RI ESG Briefing, Nov. 8: Canadian pension giant buys into US wind farms

The round-up of environmental, social and governance news

Environmental

The infrastructure arm of the C$55bn (€43.3bn) Ontario Municipal Employees Retirement System (OMERS), Borealis, has bought a 49% stake in a US wind farm portfolio for US$230m. It bought the four-farm, 599MW portfolio from wind energy firm EDP Renováveis SA. “Our investment in this portfolio marks a significant commitment by Borealis to the renewables sector, and is the type of large-scale infrastructure asset we look for to generate stable and consistent returns for the pension plan,” said Michael Rolland, President and CEO of Borealis.

German development bank KfW says it financed 36% – or €8.3bn – of all investments in renewable technology made in the country last year, adding that once these projects come on stream, they will reduce carbon emissions by seven million tonnes annually. And it said that for the first time in 2011, it had provided €3bn in loans for offshore wind parks to be realised this year and next. The bank said its loans to the renewable sector in 2011 enabled near 60,000 jobs to either be preserved or created. Link

The European Investment Bank has agreed to provide €50m for South Africa’s Khi Solar One Project – the first large concentrated solar power project in sub-Saharan Africa and one of the first private sector renewable energy projects in the country. The project will help South Africa meet renewable energy targets by increasing renewable energy output, the EIB said. The project in the Northern Cape Province consists of a 200m high tower and more than 4,500 heliostat moving mirrors. Other backers include the development institutitons the IFC, FMO, Proparco, IDC and the Development Bank of South Africa.

Social

Eurosif, the European Sustainable Investment Forum, has released its third study on High Net Worth Individuals (HNWIs) and Sustainable Investment. The study, conducted with the support of Bank Sarasin, shows that sustainable investments by European HNWIs has increased by nearly 60% over the past two years, compared to an 18% increase in overall European HNWI wealth over the same period. Sustainable investments rose to €1.15trn compared to €729bn in 2009. “The value proposition of sustainable investment and impact investing, combining both financial interests with sustainability concerns, make these strategies a valuable fit with any HNWI investment portfolio,” said Eurosif Executive Director François Passant.h6. Governance

The UN-backed Principles of Responsible Investment (PRI) has issued a discussion paper on hedge funds. It’s been produced in response to interest from signatories about how responsible investment relates to alternative investment strategies and instruments, including high frequency trading, leverage, shorting and derivatives. “There is currently no clear consensus on what being a responsible investor in hedge funds actually entails,” said Rob Lake, Director of Responsible Investment at the PRI. “This paper marks a first step in stimulating debate.” The paper had input from representatives from: Albourne Partners, APG, BT Pension Scheme, Church of England National Investing Bodies, the Environmental Investment Partnership, Harcourt Investment Consulting, Hedge Fund Standards Board, Hermes EOS, Highland Good Steward Management and the Universities Superannuation Scheme.

US-based governance research firm GMI Ratings has issued a new report on Goldman Sachs, following the investment bank’s appointment of Mark Tucker as an independent director. “Tucker isn’t the ideal candidate,” GMI says. “As the CEO of AIA Group Ltd., the insurance company that American International Group Inc. (AIG) spun-off in Asia, he is unlikely to have sufficient time to fulfil his duties for Goldman.” GMI rates Goldman an “F” on its environmental, social and governance risk overall.

Law firm Schulte Roth & Zabel (SRZ) has released its 2012 Shareholder Activism Insight Report in association with the Financial Times’ Mergermarket division. It contains interviews with senior corporate executives and activist investors on shareholder activism and their expectations for the next 12-24 months. Link

UK pension funds now hold more bonds than equities for the first time since the birth of the “cult of equity” of the 1950s, according to a report in the Financial Times. The switch to fixed income has been underway since around 2002. “This is a watershed moment for UK pensions,” Alasdair MacDonald, head of investment strategy at consulting firm Towers Watson told the paper.

China: sovereign fund China Investment Corp’s Central Huijin Investment arm aims to play a big role in financial reform by buying stakes in State-owned financial institutions as “an active shareholder”, according to a China Daily report. It quoted Chairman Lou Jiwei as saying Central Huijin doesn’t intervene in the day-to-day operations of the institutions. “Instead, Huijin’s practice to guarantee the rights of the contributors by relying on corporate governance channels.”