RI ESG Briefing, Nov. 27: PepsiCo facing shareholder resolution on land rights

Environmental

Oxfam, the AFL–CIO, Trillium Asset Management and several other investors today have filed a shareholder resolution urging PepsiCo to account for land rights violations in its supply chain. The resolution will be voted on at PepsiCo’s annual general meeting in early 2014. Thirty-three investors representing more than $1.4trn in assets have issued a statement to companies in support of Oxfam’s Behind the Brands campaign.

New York State Comptroller Thomas DiNapoli and CalPERS CEO Anne Stausboll have explained the rationale for why they decided to join 70 leading investors representing $3 trillion in assets in asking more than 40 of the world’s largest fossil fuel companies to assess how their business plans fare in a low-carbon future. “It’s prudent for investors, especially long term investors such as ourselves, to be asking what plans are in place for dealing with these trends and it’s encouraging that many of the companies we have talked with so far are taking our request seriously,” they wrote in the Huffington Post.

The Carbon Tracker Initiative, the environmental think tank, says approval of the controversial Keystone XL pipeline – linking Alberta with Nebraska – would have only a “marginal positive impact” on the economics of the Canadian oil-sands industry. But it could trigger a rush of high-risk investment into additional projects that would rely heavily on rising oil prices. The findings are in a new report called Keystone XL Pipeline: A Potential Mirage for Oil-sands Investors.

The Institutional Investors Group on Climate Change (IIGCC), which represents 85 of Europe’s largest investors, with assets of around €7.5trn, has responded to the conclusion of the UN climate change talks in Warsaw. The group is urging the European Union to “lead by example” ahead of a global deal in 2015 and implement strong climate policies which drive low-carbon investment.

Social

New York City Comptroller John Liu has called on the boards of two advertising firms – Omnicom and Publicis – to disclose the makeup of their employees by gender and ethnicity, before shareowners vote on their proposed merger. “These companies operate in an industry with an abysmal record of hiring and promoting women and minorities, particularly African Americans. They claim they care about diversity and are making progress, but unless they disclose the actual makeup of their employees it’s impossible to know whether it’s just empty talk,” Liu said.

Stiftung Abendrot, the CHF1.17bn (€953m) Swiss sustainable pension fund, reported a return of just under 5% for the period of January to October 2013 on the back of strong performance by its equity holdings. Launched in 1985, Abendrot is a multi-employer scheme which says its entire portfolio is invested sustainably. The scheme’s equity and bond managers are J. Safra Sarasin and Bank Julius Baer, which employ a sustainable filter that excludes bonds and stocks deemed unsustainable in Abendrot’s view.

Austria-based Erste Asset Management has put consumer products group Unilever on its “watch” list, after it declined to answer questions about obesity issues from its sustainability team, according to a Financial Times report. Investors had to be aware that companies in the food sector bore “a certain degree of responsibility” Erste’s Chief Investment Officer Gerold Permoser was quoted saying.h6. Governance

An analysis done by German fund association BVI has revealed an uptick in violations of corporate governance standards during supervisory board elections at listed German firms. In a first for the association, the BVI assessed the extent to which 160 small- to large-cap German firms upheld its governance standards. Those standards are based on Germany’s corporate governance code, and the association was supported in its analysis by German proxy firm IVOX. The BVI’s members hold €80bn worth of stock from German firms. A key finding was that in 2013, there were 56 violations of BVI standards with respect to supervisory board elections – 19 more than in 2012.

Investors with 20% of South Africa-based energy group Sasol have joined the Public Investment Corporation (PIC) in a revolt against the company’s pay policy at its annual meeting, according to reports. PIC, the company’s largest investor with a 13.5% stake, confirmed last week that it voted against the policy. PIC has been voting against remuneration at a series of extractive companies’ AGMs.

Staying in South Africa, UK-based shareholders in Lonmin are reportedly concerned about the mining giant’s handling of a strike that ended in the Marikana massacre. The Observer quoted Unison, the trade union which has a stake in Lonmin via its pension fund, as saying trustees of the scheme said they would bring the matter at a meeting with fund managers and “challenge the Lonmin board about the events at Marikana”. The Church Commissioners’ Ethical Investment Advisory Group has also written to Lonmin to express its concern.

Canadian pension giants British Columbia Investment Management Corp. and the Ontario Teachers’ Pension Plan have made proposals to the Ontario Securities Commission on increasing corporate boards’ gender diversity, according to Pensions & Investments. The former wants 30% of each board to be female, while the latter is calling for there to be at least three female directors on the board of all publicly traded companies.

Also in Canada, the Social Investment Organization (SIO), the membership network for responsible investment, has voted to change its name to the Responsible Investment Association (RIA). The body last month said it was laying off staff to shore up its finances.

The Principles for Responsible Investment (PRI) has welcomed clarification from the European Securities and Markets Authority (ESMA) on ‘acting in concert’ rules on investor cooperation. “In order to effectively advocate for better corporate governance, disclosure and management of ESG issues, much more collaboration between institutional investors is required,” said Helene Winch, the PRI’s Director of Policy and Research.

The Dubai government reportedly plans to set up a centre in the second quarter of next year to develop corporate governance standards based on Islamic values, guiding companies in both financial and non-financial activities. Gulf Business was quoting Department of Economic Development official Ali Ibrahim.