RI ESG Briefing, May 7: EU Parliament committee backs loyalty shares to boost long-term investment

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


Fortum Värme, the Swedish energy firm, has launched what is claimed to be the biggest ever green bond transaction in the Swedish Krona market – a SEK2.5bn (€269m) issue placed with 22 investors across six- and seven-year maturities. The bond was issued as part of its Medium Term Note programme and will be listed on the NASDAQ OMX in Stockholm. SEB was the intermediary bank for the issue and it was verified by Norway-based CICERO (the Centre for International Climate and Environmental Research). The proceeds will finance new investments in renewable and recycled district heating, district cooling and electricity production.

Bank of America has announced that it will limit its credit exposure the coal sector, following pressure from universities and environmental groups. It announced its new policy at its annual meeting, saying it has developed a new coal policy after engagement with the groups. Separately, Bank of America shareholders rejected a resolution requiring the bank to report on its impact on climate change from financing fossil fuel projects. Link

Greenpeace activists have taken action at Standard Chartered’s Hong Kong headquarters ahead of the bank’s annual general meeting in London, urging it to end its association with one of the world’s largest coal mines which they say is threatening Australia’s Great Barrier Reef. The activists displayed a stair banner using a dead fish in a new spin on the bank’s logo in front of the building.


Impact investment firm Acumen has announced
its expansion to support social entrepreneurship in Latin America. It will be headquartered in Bogotá and will invest in innovative entrepreneurs and enterprises in Colombia and Peru to drive “faster, sustainable solutions” to poverty. Founded in 2001 by Jacqueline Novogratz, Acumen takes a venture capital-like approach to investing in social enterprises serving low-income customers. Acumen’s first investment in the region, Siembra Viva, connects Colombian smallholder farmers selling organic produce to customers in cities.

Sharjah Islamic Bank, the listed bank headquartered in the emirate of Sharjah in the United Arab Emirates, has listed a $500m Sukuk, or Islamic bond, on Nasdaq Dubai. It takes Sukuk listings on the Emirate’s exchanges to just under $29bn. The transaction was oversubscribed by 7.2 times, receiving around 120 orders amounting to $3.6bn. Global Sukuk issuance is expected to remain resilient in 2015 at about $100-120bn, according to RAM Ratings.h6. Governance

In a bid to promote long-term investment, the European Parliament’s Legal Affairs Committee has today (May 7) inserted
provisions into the draft revision of the Shareholder Rights Directive that would require EU member states to introduce specific mechanisms to reward long-term shareholders. These mechanisms should include one or more of the following: additional voting rights, tax incentives, loyalty dividends or loyalty shares, they say, in a move that could prove controversial. It would be up to member states to define “long term”, but it should not mean less than two years. The Committee also backed giving shareholders a vote on directors’ pay and a call for large companies should also be required to disclose, country by country, information on tax rulings, taxes paid and public subsidies received. The committee approved the amended rules by 13 votes to 10, and the new text will now be subject to negotiation.

Proxy firms Institutional Shareholder Services (ISS) and Glass Lewis have reportedly recommended that JP Morgan shareholders vote against the bank’s executive compensation plan. Both say executive pay is not fully aligned with performance at the investment bank, which holds its annual general meeting on May 19. Both proxy firms also say the bank needs to appoint an independent chairman.

The Australian Council of Superannuation Investors (ACSI) has reportedly said its members have a role to play in tackling companies that minimize the amount of tax paid in Australia. Speaking at ACSI’s annual conference this week, ACSI President Gerard Noonan was quoted as saying by the Insto Report as saying: “Just like gender diversity on boards where a lack of diversity is after all not illegal, fiduciaries, like super funds, have a role to play in ensuring that the companies in which we invest on behalf of our citizen members display good corporate citizenship.”

The Global Network of Director Institutes (GNDI), the international network of director institutes, has issued in a new paper to guide boards in looking at governance “beyond legislative mandates”. The Guiding Principles of Good Governance were developed by GNDI as part of its commitment to provide leadership on governance issues for directors. The network comprises 15 director institutes and was established in December 2012.

Charity Bank, the UK ethical bank that makes loans to charities and social enterprises, has said it generated 155 loan applications worth £70 million in 2014, more than double the value of applications in 2013. An operating loss of £1,067,000, compared to a loss in 2013 of £804,000. It added that the Mercers’ Charitable Foundation invested a further £1m – increasing its shareholding from £200,000. This investment makes it the third largest shareholder in Charity Bank after Big Society Capital and the Charities Aid Foundation.