RI ESG Briefing, Oct. 10: Malaysian central bank sees role for Islamic finance in sustainability

Environmental

The Malaysian central bank, Bank Negara Malaysia, has called on Islamic banks to play a role in ensuring environmental sustainability. Deputy Governor Datuk Muhammad Ibrahim, speaking at Green Financing: Discover Green Technology Industry in Malaysia event, said: “Environmental protection and sustainability should be part of the Islamic finance agenda to ensure the fulfillment and establishments of the spirit of Islamic tenets.”

Environmental campaign group the WWF says it welcomes reports that the new Norwegian government is considering establishing a renewable investment mandate for the country’s Global Pension Fund. The minority conservative Government of Norway this week released its official platform, which included for the first time a commitment to consider establishing a mandate for the giant fund to invest in renewable energy. “Norwegian savings could change the world,” said Nina Jensen, CEO of WWF-Norway. “This would provide a powerful boost for the shift from fossil fuels to renewable energy.”

The European Bank for Reconstruction and Development (EBRD) is supporting a new 18MW biomass plant in Ukraine planned to become fully operational by mid-2014. The project is financed by the EBRD’s Ukraine Sustainable Energy Lending Facility (USELF), an investment programme of €70m comprising €50m from the EBRD and €20m from the Clean Technology Fund.

Social

The Global Impact Investing Network (GIIN), which promotes social investment, has released a briefing on so-called “catalytic first-loss capital” in impact investing transactions. It refers to socially and environmentally-driven credit enhancement provided by an investor or grant-maker who agrees to bear first losses in an investment in order to catalyze the participation of co-investors. The issue will be discussed and distributed at the first-ever GIIN Investor Forum, a global gathering of nearly 400 impact investors in London this week.

Threadneedle Investments has opened an office in the Malaysian capital Kuala Lumpur to help it roll out Shariah-compliant investment capabilities for institutional investors in the region, according to a Pensions & Investments report citing the UK-based fund manager. Syed Elias Alhabshi will chair the office while Mohd Farid bin Kamarudin joins as CEO and senior fixed income fund manager.h6. Governance

The Council of Institutional Investors (CII), the US industry body representing pension funds and other investors with combined assets exceeding $3trn, says its members have approved best-practice corporate governance policies related to the use of universal proxy cards in contested board elections and to director tenure. CII members believe that a universal proxy card that lists all management and dissident director nominees would let shareholders vote for whomever they wish to represent them on corporate boards. On tenure, CII members believe corporate boards should weigh a director’s years of service when determining whether they are independent. Link

Governance researcher Institutional Shareholder Services (ISS) has advised shareholders in Twenty-First Century Fox to vote against the re-election of Chairman Rupert Murdoch and other board members at the media group’s annual meeting later this month, according to reports. ISS is also calling for an independent board chairman to replace Murdoch, Reuters reported ahead of the AGM on October 18.

Canadian governance group Groupe Investissement Responsible (GIR) has detailed its attendance at the annual meeting of Quebec-based convenience store group Alimentation Couche-Tard last month. GIR says: “Our conclusion is clear: Couche-Tard’s AGMs are of little use to shareholders, who still have a lot of work to do before they will be able to make themselves heard by a board that is seemingly deaf to dialogue and controlled by only a handful of directors.”

The number of large American companies ranked highest for their political disclosure and accountability policies and practices has grown by more than 150%, according to the third annual CPA-Zicklin Index of Corporate Political Accountability and Disclosure. The measure is put together by the Center for Political Accountability in conjunction with the Carol and Lawrence Zicklin Center for Business Ethics Research at the Wharton School of the University of Pennsylvania.

A new analysis of executive pay at 98 listed Italian companies in 2012 has been published by Frontis Governance, the proxy advisory firm set up in 2011. Rome-based Frontis says: “The purpose of the study is not to define whether an overall compensation is too high, but, as the title states, to evaluate its real alignment to the company’s goals: are remunerations effectively structured to pay the performance?”