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RI ESG Briefing, May 27: Aegon, Australasian Centre for Corporate Responsibility, Illinois State Board

The latest environmental, social and governance news

Environmental

Fund manager Aegon Asset Management hired environmental data firm Trucost to measure the carbon intensity of €20bn in assets of its €560bn portfolio after shareholder interest, its new responsible investment report has revealed. In a first for Aegon, Trucost analysed three of its actively managed fixed income portfolios and found all were more carbon efficient than a comparable benchmark. Elsewhere, Aegon’s report said it engaged with 230 companies in 2014 and investigated the potential for microfinance investments.

The Australasian Centre for Corporate Responsibility (ACCR) plans to table resolutions at Australian power companies AGL and Origin requiring action on reducing carbon emissions. It comes in response to a report from the Australian Conservation Foundation which names AGL and Origin amongst Australia’s top 10 carbon polluters. ACCR is calling on fellow shareholders to help it shape and support the resolutions.

The California Democratic Party, which holds a majority in the state senate and assembly, has endorsed a resolution that seeks fossil fuel divestment by CalSTRS and CalPERS. The party also wants the state’s 33 public universities to exit fossil fuels. Inside Climate News reports that the resolution on fossil fuel divestment was among the party’s top 11 proposed resolutions at its annual convention recently. The resolutions winning the most support often get worked into the party platform. It comes as the Californian senate is set to vote on a bill requiring CalSTRS and CalPERS to engage with their coal holdings and sell the shares if they are not convinced the companies are transitioning to a “clean energy” strategy. If passed, the bill will move to the Californian state assembly.

Social

Institutional investor clients of private equity firms, known as Limited Partners (LPs) worry more about bribery and about firms (General Partners) hiding bad news than traditional ESG issues, according to a new study. The RRiPE Index (Reputational Risk in Private Equity) 2015 is said to be the first study to examine in detail the impact of reputational risk and environmental, social and governance (ESG) issues on the fund selection decisions of LPs.

A petition urging the Securities and Exchange Commission to enforce a statutory rule requiring all publicly traded companies to disclose their CEO-to-worker pay ratio, has been launched by AFLCIO, the umbrella federation for US unions. Five years ago, the US Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act that included the rule on disclosing pay ratios. However AFLCIO say the SEC has taken no action to enforce this rule, due to corporate lobbying. Link. Governance

The Illinois State Board of Investment, the UAW Retiree Medical Benefits Trust, Amalgamated Bank LongView Funds, and the Nathan Cummings Foundation are calling on retail giant Walmart to disclose whether it has clawed back pay from executives whose actions have caused significant financial harm to the company and its owners. In a filing with the SEC, the investor coalition highlighted the request that is on the agenda for the company’s AGM on June 5. “Our hope and desire is that public corporations encourage a culture of transparency and openness,” says William Atwood, Executive Director of the Illinois State Board of Investment. The proposal is the result of allegations of foreign bribery and corruption in Walmart’s Mexico subsidiary.

US union pension funds advisor CtW Investment Group is seeking an inquest by the Public Company Accounting Oversight Board (PCAOB) into Walmart’s auditor Ernst & Young over its alleged knowledge of bribery in Mexico before the giant retailer disclosed it to US authorities. Reuters reports CtW as saying an internal Walmart memo released during shareholder litigation showed that EY was informed by the company’s internal audit services that a whistleblower had provided evidence of the alleged bribery scheme to Walmart.

“Say-on-pay” for shareholders is back in the spotlight in Canada, according
to law firm Stikeman Elliot. Say-on-pay, describing the ability of shareholders of a company to vote directly on executive compensation, is part of regulation in the US and UK, albeit non-binding. However, no obligation is placed on Canadian companies. In a blog, the firm highlights a renewed focus on the issue in Canada, pointing out that late last year, over 75% of companies on Canada’s S&P/TSX 60 Index held say-on-pay votes. More pertinently, there have been a number of well publicized “no” votes in 2015, when in 2014 no Canadian company failed to receive approval of its executive compensation resolution.

Almost half of Unilever Pension Fund’s engagement activity in 2014 focused on corporate governance, according to a report in the Financial Times’ Pensions Expert. The magazine’s analysis of engagement reports released by the Anglo-Dutch consumer goods multinational finds nearly half (46.3%) of its pension scheme’s engagement activity focused on governance issues such as board structure and executive remuneration in 2014. The scheme engaged with companies 546 times over the year.

Dubai International Financial Centre’s corporate governance institute Hawkamah and London-based board governance consultancy Nestor Advisors have signed a partnership agreement to jointly deliver services in the Gulf region. One of their first initiatives will be to assist corporates in the Gulf to develop governance policies. Announcement