RI ESG Briefing, Oct 18: The news you need to know: bite-sized.

Environmental

The California Public Employees Retirement System (CalPERS), the $340bn giant US pension fund, has reportedly announced plans to vote against the Board of Australian energy giant, Origin, and support three climate change-related resolutions at the company’s annual meeting. The resolutions were filed by environment finance campaigning group, Market Forces. It is also reported that AustralianSuper and the Australian Council of Superannuation Investors have also thrown their support behind CalPERS’ initiative.

A new report warns that the Big Six UK utility companies have undue influence on UK energy policy and regulation, hindering the clean energy transition and posing significant investor risk. The report, Gridlock in UK Power Markets, written by InfluenceMap and commissioned by Friends Provident Foundation, finds misalignment between top-level statements of companies and their actual behaviour. For example, E.ON’s UK Chief Executive, Michael Lewis, stated in 2017 that the firm’s core business reflects “global growth of renewables as part of the effort to tackle climate change” but E.ON is also notable for its lone opposition to a UK carbon price floor among the Big Six, the report claims. Colin Baines, Investment Engagement Manager at the Friends Provident Foundation said: “It should concern investors that the business models of the Big Six appear to be based on their current ability to maintain the status quo via regulatory influence.”

Social

A coalition of UK pension investors, impact managers and social enterprises have come together for new initiative ‘Pensions for Purpose’, to raise awareness of impact investment for pension funds and encourage the growth of social investment funds. Karen Shackleton, Head of Pensions for Purpose, said: “One of the main challenges facing trustees, when considering an allocation to impact investment, is the lack of accessible information on this topic. By encouraging our influencers to share thought leadership, blogs and case studies via one central platform, we hope to make it much easier, going forward, for pension fund investors to access that material so that trustees can have a more informed debate.” Supporters of Pensions for Purpose include Big Society Capital and Bridges Fund Management.

UK-based charity housing association, Hightown Housing Association, has raised £31.5m through a dedicated social housing bond. The Hightown Housing Association Retail Charity Bond, which closed early due to high demand, will be used to support the association’s development programme, which aims to build over 1,000 homes in the next two years – 75% of the housing will be for social, affordable, or intermediate rent. The bonds will pay a fixed rate of interest of 4% a year and will mature in 2027.

The UK National Advisory Board (UK NAB) on Impact Investing – the UK representative of an international steering group on impact investing – has recommended that the government should require pension funds to engage their members on their impact preferences. It is one of 15 sweeping recommendations made in new report The Rise of Impact: Five Steps Towards an Inclusive and Sustainable Economy from the UK NAB chaired by Michele Giddens, partner at Bridges Fund Management. Other recommendations include pension funds, foundations and other institutional investors seizing on investment opportunities that help achieve the UN Sustainable Development Goals in the UK, and DC pension providers developing products which include an allocation to impact investments.It comes as Elizabeth Corley, Deputy Chair of Allianz Global Investors, is set to deliver a report to the UK Government on catalysing a culture of social impact investing. Corley has been heading up a government advisory group including Aberdeen Standard Investments and Legal and General Investment Management. Speaking at an event at Aberdeen Standard Investments last week, Corley said the UK was once called a leader in social impact investment, but was now falling behind other countries “who have seen what we have done and are catching up”. For example, the US, “where the private industry has decided it can’t wait for public policy to do anything”.

Blended finance body Convergence has announced that it will award a design funding grant to KOIS Invest to structure an impact bond for organisations providing employment support to Syrian refugees and vulnerable local populations in Jordan, Turkey, and Lebanon. KOIS Invest plans to raise between $10m and 30m for the impact bond. KOIS Invest recently co-structured one of the largest impact bonds ever, a humanitarian impact bond from the International Committee of the Red Cross.

The Government of Canada has launched a consultation on the development of a social innovation and social finance strategy for the country. It will inform recommendations by the country’s Social Innovation and Social Finance Strategy Co-Creation Steering Group, which includes representatives from KPMG Impact and MaRS. In related news, Canadian province Manitoba has reportedly selected MaRS to help it develop a social impact bond strategy by 2018.

ICTI CARE, the ethical supply chain programme for the global toy industry, has announced it is to collaborate with the US’ Toy Association to develop its industry programme, which aims to protect the rights and well-being of millions of toy factory workers. The Toy Association will now directly fund and support the global non-profit’s work, while offering ICTI CARE’s range of services to its small and medium-sized members.

Governance

California Treasurer John Chiang has decided to extend the State’s sanctions against under-fire US bank Wells Fargo & Company into a second year. The sanctions include the suspension of investments by the Treasurer’s Office in Wells Fargo securities, suspension of the use of the bank as a broker-dealer for purchase of investments, and suspension of the bank as a managing underwriter for bond sales in which the Treasurer appoints the underwriter. He has also called on federal regulators to investigate the activities of other lines of Wells Fargo business due to the numerous questionable practices that have come to light.

Four senior Royal Dutch Shell executives, including Malcolm Brinded CBE, have reportedly been charged in Italy over their alleged involvement in a billion-dollar Nigerian oil fraud. The allegations, which the Anglo-Dutch oil giant is also facing bribery charges over, relate to payments made to the now convicted money-launderer and former Nigerian oil minister, Dan Etete, in exchange for Nigerian oil block OPL 245 in 2011.