RI ESG Briefing, Nov. 18: Green Investment Bank, M&G, CalPERS, EY, European Banking Authority

Environmental

The UK’s Green Investment Bank (GIB) has invested £47m (€65m) in a new “energy from waste” (EFW) plant in Belfast, Northern Ireland. GIB said the plant was fuelled by feedstock derived from household and commercial waste. With a capacity of 15MW, it will supply power to an adjacent wing producing facility owned by Canadian aircraft manufacturer Bombardier. Other financiers of the EFW plant, whose total cost was put at £107m, are project developer RiverRidge Energy and London-based investment firms Equitix and P3P Partners. The EIB also said the plant would create 250 jobs during construction and 20 permanent positions when completed.

Staying in the UK, M&G Investments has provided £247m (€346m) in debt finance for the sake of 33 photovoltaic (PV) parks developed by UK solar power firm Lightsource. In a statement, M&G said the finance was done through the acquisition of a 22-year inflation-linked bond issued by Lightsource. “The investment has been made on behalf of pension fund clients who require inflation-linked income over the long term,” M&G said. Another £37m needed to finance the PV parks was provided by way of a mezzanine loan from Australia’s AMP Capital. The PV parks have a total capacity of 100MW, which M&G said was enough to power 30,600 homes in the UK.

The Connecticut State Treasurer’s Office plans to issue $65m in Green Bonds to provide funding for critical wastewater infrastructure projects statewide through the State’s Clean Water Program. This green bond sale will be the state’s third issuance of green bonds and will finance water pollution control projects for the Mattabassett District (Cromwell), the Metropolitan District Commission, the Greater New Haven Water Pollution Control Authority, and other local Clean Water projects across the State.

Social

The number of investors who use a structured, methodical evaluation of ESG issues has nearly doubled in a year illustrating a growing interest in nonfinancial reporting, says a new study
from consultancy firm EY. The study, Tomorrow’s Investment Rules 2.0, surveys more than 200 major institutional investors globally on the availability and quality of corporate nonfinancial information, and whether they use this information when making investment decisions. It finds that the number of investors who use a structured, methodical evaluation of environmental and social impact information, has risen to 37% from 19.6% last year, when EY quizzed investors on the same information.h6. Governance

CalPERS, the US pension fund giant, is considering changing its proxy voting policies regarding director tenure by voting against director independence if it deems it may be “compromised” after 10 years of service. It says it expects companies to carry out rigorous evaluations to either classify directors as non-independent or provide detailed annual explanation why the director should continue to be classified as independent. In addition, it says boards should fully evaluate their succession planning process surrounding director refreshment to maintain the necessary mix of skills, diversity and experience.

The European Banking Authority (EBA) believes eight banks may have circumvented EU rules regarding bonuses in 2014. At issue are role-based allowances (RBAs) which European banks introduced following a cap on bonuses equalling 100% of base salary. While the banks first treated RBAs as part of base salary, the EBA ruled in October 2014 that they were to be considered a bonus. Despite its ruling, the EBA found that eight of the 35 EU banks it examined paid out EBAs as though they were part of base salary. This would be in addition to bonuses received. The banks were not named, and the London-based EBA said it expected all EU banks to comply with its ruling from this year. Link

Indonesia’s financial regulator has released a new set of guidelines on governance practices for listed companies in Jakarta. The regulations relate to international rules not yet integrated in the local capital market. Nurhaida, the country’s Financial Services Authority, believes the governance move could increase local company competitiveness in the ASEAN region. The targeted companies will have to comply from next year.

BNY Mellon has been appointed trustee, paying agent and bond registrar for $18.5 m in green bonds issued by the Vermont Educational and Health Buildings Financing Agency and Saint’s Michael College. The green bond proceeds will be used to finance the construction of a residence hall for students built on sustainable practices.

Board director compensation at US firms “decelerated significantly” in 2014, increasing a “modest” 6% and reaching $147,551, according to The BDO 600: 2015 Survey of Board Compensation Practices of 600 Mid-Market Public Companies study. “This is half the growth rate seen between 2012 and 2013, when board compensation increased by 12%,” the accounting and consulting firm said, having analyzed proxy statements filed between May 15, 2014 and May 15, 2015. Link