RI ESG Briefing, Dec. 4: National Association of Pension Funds’ engagement survey

Environmental

The Institutional Investors Group on Climate Change (IIGCC) and the Investor Group on Climate Change (IGCC) have said the United Nations’ new Green Climate Fund risks being “strangled at birth” by a call from some countries that the UN should be able to vet any investment made by the fund, according to a Financial Times report. This would be untenable for private sector investors, the paper quoted IIGCC and IGCC heads Stephanie Pfeiffer and Nathan Fabian as saying.

Fund manager Old Mutual’s R3.3bn (€288m) Infrastructural, Developmental and Environmental Assets (IDEAS) Managed Fund, South Africa’s largest domestic infrastructure equity investor, is a consortium member of the 138MW Jeffreys Bay Wind Farm in the Eastern Cape being constructed by developer Mainstream Renewable Power. Mainstream has signed the key agreements with the South African government for a total of 238MW of wind and solar projects in the country with a combined investment of over €500m. Announcement

Australian solar companies Solar Guys International and Mitabu have secured funding for their SGI-Mitabu consortium through a green Islamic bond, or Sukuk, for 50MW of photovoltaic projects in Indonesia. The $100m Green Sukuk is the first tranche of what will be a total of $500m.

Social

US-based exchange operator NASDAQ OMX has become the first North American exchange to join the UN Global Compact, the corporate sustainability framework. “It is becoming increasingly important for businesses of all sizes to set sustainability goals and work towards fulfilling obligations to the larger global community,” says Sandy Frucher, Vice Chairman of NASDAQ OMX. “There is no rulebook on how companies should do this. But at NASDAQ, we aim to provide guidance to our listed companies on how they can begin to decrease their environmental footprint and increase their impact as responsible global leaders.”
Just 30 companies in Australia’s benchmark ASX100 index had their sustainability reporting assured by independent third parties, according to new findings from the Association of Chartered Certified Accountants (ACCA) and the Net Balance Foundation cited by the Sustainability Report. In sum, 85 ASX100 firms made some form of sustainability disclosures during the 2010/2011 financial year.h6. Governance

The National Association of Pension Funds, the UK trade body, says pension funds are increasingly taking up their stewardship responsibilities. Its latest Annual Engagement Survey showed that 71% of respondents had taken the stewardship activities and policies of asset managers into account when selecting them (2011: 48%). And 90% said they had reviewed their asset managers’ application of the stewardship policy. The survey also revealed that pension funds exercised their votes more often and in an increasing number of jurisdictions, with 93% of them having cast their votes this year. But the NAPF said there was still room for improvement, “particularly among investment consultants”.

A new position paper from a group of leading European investors has highlighted fears over accounting standards. The group of 10 signatories, with combined assets of approximately €340bn warn that current accounting standards fail to give sufficient priority to prudence, undermining investors’ ability to hold company executives to account and weakening companies’ long-term decision-making. “Our wish in publishing this paper is to highlight that it is not just regulators who need prudence in company accounts, but also long-term investors who rely on accurate numbers to hold executives to account,” said one of the paper’s authors, Ben Levenstein, Head of UK Equities at USS Investment Management. Link

A group of investors led by the Arkansas Teacher Retirement System, Ohio Public Employees Retirement System and the state of Oregon accuses J.P. Morgan Chase of turning its chief investment officer into a “secret hedge fund” according to reports. The CIO cost the bank around $6bn in losses in the so-called “London Whale” scandal. The lawsuit covers investors who bought the bank’s shares February 2010 and May this year.

The European Union authorities have agreed to introduce limited controls on credit ratings agencies, following criticism of their role in global financial crisis. “Credit rating agencies will have to be more transparent when rating sovereign states, respect timing rules on sovereign ratings and justify the timing of publication of unsolicited ratings of sovereign debt,” Internal Markets Commissioner Michel Barnier said.