RI ESG Briefing, November 26: World Bank pension funds sign up to PRI

Environmental

A group of leading 39 French companies have pledged to invest at least €45bn from 2016 to 2020 in renewable energy and low carbon technologies, according to a Reuters report. The group includes oil giant Total, utility EDF, telecoms operator Orange and bank Societe Generale would also would provide bank and bond financing of at least €80bn for climate change projects.

The University of Ottawa has reportedly become the first university in Canada — and only the second in the world — to sign the Montreal Carbon Pledge, which commits it to calculating and disclosing the carbon footprint of its C$2bn investment portfolio. The pledge was reported by the Ottawa Citizen and is part of uOttawa’s existing commitment to cut its greenhouse gas emissions by 34% by 2020.

Greencoat UK Wind, the renewable infrastructure fund, has agreed to buy the 30MW Stroupster Wind Farm in Caithness in northern Scotland from German developer BayWa for a total £85m. The acquisition will include the prepayment of existing indebtedness and will be funded by Greencoat’s acquisition debt facility provided by RBC, RBS and Santander.

Social

Investors in pharmaceutical companies should focus on value creation from innovative drug development – rather than “mega-deals that lower tax rates”. That’s the view of Robeco Equities Analyst Stijn Vanacker. It comes after US drug giant Pfizer agreed on November 23 to pay $160bn for Irish company Allergan in the largest deal ever in the healthcare sector. Pfizer is reversing into Allergan – a technique where the target effectively buys the bidder – to allow it to be domiciled in Ireland and take advantage of lower tax rates, Vanacker writes.

An institutional investor based in Switzerland has tendered a €50m ESG equity mandate using the IPE-Quest mandate matching system. According to search QN-2137, managers are expected to outperform the benchmark, after costs, by at least 100 basis points over a rolling three-year period, IPE said. The investor prefers the “integration approach” to ESG and calls for no “thematic ESG products”, it added. The deadline for applications is December 7.

HSBC UK has set a target to appoint the same number of women as men to senior manager roles, according to the Financial Times. The bank wants half of its 5,500 senior management roles in the country occupied by women, the FT reported, though it said HSBC hasn’t set a deadline. Currently, less than a third of such roles are held by women, it added.h6. Governance

The World Bank Group Staff Retirement and Benefit Plans have become signatories to the United Nations-supported Principles for Responsible Investment (PRI). “As long-term investors, we are by nature focused on material ESG factors and the responsible stewardship of our investments, so we see signing on to PRI as a prudent, logical step,” said Bertrand Badre, World Bank Group Chief Financial Officer and Chairman of the Pension Finance Committee. Separately, the United Nations Foundation, founded with a $1bn grant from CNN founder Ted Turner, has also signed up to the PRI. The foundation was created in 1998 by the media mogul – who still chairs its board. Its board includes figures such as Jordan’s Queen Rania and former UN Secretary-General Kofi Annan.

Canada’s Alberta Investment Management Corporation (AIMCo) has announced that it and the Virginia Retirement System have successfully recovered USD204.4m on behalf of investors in the bankrupt broker-dealer MF Global. They serve as Co-Lead Plaintiffs in the class action securities litigation In re MF Global Holdings Limited Securities Investment Litigation, having prosecuted the case for over three years. AIMCo is represented by Bleichmar Fonti Tountas & Auld and Virginia by Bernstein Litowitz Berger & Grossmann.

UK retail giant Tesco has reportedly agreed to pay $12m to settle a class-action lawsuit arising from the £263m profit overstatement scandal of 2014 – though it is not admitting liability. The Financial Times said the agreement with holders of Tesco’s American Depositary Receipts (ADRs) was equal to around 2% of the group’s shares and that it is subject to confirmation by a federal court in New York.

The Japan Exchange Group (JPX), which operates the Tokyo and Osaka exchanges, in light of Japan’s Corporate Governance Code, has committed to “properly developing” its corporate governance system. It would do this by “developing a highly effective system of checks achieved through tension and harmony between the management and independent outside directors while striving to facilitate the smooth sharing of information and coordination between them”.

Hong Kong-based tycoon Li Ka-shing has had a plan to merge his Power Assets Holdings (PAH) and Cheung Kong Infrastructure operations scuppered by investors following critical advice from governance research firms, according to reports. The Economist said about half of the minority shareholders in PAH, “emboldened” by reports from Institutional Shareholder Services and Glass Lewis, voted against the plan.

Pacific Investment Management Co (PIMCO) and other investors including TIAA–CREF, and affiliates of Prudential Financial Inc. and Aegon’s Transamerica have reportedly sued Citigroup over the bank’s alleged failure to monitor “toxic securities” backed by over $13.8bn of mortgage loans. Reuters, citing a complaint filed in a New York state court in Manhattan, said it resulted in $2.3bn of losses. It said a Citigroup spokeswoman declined to comment.