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RI ESG Briefing, Oct. 16: African Corporate Governance Network launched

The round-up of environmental, social and governance news

Environmental

Institutional investors have snapped up €350m worth of catastrophe bonds from AXA’s insurance arm AXA Global P&C, which said it was the largest issuance of catastrophe bonds in euros so far. Following issuances in 2010 and 2011, the new deal was structured through a new Irish Special Purpose Vehicle called Calypso Capital II Ltd. – providing protection against extreme European windstorms. The bonds use a PERILS index trigger structure.

The North American Development Bank, which finances environmental infrastructure projects along the US-Mexico border, has closed four loan agreements – totalling $50.8m – for the construction of four solar energy parks with a total generation capacity of 19.5MW in northwestern San Diego County in California sponsored by Macquarie Infrastructure Company Solar. To date, the NADB has provided $369.4m in loan financing for 11 utility-scale solar projects in California, Arizona and Texas.

Social

The Oxford Martin Commission for Future Generations, a high-level group chaired by former World Trade Organization chief Pascal Lamy, is calling for a radical shake-up in politics and business to deliver progress on climate change, reduce economic inequality, improve corporate practices and address the chronic burden of disease. It has issued a report called Now for the Long Term, the product of a year long process of research and debate. Among its recommendations: a C20-C30-C40 Coalition to counteract climate change; a Voluntary Taxation and Regulatory Exchange; and the removal of “perverse subsidies” on hydrocarbons and agriculture.

New York State Comptroller Thomas DiNapoli and the New York Business Development Corp. (NYBDC) have announced a $50,000 loan to a New York-based chocolate distributor owned by Iraq War veteran Joseph Whaley. The funding for 5th Avenue Chocolatiere comes from a small business loan program for military veterans supported by the $160.7bn New York State Common Retirement Fund, which DiNapoli oversees. The fund has allocated $400m for New York State-based small businesses through NYBDC since 1987.h6. Governance

The African Corporate Governance Network has been launched by the World Bank’s IFC arm to “encourage best practices in corporate governance among African institutions, and contribute to capacity building in corporate governance”. The launch took place in Mauritius today (October 16). The ACGN aims to develop the institutional capacity of members, enhance effective corporate governance practices and build “better governed and more accountable” public and private organisations on the continent. Countries currently involved in the network include Kenya, Malawi, Mauritius, Mozambique Nigeria, South Africa, Tanzania, Zambia and Zimbabwe.

The National Association of Pension Funds (NAPF), the UK trade body, has published a Stewardship Disclosure Framework to provide pension funds with greater transparency around the stewardship policies and activities of the 206 asset managers who are signatories to the UK Stewardship Code. The NAPF is inviting all the asset manager signatories to the Stewardship Code to complete and return the Framework, which is based around the seven Principles of the Stewardship Code.

Pax World Management, the US sustainable funds group, has written to the Securities and Exchange Commission (SEC) in strong support of the regulator’s proposed requirement for companies to disclose the ratio of CEO-worker pay. Julie Fox Gorte, Senior Vice President for Sustainable Investing at the firm, wrote: “The ratio of CEO to worker pay at individual companies is, in our view, material to investors.” Pay disparities at companies can hurt employee morale and productivity, and have a negative impact on a company’s overall performance, she added. And the disclosure of median employee pay will help investors better understand companies’ “overall compensation approach to developing human capital”.

A new study by compensation and corporate governance consultancy Meridian has found that companies in the US are increasingly focused on using their proxy statements to provide detailed rationale for executive pay decisions. It said: “Proxy disclosures have come a long way from the days when the rationale behind the numbers was an untold story.” The findings were released as part of Meridian’s 2013 Corporate Governance and Incentive Plan Design Survey which reviewed pay practices of 250 large US companies. Link