RI ESG Briefing, Nov. 30: AP2, Nordic pension funds, UAW trust, MPs’ pension fund, Exxon

The round-up of the latest ESG developments


Andra AP-Fonden (AP2) the Swedish state buffer fund, has released a publication regarding its approach to the transition towards a low-carbon economy, saying it has followed up its analysis of financial climate risks in power utilities, “deciding to divest” a further 10 companies that it believes are exposed to significant financial climate risks. “I hope this publication will provide some insight into why and how AP2 works with climate issues,” said AP2 CEO Eva Halvarsson. In total, AP2 has divested from 76 companies due to financial climate risks.

A group of Nordic pension funds have invested DKK409m (€54.9m) in a US onshore wind farm project, according to IPE.com. It said PensionDanmark, Lægernes Pension, KLP and others are backing a fund from Copenhagen Infrastructure Partners (CIP) to invest via mezzanine financing in the Fluvanna I facility in Texas.

A row is brewing between British parliamentarians and the trustees of their pension scheme over its refusal to disclose the holdings of the £600m fund. The Financial Times reports that a cross-party campaign of 32 MPs wanting to know the scheme’s exposure to fossil fuel companies have been told by the chair that it was no longer “possible for the trustees to engage in further prolonged discussion”. Caroline Lucas, co-leader of the UK Green’s Party, and Shadow Secretary for International Trade Barry Gardiner have accused the scheme of behaving in an opaque and obstructive manner.

Michael Bloomberg says it may be down to city mayors to push the climate change agenda in the US if Donald Trump backtracks on the country’s commitments under the Paris Agreement. In a piece penned last week, the former mayor of New York says he hopes Trump will “recognize the importance of the issue”, but that “no matter what happens in Washington… we will meet the pledges that the U.S. made in Paris”.


The Inter-American Development Bank and consulting firm Mercer have published a paper entitled Building a bridge to sustainable infrastructure. The study highlights 30 ongoing initiatives that aim at solving in a sustainable way the so-called global infrastructure investment gap that has been put at $3trn which cash-strapped governments will not be able to fund. In the case of Latin America, the IaDB estimates that the gap is even more significant. The joint report categorizes those 30 initiatives in three categories: influencers (thought leadership), mobilizers (investment) and tool providers (analysis).

The UK government has raised the amount of investment that social enterprises can raise through social investment tax relief (SITR) to £1.5m from £1m. SITR allows investors in asset-locked social organisations in business for seven years to claim 30% relief against income tax. Simon Rowell, Senior Director Strategy and Market Development, said: “We welcome the modest increase to the size of investment able to be raised using SITR. It will enable a range of younger, dynamic charities and social enterprises, as well as recent spin-outs, to use capital to boost their operations to reach more people and try new business models.”

Workers at building materials firm LafarageHolcim plan a day of action in Europe, Africa, Asia and the Americas to call attention to what they say are rights violations at the company. The day of action against the Swiss listed firm is coordinated by global union federation, IndustriALL and will take place on 9 December in advance of International Human Rights Day on 10 December. Unions are demanding that LafargeHolcim enter into meaningful negotiations with them about the future of labor relations and social dialogue.h6. Governance

The UAW Retiree Medical Benefits Trust and a coalition of 11 investors representing $500bn in assets have released a guide for institutional investors seeking to engage listed companies on capital allocation decision-making, with an emphasis on share buybacks. The document, Bridging the Disclosure Gap: An Engagement Guide is designed to foster better communication between investors and portfolio companies while encouraging more transparency around the board’s role in overseeing share buybacks. The Guide is based on findings from investor engagements with 12 public companies in 2016.

Law firm Zamansky has announced an investigation of Exxon Mobil on behalf of its current and former employees over the Exxon Savings Plan for “potential violations” of the Employee Retirement Income Security Act. Zamansky said ERISA imposes fiduciary duties to prudently manage and invest plan assets, adding: “We are investigating whether these duties were violated by the continued offering of the Exxon stock from January 2016 through October 2016 as an investment option for employees.” The firm cites a November 7 securities class action lawsuit filed against Exxon and its CEO and CFO that alleges that oil giant “fraudulently overstated its oil and gas reserves, their value and the costs of extraction, in view of internal reports it had on the impact of global climate change”. Link

Fund management giant BlackRock has reportedly “clashed with its shareholders” after repeatedly voting against environmental resolutions at company AGMs. The Financial Times reported that a group of its shareholders have accused BlackRock, the world’s largest fund manager, of putting its reputation at risk because of its “perplexing and troubling” votes on environmental and social issues. The FT quoted a BlackRock spokesperson as saying it prefers to engage with firms to understand their stance on issues like climate change.

It is now “incumbent on both companies and us as investors to respond to the challenge of excessive executive remuneration”. The words of Leon Kamhi, Head of Responsibility at Hermes Investment Management, on the latest corporate governance reform plans from the UK government. A feature of the plans is the disclosure of pay-ratios between CEOs and staff and Kamhi added: “Whilst it is not a panacea and the appropriate ratio will differ from company to company, increased transparency provided by the publication of the CEO-to-median-employee pay ratio is to be welcomed as it puts pressure on boards to explain the rationale behind the level of executive remuneration and disparities in pay across the organisation.”

The India UK Financial Partnership has published a report paving the way for a potential UK-inspired Stewardship Code in the country. The report, however, doesn’t make specific content recommendations “because that is something for the Indian Government and regulators to evolve in consultation with stakeholders”. TheCityUK, a membership body which lobbies on behalf of the financial industry, provides the UK secretariat to IUKFP as part of its India Market Advisory Group.

ESG intelligence firm RepRisk has announced a data partnership with Bureau van Dijk, the corporate information provider known for its flagship Orbis database.