RI ESG Briefing, November 16: Maryland, Wells Fargo, PRI, Rabobank, PLSA, BankTrack

Environmental

The $45bn Maryland pension fund is reportedly analysing climate risk of its portfolio and how to shift more money into environmentally friendly industries. In a meeting with Maryland politicians, Andrew Palmer, who oversees the portfolio, said investment strategy hasn’t changed but the fund is incorporating more questions about climate change impact into decision-making.

The Principles for Responsible Investment (PRI) has launched a new Green equity investing guide – showcasing 10 case studies of investors integrating green risks and opportunities. It was unveiled during COP22 at the China Climate Finance Forum. It comes as the PRI has announced that new signatories include Sweden’s SEB Life and Pension and Ahold Pensioenfonds of the Netherlands.

A group of banks including Rabobank, Norddeutsche Landesbank Girozentrale and others have supported US solar firm sPower with a $434m tax equity investment and construction/term loan. Salt Lake City-based sPower, the largest private owner in the US of utility-scale solar operating assets, said the cash would be used to finance a group of three solar projects that, when fully operational, will generate 183.4MWdc of renewable energy. Announcement

Social

Rabobank has reportedly lent money to a social investment supporting brothels in Amsterdam’s red light district. The Start Foundation, which helps vulnerable people find employment, has bought four buildings from Amsterdam’s city council that it will rent to My Red Light, a new charity supporting sex workers. A Rabobank spokesman told the Volkskrant it has agreed to lend money to furnish rooms and build the website. “We believe in the empowerment of sex workers,” a spokesman told the paper.

The Guernsey Chamber of Commerce has launched an initiative to develop impact investment on the island, a British dependency. Impact Guernsey involves business leaders, the financial services community and representatives from government and the Guernsey Financial Services Commission. Justin Sykes, founder and managing director of impact investment consultancy Innovest Advisory, will chair the initiative. Home page

Some 81% of social organisations in the UK believe impact measurement is crucial or important to improve their business finds a new survey released at the Good Deals Conference. The Social Impact Survey, which is supported by The Esmée Fairbairn Foundation, also found a majority (85%) found impact measurement to be challenging but worthwhile, however 11% of respondents found it too complex and difficult.

The Omidyar Network, the foundation and impact investment firm started by eBay founder Pierre Omidyar, has published a framework to help other impact investors evaluate the financial and social impact of their investments. Matt Bannick, managing partner at Omidyar Network said: “This report is intended to move impact investing beyond the long-standing and unproductive debate that impact investors can have either financial return or social impact, but not both.” The report, “Across the Returns Continuum,” appears in the Winter 2017 issue of the Stanford Social Innovation Review.h6. Governance

It’s been reported that several large shareholders in scandal-hit US bank Wells Fargo are seeking changes on the board of directors. Reuters said four top investors voiced concerns about the 15-member board’s response to the crisis, its size, directors’ responsibilities — and external commitments. The news agency said among the investors who responded were the California State Teachers’ Retirement System (CalSTRS), New York City Retirement Systems, union-affiliated CtW Investment Group and fund managers Gardner, Russo & Gardner and Gamco Investors. Reuters added that a Wells Fargo spokesman declined to comment.

UK industry group the Pensions and Lifetime Savings Association (PLSA) has written to the chair of every FTSE350 company asking them to share fuller information with investors about the “culture and working practices” of their workforce. In a letter, supported by Pensions Minister Richard Harrington, Newton Investment Management and USS Investment Management, the PLSA highlights how the management and engagement of the workforce can have a material effect on a company’s performance over the long-term.

The Investment Association, the UK’s funds industry body, has launched a five-year initiative to increase diversity. The IA said the Diversity Project – supported by many leading investors – “marks a significant step to accelerate progress in encouraging a more inclusive culture in the investment profession over the next five years”. Development of the Project’s strategy will be led by a CEO and Chair Advisory Council, and implemented through a Steering Committee. Andy Haldane, Chief Economist at the Bank of England, backed the initiative with a keynote speech at its launch event in London this month.

RBC Global Asset Management has launched its inaugural survey on the opportunities and obstacles in ESG investing. It finds less than a third of investors quizzed consider ESG investing as a source of alpha [market outperformance] and that 40% do not believe ESG is a risk mitigator. , Senior Portfolio Manager Ben Yeoh said: “It is striking to see that asset owners remain doubtful of ESG’s efficacy even as so much capital pours into ESG-related investments. Clearly, many investors have yet to understand the financial benefits of ESG.”

NGO BankTrack has called for improvements to the Dutch Banking Sector Agreement on International Responsible Business Conduct Regarding Human Rights. The agreement, developed this year by the Dutch Banking Association, the Dutch Government, trade union federations and civil society organisations, lays out expectations around due diligence, complaints procedures and information sharing – among other things – to help banks meet their human rights responsibilities under the UN Guiding Principles and OECD guidelines. It is signed by 13 banks including Rabobank, ING, ABN Amro and Triodos, and is open to further signatories from around the world. BankTrack describes the document as “an ambitious agreement with some far-reaching commitments”, but says it should insist upon the implementation of grievance mechanisms, and extend its considerations beyond project finance and corporate loans.

The Greens and European Free Alliance (EFA) group in the European Parliament has called on German industrial group BASF to immediately stop what they labelled “tax dumping”. In a damning report entitled Toxic Tax Deals: when BASF’s tax structure is more about style than substance, the group said close to €1bn tax revenues have been “smuggled” using tax schemes in the Netherlands, Malta and Belgium.