RI ESG Briefing, May 22: Pfizer, Potash removed from sustainability index

Environmental

Campaign group Fair Pensions has published a briefing for investors looking at Royal Dutch Shell’s operations in the Arctic. The briefing accompanies a new report published by Platform, Greenpeace and FairPensions called “Out in the Cold: Investor Risk in Shell’s Arctic Exploration”. Link to briefing

BM&FBOVESPA, the Brazilian exchange, and Santander Brasil have signed a partnership agreement to stimulate the carbon credit market in Brazil by exploring the creation of products including derivatives based on carbon credits. The two will develop joint studies, assess economic viability and suggest the necessary regulatory measures.

A new report says investment by the mining industry on renewable energy and energy conservation will reach approximately $8.4bn by 2016 and nearly $20bn by 2020. The report by Pike Research, a cleantech specialist, says the Asia Pacific region will see the greatest investment at $9.4bn by 2020 with $4.6bn invested in the US in the same year.
Link to report

The United Nations Environment Programme (UNEP) is amongst the backers of the pilot version of the Global Protocol for Community-scale Greenhouse Gas Emissions, a reporting system designed to harmonize emissions measurement for the world’s cities. Other backers include the World Resources Institute and the World Bank. UNEP said as much as 70% of global GHG emissions can be attributed to urban areas, hence the need for clear and standardized metrics to measure progress in reduction efforts. Link

Social

Drugs firm Pfizer and chemicals giant Potash Corporation of Saskatchewan have been removed from the NASDAQ OMX CRD Global Sustainability Index, which comprises companies taking a lead in disclosing their carbon footprint, energy usage, water consumption, hazardous and non-hazardous waste, employee safety, workforce diversity, management composition and community investing. Bank of America and TELUS Corp. have been added. Announcement

The UK government has issued a call for evidence about where red tape is holding back social investment. It forms part of its Red Tape Challenge which will spotlight social investment this summer. The Cabinet Office, which helps develop government policy, said the project would address legal, regulatory and fiscal barriers to social investment, working across government to design and implement measures to address these. Penny Shepherd, Chief Executive at the UK Sustainable Investment and Finance Association (UKSIF), said: “We hope that financial advisers, social ventures and individual investors will give the government practical examples of where regulation has got in the way of supporting valuable projects through social investing.” Link

Seven out of 10 CEOs say they will take more ambitious action on issues related to the Millennium Development Goals including issues of energy, water and sustainable development if progress is made at the Rio+20 earth summit next month. The survey by PwC polled 141 CEOs of companies with revenues between $10m – $10bn +, during April and May 2012. Link. Governance

Royal Dutch Shell’s remuneration report gained 90.82% backing from shareholders at its annual meeting today, according to Fair Pensions. The oil major was subjected to what the UK Tar Sands Network tweeted was a “three-hour barrage” of critical questions from shareholders, mostly about human rights and the environment.

Pensions and Investment Research Consultants (PIRC) advised its clients to oppose what it says is a “excessive” pay package for Shell CEO, Peter Voser, at the AGM. PIRC said Voser’s total remuneration doubled to more than £10m last year, a combination of £1.3m base salary, £4.5m in annual bonuses and benefits, and shares from long-term plans.

Fund firm Harrington Investments has given its perspective about its call for more disclosure about political contributions at US healthcare firm WellPoint, saying the 16% shareholder support for motion is a “big deal”. “Anybody familiar with the dynamics of corporate governance knows that shows shareholders are very concerned,” writes portfolio manager Jack Ucciferri in the Huffington Post.

Governance for Owners (GO), the activist investor which has backing from Railpen and CalPERS, says it will drop a shareholder resolution at the AGM of Viscofan, the Spanish bio-engineering firm, on May 23, after the company agreed a series of governance changes including executive pay and independent board oversight amendments. GO is a 5% shareholder of Viscofan.

Asian listed companies with more diverse and independent boards of directors are likely to perform better, according to a report by the Monetary Authority of Singapore. The study found that Singaporean companies and those listed on the country’s stock exchange (SGX), performed better with diverse boards of directors than boards dominated by males or controlled by a single family.

Asset managers are pushing the UK Financial Services Authority (FSA) to tighten standards on FTSE listings over concerns about standards of corporate governance, writes the FT. Investor associations including the Association of British Insurers said some flotations by foreign-based natural resources companies have meant existing shareholders have retained an overwhelming majority of the equity, above the LSE minimum free float of 25%. FTSE re-iterated the 25% rule in January this year, but some investors are calling for a 50% minimum to protect the governance interests of minority investors, notably index funds.

CtW Investment Group, which advises US labour pension funds holding six million shares in JPMorgan, says it will work with pension funds in the powerful US Council of Institutional Investors and the International Corporate Governance Network to push the US bank to improve its risk policy committee. The bank recently acknowledged more than $2 billion in losses from risky trades. CtW says it wants the bank to replace James Crown and Ellen Futter, members of its board’s three-person risk policy committee, with individuals who have deeper experience in banking and financial regulation.

ERAFP, the €12bn Paris-based 100% SRI pension fund, has published an English version of its detailed voting and engagement strategy to cover its relationship at annual general meetings (AGMs) with investee companies. The policy is a rare move in France where shareholder activism is not common. Link

Salwa Boussoukaya-Nasr has been named Chief Investment Officer at the €35.1bn Fonds de Réserve pour les Retraites (FRR), the French state pension fund, according to IPE.com. She was previously head of asset allocation department and takes over from Philippe Aurain, who left earlier this year.