RI ESG Briefing, October 20: UK pension funds in biomass investment

Environmental

The £13.3bn (€18.8bn) Greater Manchester Pension Fund and the London Pensions Fund Authority (£4.9bn) have today announced they will jointly commit £60m towards renewable energy assets from their £500m infrastructure investment joint venture. The first investment from Greater Manchester & London Infrastructure Limited, will be £39m towards Leeming Biogas, a green energy plant that converts waste from the food production industry into biomethane, which is injected into the local gas grid.

The NOK75bn (€8.1bn) pension fund for the Norwegian capital of Oslo will divest from the fossil fuel sector, according to an official from Oslo’s newly elected centre-left government. “The time for climate action is now, and the new city government will address climate change. Divestment sends a message to the world that we need a strong agreement at the Climate Change Conference in Paris,” said Lan Marie Nyuyen Berg of Norway’s Green Party, which is part of Oslo’s new government. The value of the pension scheme’s fossil fuel investments was not disclosed.

Pension consultant of Wilshire Consulting has warned that efforts to divert California pension giant CalPERS’ assets from investments deemed unethical have cost the largest US public pension fund up to $8bn, according to a Reuters report. Five of the six divestments campaigns that CalPERS has undertaken have hurt its returns, the news agency quoted Wilshire President Andrew Junkin as saying at a meeting of the fund’s Investment Committee in Sacramento.

The University of Surrey’s Finance Board has voted to divest from all its current fossil fuel investments, and will not invest in the industry until it has reviewed its ethical investment policy. The university, in Guildford in southern England, will sell off the final portion (a £33,000 investment in BHP Billiton) of over £200,000 formerly invested in fossil fuels as part of its £42 million endowment. The decision came after pressure from faculty staff and student pressure groups. Link

Social

The Global Impact Investing Network (GIIN), in partnership with the Carsey School of Public Policy, has published Scaling U.S. Community Investing: The Investor-Product Interface, an in-depth landscape study of the U.S. Community Investing (USCI) field. The full report includes a detailed analysis of the major types of USCI products, parameters that different investors use to evaluate investment opportunities, and the barriers and opportunities to increasing investment. Link

Transfield Services, the Australian-based provider of operations, maintenance and construction services, is the subject of reports conducted by proxy advisory services, Glass Lewis & Co and Institutional Shareholder Services. Prepared ahead of Transfield’s upcoming AGM on October 28 , the reports centre on what’s termed ‘opaque’ relationships between operations at the controversial detention centres at Manus Island and Nauru and executive remuneration. Transfield is facing growing pressure from investors with some of Australia’s largest superannuation funds divesting.h6. Governance

The next hearing in the Lloyds/HBOS group litigation has been listed for three days of Court time from tomorrow (October 21). The hearing will take place at the Royal Courts of Justice in London, heard by The Hon Mr Justice Nugee. This hearing follows the first Case Management Conference in July. The Lloyds/HBOS Shareholder Action comprises approximately 6,000 claimants all of whom were shareholders in Lloyds TSB at the relevant time. Over 300 of the claimants are corporate entities, including pension funds and other large investment funds domiciled primarily in the UK, Europe, the USA, Canada and Asia.

The Thai Institute of Directors Association, with support from the Stock Exchange of Thailand, has disclosed the corporate governance findings of 588 listed companies – showing an average score of 75%, considered to be a good level of governance practice. This year, the assessment reveals that Thai listed companies have put more emphasis on the actual practices of governance as stipulated in their CG policies, a clear move towards substance as opposed to form.

Poland: The Warsaw Stock Exchange has approved a new code of corporate governance, entering into force at the start of next year. Best Practice of GPW Listed Companies 2016 builds upon and incorporates guidelines first formalised in 2002. “The modifications of the Code of Best Practice aim to further enhance the quality of listed companies in terms of corporate governance standards,” said Wiesław Rozłucki, Chairman of the Exchange Supervisory Board.

US pharmacy chain Walgreens Boots Alliance has reportedly “bowed to pressure from union pension funds” by agreeing to proxy access – opening its board nominations to shareholders. The drugstore giant had resisted attempts by the Change to Win (CtW) body. But the Chicago Tribune, citing company filings, reported that any group of 20 or fewer investors who among them have held 3% of Walgreens shares for at least three years could now nominate up to 20% of the board. But CtW, while welcoming the move, said it didn’t go far enough.

California Treasurer John Chiang has written to the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) requesting their help to draft legislation to “increase disclosure of fees and related party transactions in private equity”. This legislation is needed, argues Chiang, who is also a board member on both funds, to combat the “excessive fees” paid by pension funds that “do not have sufficient visibility into the nature and amount of those fees”. CalPERS have backed Chiang’s initiative, saying it “applauded” his seeking greater disclosure. Link

The Bursa Malaysia exchange has invited public feedback on proposed amendments to the Listing Requirements for Disclosure, Corporate Governance and Mineral, or Oil and Gas listed issuers. The move is aimed at boosting disclosure “to promote greater transparency, maintain market integrity and reinforce investor protection”. The deadline for comments is November 13.