fund the Future Fund, and institutional and wealthy private investors to back social impact bonds. Waislitz announced the call as he announced plans to raise A$100m (€71m) for a social impact bond to provide affordable housing and mentoring to homeless people.h6. Governance

Dutch pension investment giant PGGM was among investors who supported a shareholder motion on human rights in the Western Sahara at Canada-based fertilizer firm Potash Corporation of Saskatchewan’s AGM on May 12, according to voting records. The resolution was filed by a group of faith investors and the Meritas Jantzi Social Index Fund and called for an independent, public assessment of Potash’s human rights responsibilities and phosphate from the disputed Western Sahara region “having regard to the UN Guiding Principles and associated international human rights standards”. PGGM backed the proposal, saying it would “further inform shareholders on any relevant risks and could assist the company in taking any necessary steps to manage them”. The motion gained 6.7% shareholder support. Link

Professor John Kay, the noted economist and author the UK government-backed Kay Review into market short-termism, has looked at the role of ‘good corporations’. In an article in the Financial Times, he said the purpose of a corporation is not just to produce goods and services and earn returns for its shareholders. It is also to “make a positive contribution to the social and physical environment in which it operates”.

The $191.2bn (€168bn) California State Teachers’ Retirement System has released its 2013–14 Sustainability Report: The Next 100 Years. CalSTRS said it is the first US public pension fund to complete the “rigorous and detailed” sustainability reporting guidelines consistent with the Global Reporting Initiative. CEO Jack Ehnes said completion of a GRI-compliant report “ensures we have taken steps consistent with our business beliefs and forward-thinking strategic business plan objectives”. Link

APG, the €424bn Dutch pension asset manager, has reportedly criticised France’s double voting rights Florange Act. IPE.com reported that APG argued the rules put a whole category of shareholders – such as long-term institutional investors – at a disadvantage against larger stakeholders.

State Street has signed up to the UN Global Compact, the responsible business practices initiative. “By signing the compact, we committed to align our business operations and strategy with 10 universally accepted principles in the areas of human rights, labor, the environment and anti-corruption,” the giant US bank said in its new 2014 Corporate Responsibility Report.

The Association for Sustainable & Responsible Investment in Asia (ASrIA) has launched a private equity ESG initiative to support firms in building internal ESG capacity. It will comprise a series of working sessions to be held during 2015, with participants consisting of senior management from private equity firms. A briefing note will be produced after each working session for participants only, ASrIA said.