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RI ESG Briefing, May 28: ANZ green bond, BlackRock/Ceres engagement guide, ORIX wind project

The round-up of the latest ESG developments

Environmental

Australia’s ANZ banking group has launched and priced its first green bond, raising A$600m (€420m) for financing a portfolio of loans that directly contribute to developing low carbon industries, technologies and practices. Proceeds will also be allocated for investment in future green projects. The five-year fixed rate bond comes with a coupon, or interest rate, of 3.25%. ANZ said it is largest climate related bond yet by an Australian issuer and was primarily distributed with Australian institutional investors, as well as funds in Asia. ANZ was sole lead arranger for the deal. It was certified by the Climate Bonds Initiative (CBI), the industry advocacy group, while Ernst & Young has independently verified the bond against CBI standards. Link

Japan-based ORIX Corp., the parent of fund manager Robeco, has teamed up with Wind Power Group and SB Energy Corporation in the joint development and construction of an offshore wind project called the Kashima Port Large-Scale Offshore Wind Farm in Ibaraki Prefecture. The project involves the installation of 20 wind turbines offshore of Kashima port, with each turbine possessing output capacity of 5,000 kW. The trio say they will “aim for further expansion and wider usage of renewable energies through the development and operation of renewable energy power plants, including wind farms”.

The global value of carbon pricing instruments is estimated at just under US$50bn, according to Carbon Pricing Watch 2015, a new publication from the World Bank Group and consulting firm Ecofys. It found that emissions trading systems have grown in value from US$32bn in 2014 to US$34bn now – partly due the addition of the South Korea emissions trading scheme and the expansion of the California and Quebec cap-and-trade programs. Existing carbon tax systems are valued today at around $14bn.

The finance committee of the Norwegian parliament has reportedly called for the country’s vast Government Pension Fund to cut its exposure to the global coal industry and sell stakes in firms that focus on the sector. Reuters reported that the body agreed in a bipartisan motion that the fund should sell stakes in corporates that generate more than 30% of their revenues/output from activities linked to coal. “Investing in coal companies poses both a climate risk and a future economic risk,” the parties said in a statement quoted by the news agency.

Social

Gerhard Wiesheu, the new Head of Asset Management at Metzler, has reaffirmed the German private bank’s intention to have the €30bn in assets its manages for institutional clients done so sustainably. “Since we’ve signed the PRI (Principles for Responsible Investment), we want to show that we mean to keep a pledge,” Wiesheu said during the bank’s annual news conference. Metzler already excludes banned munitions like cluster bombs and companies that rely on child labour. It is now negotiating with its institutional clients to broaden the portfolio’s sustainable profile by shifting to a best-in-class approach, and Wiesheu says the talks are going well.

Europe: A deal struck by MEPs and Council of Ministers negotiators in the small hours of Thursday morning means the architecture of the “Juncker plan” to unlock €315bn public and private investments in the real economy in 2015-2017 can now be put to a European Parliament vote on 24 June and the investment programme can kick off in the summer. Announcement. Governance

The world’s largest asset manager, BlackRock, has teamed up with sustainability advocacy group Ceres to create guidance for US institutional investors on engaging with companies and policymakers on sustainability issues. The 68-page guide, 21st Century Engagement: Investor Strategies for Incorporating ESG Considerations into Corporate Interactions includes tactics and case studies from 37 engagement experts spanning six countries. “As a long-term investor on behalf of our clients, BlackRock believes we have a responsibility to engage with companies on a range of governance matters, including the material environmental and social impacts of their operations”, said Michelle Edkins, Managing Director and Global Head of Corporate Governance and Responsible Investment at BlackRock.

CalPERS, the $307bn California Public Employees Retirement System, is reportedly set to require all of its asset managers to identify and articulate ESG in their investment processes. Top1000 funds reported that staff presented the ESG manager expectations, and draft sustainable investment guidelines, to the giant fund’s investment committee this week.

Excessive executive pay at Swatch is the reason why US proxy firm Institutional Shareholder Services (ISS) recommended shareholders vote against the re-election of Swatch CEO Nick Hayek Jr. and his sister Nayla to the Swiss watchmaker’s board at today’s AGM. ISS and Swiss peer Ethos say Swatch’s board has made it possible for management, which includes Hayek Jr., to pay itself a total of CHF42.1m (€40.5m) for 2014. Considering its share price over the last year, such pay bears no relation to company performance, the proxy advisors say. Unlike ISS, Ethos only recommends shareholders oppose Nick and Nayla Hayek’s re-election to the compensation committee for Swatch’s board.

Kingsdale Shareholder Services, the Canadian governance advisory firm, has announced a strategic partnership agreement with ISS Corporate Solutions (ICS), the corporate advisory arm of Institutional Shareholder Services. It means Kingsdale clients in the US “will be able to leverage ICS executive compensation analytics and custom advisory services”. Terms of the deal weren’t announced. Link

A group of former Commissioners and Chairs of the Securities and Exchange Commission (SEC) has written to current chair Mary Jo White in support of a petition to require listed companies to disclose to shareholders the use of corporate resources for political activities. Petition 4-637 was submitted in August 2011 by a committee of law professors. The petition has received a record-breaking 1.2m supportive comments, said William Donaldson (SEC Chair, 2003-2005), Arthur Levitt (SEC Chair, 1993 to 2001) and Bevis Longstreth (Commissioner, 1981-84).

The UN-backed Principles for Responsible Investment (PRI) has launched a new Investor Working Group on Corporate Climate Lobbying, according
to Canada’s Shareholder Association for Research and Education (SHARE). SHARE said it would be participating in the new working group, which will examine how companies use shareholder funds to lobby on climate regulations.

The African Development Bank (AfDB) has unveiled its first-ever Gender Equality Index for Africa. The index, titled the Empowering African Women: An Agenda for Action, was launched as part of the opening events at the week-long AfDB meetings, in a session called “Gender Equality: Where are we?”