RI ESG Briefing, Nov. 2: New York’s Stringer welcomes Exxon’s proxy access decision

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

Environmental

New York City Comptroller Scott Stringer has welcomed ExxonMobil’s announcement that it will amend its bylaws to adopt proxy access (the right of shareholders to nominate directors). It follows Stinger’s shareholder proposal under his “Boardroom Accountability Project” initiative which received an unprecedented 62% support. Stringer said it was a “significant step to empower shareowners”. He added: “As these companies navigate the transition to a low-carbon economy, proxy access gives investors a critical tool to hold directors accountable.”

A fund managed by BlackRock Real Assets has bought an operational wind project in the UK. It brought the 18MW Batsworthy Cross project in Devon, western England, from innogy, a subsidiary of Germany’s RWE. It means BlackRock Real Assets now owns over 40 renewables projects in the UK across onshore wind, offshore wind and solar.

A research team from Stanford and Yonsei Universities will receive a €12,500 grant and free access to Trucost data after winning an award from the Portfolio Decarbonization Coalition, Sovereign Wealth Fund Research Initiative (SWF RI) and Trucost. The team won with their proposal: “Is ‘Being Green’ Rewarded in the Market? An Empirical Investigation of Decarbonization Risk and Stock Returns.” The Portfolio Decarbonization Coalition was formed in 2014 to help cut greenhouse gas emissions by mobilising institutional investors committed to decarbonizing their portfolios.

The French SIF (FIR) has published a handbook to help investors understand the principles of the new Article 173 regulation on ESG-Climate approach. Article 173-VI of France’s Law on Energy Transition for Green Growth (LTECV) represents a major piece of corporate/investor regulation in the fight against climate change. Link to handbook

Social

Australian super fund HESTA has made a A$6.7m (€4.6m) allocation to a social and community housing project in Queensland – the first investment from its A$30m social impact investment fund it runs with Social Ventures Australia. In an interview with Investment Magazine, the A$35bn fund said it hopes in supporting small, but institutional investment grade social housing deals, it will help foster a pipeline of opportunities at a larger scale.

In a first for Australia, superannuation fund Christian Super has set up Brighlight, a consultancy that will advise asset owners who want to access the impact investment market. The A$1bn super fund is putting A$250,000 from its operational reserves as a loan for seed capital and will be Brightlight’s first client. With the seed loan, Christian Super has 80% equity ownership; the remaining 20% equity belongs to the Brightlight Foundation. According to Impact Investing Australia, Christian Super has completed 17 impact investment deals in seven jurisdictions amounting to more than A$140m.

BNP Paribas and Australian-based insurer QBE are among lenders to the State of Connecticut’s first Pay for Success contract to help at-risk children stay with their families. BNP Paribas acted as administrative agent and lead bank for the credit facility deal which raised $11.2m. Link

The Principles for Responsible Investment has launched a new publication, Investment Policy: Process & Practice: Asset Owner’s Guide to Complete ESG Incorporation, which provides concrete, step-by-step guidance on how asset owners should be integrating ESG.h6. Governance

Ethos says it is “very satisfied” with a court ruling in the long-running saga about control of Swiss industrial group Sika. The pension-backed advisory group said the Zug Cantonal Court has rejected the suit by the Burkard family (descendants of the company founder) against the board of Sika. “This decision confirms the board’s entitlement to limit the voting rights of the Burkard Family for votes related to the sale of their shares to the competitor Saint-Gobain,” Ethos said, adding it allows for the continued independence of the adhesives firm. “In light of the importance of this decision for Sika and the Swiss economy, Ethos will continue as an accessory party in this legal procedure if the Burkard Family appeals the decision of the court.”

South Africa has released an updated “apply and explain” governance code. The King Committee and the Institute of Directors in Southern Africa (IoDSA) released yesterday the latest update to the code, known as King IV. It moves from an “apply or explain” to an “apply and explain” approach, meaning companies have to be more transparent about the implementation of the code’s goal-orientated principles. An added seventh principle is applicable to institutional investors. In addition, issues such as shareholder scrutiny of executive remuneration are addressed.

Former BlackRock portfolio manager Mark Lyttleton has pleaded guilty to two counts of insider trading in a London court, according to media reports. Bloomberg reported he is accused by the Financial Conduct Authority regulator of insider dealing relating to equities trades and a call option between October and December 2011. Facing a possible seven-year prison term, 45-year-old Lyttleton will return for his sentencing on December 21, the report added.

Ministers are reportedly looking at ways to “water down” UK Prime Minister Theresa May’s workers on boards plan. The Financial Times said Business Secretary Greg Clark and Chancellor Philip Hammond have reservations about the plan. One option being looked at, the FT said, was to follow the German model of having worker representatives on a supervisory board, or subcommittee.

ERAFP, France’s public service additional pension scheme, a 100% SRI investor with €26bn in assets, has hired VigeoEiris for two ESG research advisory mandates. The mandates were awarded for four years with a possible two-year extension. The briefs concern two asset buckets: the first for large, mid and small cap equities in Europe, and large and mid caps in North America and the Pacific region, as well as European and global convertible, investment grade and high yield corporate bonds in euro and dollar denominations. The second bucket is for non-corporate bonds issued by OECD member states or regions as well as supranational organisations.

The number of companies in the MSCI Japan Index with zero outside directors fell from 54 in 2014 to three as of August 16, 2016, after the country’s Corporate Governance Code was introduced, although only 8% had a majority independent board, according to MSCI ESG Research. Japan has also set a target of 30% women in leadership positions by 2020, but MSCI said its research had indicated significant barriers to meeting the target in sectors such as Energy and Materials, where roughly 2% of managers are women.