RI ESG Briefing, Oct. 30: Blue economy, climate lobbying, Stringer on Saudi Arabia, PKA, Cbus

Environmental

The Seychelles have sold the world’s first sovereign “blue bond” – debt specifically designed to support ocean sustainability projects. The island archipelago raised $15m from three investors – Calvert Impact Capital, Nuveen and Prudential – in a 10-year maturity bond, modelled on green bonds. The World Bank, which pioneered green bonds a decade ago, and the Prince of Wales International Sustainability Unit helped conceive of and design the instrument. Proceeds will be used to promote sustainable fishery management, expand marine-protected areas, and develop the country’s blue economy. Fisheries are the Seychelles’ second most important industry, employing 17% of the population and representing 95% of domestic exports.

A new sustainable blue economy finance initiative spearheaded by UNEPFI is expected to launch next year, with the European Commission, WWF, WRI, and the EIB also acting as founding partners. The initiative is based on the Sustainable Blue Economy Finance Principles – the set of guidelines helping investors support ocean sustainability.

Denmark’s PKA says it has invested DKK 2bn (€268m) in US solar power, its first direct investment in them. It gives PKA 49% of Canadian Solar subsidiary Recurrent Energy, which owns two plants in California.

The A$46bn (€28.7bn) Australian superannuation fund Cbus (Construction and Building Unions Superannuation) is benchmarking its fund managers to gauge to what extent they are factoring in climate change, according to an article in Top1000 funds citing Head of Responsible Investment Nicole Bradford.

Social

The Global Legal Action Network (GLAN) has filed a complaint before Ireland’s National Contact Point (under the OECD) against San Leon Energy, a Dublin-based oil and gas exploration company, due to its activity in Morocco-occupied Western Sahara. It argues that London-listed San Leon should have been granted consent by the Western Saharan people before drilling for oil, as part of the human rights compliance chapter included in the OECD Guidelines for Multinational Corporations. GLAN said the complaint came after the Irish Senate passed in July a first vote of the Control of Economic Activities (Occupied Territories) Bill 2018, which will return to the Senate for further consideration in November 2018, according to Frances Black, the independent senator who sponsored it.

Cornerstone Capital Group has published a new report called Creativity & The Arts: An Emerging Impact Investing Theme, which looks at “the rich array of opportunities to make meaningful, profitable investments that foster economic empowerment for individuals and communities”.

Canadian fund manager NEI has released a paper on cannabis investing as a law legalizing recreational use comes into force. It’s called Investing Responsibly in Canadian Cannabis. Governance

The Church of England Pensions Board and Sweden’s AP7 are spearheading a $2trn investor coalition targeting 55 of Europe’s largest companies over their climate lobbying practices. The chairs of the worst performing companies – including oil giants Shell, BP, and Gazprom – across seven of the highest CO2 emitting sectors have received a letter calling on them to take responsibility for the impact of their indirect lobbying on governments’ climate policy or face shareholder action at the next AGM season. Charlotta Dawidowski Sydstrand at AP7 told RI: “Companies’ emissions and direct operations might not have as big an impact as their indirect lobbying, so we are asking the companies to take responsibility for the role that they play in the political system”.

New York City Comptroller Scott Stringer has reportedly written to three major index firms, calling on them to bar Saudi Arabia from their global emerging markets indexes in the wake of the Jamal Khashoggi murder.

The City of Pontiac General Employees Retirement System has settled with US retail giant Walmart for $160m in case relating to foreign bribery allegations. Walmart didn’t admit fault as part of the settlement, the company said.

Norges Bank Investment Management has published position papers on board composition and independence.

UK governance watchdog the Financial Reporting Council has launched a “major project” to challenge existing thinking about corporate reporting and consider how companies should better meet the information needs of shareholders and other stakeholders. It will review current financial and non-financial reporting practices, consider what information investors and other stakeholders require and fundamentally, the purpose of corporate reporting and the annual report.

The UK’s University of Oxford has published what’s termed a “new approach” for assessing whether assets, companies, and portfolios are compatible with tackling climate change. Carbon Lock-in Curves (CLICs) are a new method to objectively assess the carbon budget implications of current and planned assets across a wide range of sectors. Link

The Investor Initiative for Sustainable Forests (IISF), coordinated by Ceres and the UN Principles for Responsible Investment (PRI), has invited investors to sign the Investor Expectations Statement on Deforestation in Soybean Supply Chains. The sign-on deadline for investors is October 31.

Proxy advisory firm Glass Lewis has published a case study of AES Corp.’s decision to exclude a shareholder proposal that would have lowered the ownership threshold for calling a special meeting. While the power utility firm may have “thought it had avoided a recurring headache”, Glass Lewis reckons that in the end “disregarding investors may prove to be a bigger pain”.