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RI ESG Briefing, Oct. 13: Norges Bank, NRW, Harvard divestment, Climate Bonds, Hermes, CalSTRS

The round-up of the latest ESG news

Environmental

German development bank NRW.Bank plans to raise another €500m from investors with its third green bond. According to NRW.Bank, Crédit Agricole and HSBC have been selected to conduct a road show next week (starting October 19) with investors in major European cities. NRW.Bank will use the proceeds from the issuance to finance projects aimed at adaption to climate change and mitigation thereof. Such projects are in the areas of biodiversity, flood control, renewable energy and energy efficiency. German ESG firm Oekom Research has verified the bond’s green credentials. The Wuppertal Climate Institute has also done an analysis of its impact.

Harvard Climate Justice Coalition, the student-based group that lost a recent lawsuit calling for Harvard University to divest its endowment from fossil fuel companies, are appealing that decision and asking for the opportunity to make their arguments at trial. The students argue that such investments violate the university’s public charitable duties and other legal duties – Massachusetts law requires non-profit organizations to consider how investment decisions relate to their charitable missions. Link

Climate Bonds Initiative, promoter of green bonds and related environmental standards, has partnered
with the United Nations Framework Convention on Climate Change (UNFCCC) ahead of the UN COP 21 to present the Initiative’s comprehensive green bond data set – including every ‘non-state actor’ (companies, cities, municipalities and banks) green bond issuance, normalised into $USD, since the market commenced in 2007 – on the Non-State Actor Zone for Climate Action (NAZCA) platform hosted by the UNFCCC.

Social

Norges Bank Investment Management (NBIM), which runs Norway’s NOK6.9trn (€745bn) sovereign wealth fund, has put Indonesian conglomerate Astra International under observation due to Astra’s involvement with rainforest destruction. The move follows a recommendation from the Ethical Council, which advises NBIM on company exclusions for ethical reasons. According to the Council, the problem at Astra is a plantation in Indonesia. However, the Council also said the company had recently promised to end logging and land conversion. This is why it was recommending that NBIM watch Astra over the next few years to see whether it fulfilled its pledge and whether its new sustainability strategy worked.

The Shareholder Association for Research & Education (SHARE), a Canadian-based responsible investment advisor, has issued a report “Psychological Health and Safety and the Canadian Financial Sector”, exploring the positive short and long-term impacts strong management of psychological health and safety has on financial institutions’ performance. The report came in advance of World Mental Health Day earlier this month.h6. Governance

Just 23% of institutional investors think female boardroom representation is important, according to a new survey by Hermes Investment Management, the fund firm owned by the BT Pension Scheme. It asked 109 UK and European institutional investors if they thought having women in the boardroom was important for a poll called Responsible Capitalism and Diversity.

HSBC is reportedly being targeted by institutional investors looking to change the banking giant’s board. The Times reported investors are working under the banner of the Investor Forum, the shareholder body set up last year to engage with boards of leading corporates. It added the shareholders are interested in what succession plans are in place for when chief executive Stuart Gulliver exits. The bank told the paper it has “regular and constructive dialogue” with investors and that it was supportive of the Investor Forum.

The California State Teachers’ Retirement System (CalSTRS) has reportedly been denied the opportunity to intervene as a plaintiff in a class action alleging yen-denominated Libor rate-fixing by banks including Deutsche Bank, HSBC and several Japanese banks, a New York federal judge has ruled. CalSTRS claim that since many of the banks named as defendants were involved in thousands of Euroyen-based derivative transactions conducted by the fund it was harmed by the alleged manipulation. CalSTRS has been seeking to become a named plaintiff in the suit since September 2014 but have fallen foul of the presiding judges dismissal of antitrust, vicarious liability and unjust enrichment claims in favour of price manipulation and aiding and abetting allegations.

The Council of Institutional Investors (CII), the association of US corporate, public and union employee benefit funds and endowments, has indicated that shareholders plan to “get tough” on boards “adopting troublesome [proxy] access provisions”. Recent CII data shows that of one-third of the US companies that have adopted proxy access have opted for a 5% ownership threshold – which could translate into votes against directors in the 2016 proxy season. CII Home Page

ShareAction, a charity advocating responsible investment, has visited the offices of its pension provider, NEST, the government-backed scheme with a universal service obligation, to deliver a letter to Otto Thoresen, Chair, and Helen Dean, Chief Executive seeking a commitment from the workplace pension scheme to meet regularly with savers to discuss how it invests their money. The action is part of a wider initiative by ShareAction and USKIF to encourage pension funds to engage with beneficiaries, ahead of Good Money Week.