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RI ESG Briefing, Nov. 29: LGIM and Aviva Investors back world’s biggest offshore wind farm

The latest ESG market developments

Environmental

Legal & General’s LGIM Real Assets says it has provided, on behalf of its clients including Legal & General Retirement Institutional (LGRI), c.£370m in long-term financing to support Global Infrastructure Partners’ 50% acquisition of the Hornsea 1 offshore wind farm from Denmark’s Orsted Wind Power. Hornsea, which will be the world’s largest offshore wind farm once complete, is located 100km off the North-East coast of Britain in the southern North Sea. Separately, Aviva Investors announced a £400m investment to help fund the construction via fixed-rate and inflation-linked bonds.

The Canada Pension Plan Investment Board (CPPIB) has made an investment in electric vehicle charging network ChargePoint. The preferred share investment was part of a US$240m funding round led by Quantum Energy Partners and CPPIB said it was “an attractive opportunity to invest in a market-leading business with room for expansion that aligns with our growing focus on the energy transition”.

European Central Bank President Mario Draghi has referenced the ECB’s progress on sustainability matters in response to questioning from Green MEP Philippe Lamberts. Draghi said: “this discussion has started in the ECB’s governing council and it is my intention to continue it.” It comes as the European Parliament’s Committee on Economic and Monetary Affairs has adopted its annual report on the ECB with the inclusion of a section on sustainability calling it to integrate the Paris agreement and ESG principles. The final report will be voted on by the whole European Parliament in mid-January.

Social

The International Council on Mining and Metals industry group has announced that its members will have to commit to implementing the United Nations Guiding Principles on Business and Human Rights. The performance expectations will apply to all ICMM’s company members who manage almost 650 assets in over 50 countries, covering nearly half of the world’s iron ore and copper production, and over a quarter of all mined commodities by value.

Zero hours contracts are the subject of a briefing by fund firm EdenTree Investment Management. “As responsible investors, we regularly see clients interested in our views on issues which can occupy remarkably grey ethical areas,” it says.

INSIKT, a certified Community Development Financial Institution using technology to disrupt the predatory lending industry, has announced the closing of its largest social impact securitization of $50m. San Francisco-based impact investment firm Community Investment led the issuance to banks, credit funds, family offices and other social impact funds.

A fund manager at Legal & General Investment Management has explained why he gave up tobacco. “An exciting new range of products and much-needed switch to a less harmful business model is not necessarily good news for shareholders in the tobacco companies,” writes Nigel Masding, Fund Manager for the Real Income Builder (RIB) strategy, in LGIM’s Future World blog.h6. Governance

A group of 35 institutional investors representing nearly $41.2bn in assets have written to Duke Energy calling on it to initiate an independent investigation to determine the extent of possible contamination from recent breaches of the company’s coal ash ponds during Hurricane Florence. And As You Sow and the Daughters of Charity have filed a shareholder resolution requesting that Duke explain how it will mitigate public health risks of its coal operations as climate change continues to spur more frequent extreme storms and flooding.

CalSTRS, the $220bn Californian teachers’ pension fund, has updated its proxy voting guidelines to include the management of human capital and virtual annual meetings for the 2018-19 reporting year. The revisions to the scheme’s Corporate Governance Principles (CGP) document were approved at a November 7 meeting of the investment committee.

Hong Kong’s financial sector advisory body the Financial Services Development Council (FSDC) has issued a research report setting a strategy for “fostering the development of an ESG ecosystem” in Hong Kong. One key recommendation is for the Hong Kong Monetary Authority to scale up ESG requirements on their external investment managers.

The UK Investment Association, the funds industry body, is launching a consultation with its members next month on a definitional framework around SRI investments, Will Oulton, director of responsible investments at First State Investments has said. Oulton is chairing an IA Working Group on Standard and Definitions as part of its recently formed SRI committee. Oulton said the Working Group was looking at whether there could be something created for the UK under the auspices of the IA to classify/label different funds on how “ESG-heavy or ESG-light” they were. He said the issue was becoming more important in light of the European Union working on a sustainable taxonomy.

Californian pension giants CalPERS and CalSTRS were among the 15% of investors who supported a resolution on human rights in supply-chains at Australian retail giant Woolworths, which was filed for a second year in a row following the company’s failure to implement commitments it made last year to avoid a vote at its 2017 annual meeting. The resolution, which was filed by the Australasian Centre for Corporate Responsibility (ACCR), was also supported by ACSI, the body that represents Australian superfunds that oversee A$647bn in assets. US proxy advisors Glass Lewis and ISS both recommended votes against the resolution. But UK-based global proxy services provider PIRC supported the resolution.

The UK government is introducing new regulations requiring companies to report annually on how they are engaging with employees and other stakeholders under Section 172 of the Companies Act, BEIS Permanent Secretary Alex Chisholm has said. In a speech at the Investment Association this month, Chisholm said the government had accepted concerns that there is currently no systematic and consistent way of assessing how companies are meeting their Section 172 duty.