RI ESG Briefing, October 16: Principles for Responsible Investment in Agriculture approved

Environmental

The AU$104.48bn (€71.5bn) Australian state Future Fund has reportedly indicated that it could review its fossil fuel investments. Managing Director David Neal was quoted by Australian media as saying the fund was monitoring new energy technology and changing demand for fossil fuels. “That’s something, that as an investor, we kind of have to worry about,” he was reported saying by News Corp.’s news.com.au. He added the fund expects its managers to “have regard for” the risks of future changing demand.

Index firm MSCI has launched a set of fossil fuels exclusion indices. The MSCI Global Fossil Fuels Exclusion Indexes were developed in response to investor demand for benchmarks designed to represent the performance of the broad market while excluding companies that own oil, gas and/or coal reserves. The MSCI ACWI ex Fossil Fuels and MSCI ACWI ex Coal Indexes are the first in the series.

SolarCity, the Nasdaq-listed US solar energy firm, has launched what it says is the first registered public offering of solar bonds in the US. It has filed a registration statement with the Securities and Exchange Commission to issue up to $200m in solar bonds initially, and launched a new online investment site to make them available directly to consumers. The bonds will be available to all US investors who meet eligibility requirements, with no fees for purchase. Investors will be able to purchase solar bonds for as little as $1,000, with maturities ranging from one year to seven years and interest rates of up to 4%.

Social

Canadian market regulators released rules this week to compel Toronto-listed companies to be completely transparent about female representation on their boards, according to reports. Led by the Ontario Securities Commission, the plan was endorsed by nine provinces and two Canadian territories, the Financial Post reported, adding that Alberta’s security regulator opted out. The move was welcomed by Jennifer Reynolds, president and CEO of advocacy group Women in Capital Markets, the paper added.

Staying in Canada, SHARE, the Shareholder Association for Research & Education, has released a new 17-page report that draws attention to the social and environmental challenges facing global food systems and the implications for Canadian investors of unsustainable practices by food companies. ‘Building Sustainable Food Systems: the Role for Investors’ is available here.

Global asset manager American Century Investments has announced that two biomedical research organisations into which it puts almost half of its profits have made a potential breakthrough in the treatment of inoperable cancerous tumors. Since 2000, more than US$1bn in dividends from the asset management firm have gone to the Stowers Institute for Medical Research and BioMed Valley Discoveries (BVD), with a further US$1bn contributed from the Stowers family’s personal wealth. Michael Green, London-based chief executive of American Century’s international business, said: “Our investors can also be proud of their involvement; by investing with us, they are directly helping fund important and potentially life-saving medical research.”h6. Governance

The Principles for Responsible Investment in Agriculture and Food Systems have been approved by the Committee on World Food Security (CFS), a United Nations committee based at the Food and Agriculture Organisation’s headquarters, at meeting in Rome this week. The Principles are voluntary and non-binding, but represent the first time that governments, the private sector, civil society organizations, UN agencies and development banks, foundations, research institutions and academia got together on responsible investment in agriculture and food systems. But campaign group PAN Asia Pacific called them “self-contradicting and a failure in promoting the human right to food, land and resources”.

The UK’s Financial Reporting Council (FRC) watchdog has found that corporate reporting by large listed companies is generally of a high standard, particularly among FTSE 350 companies, in its annual report Corporate Reporting Review (CRR). However, the FRC has said there is still a higher proportion of poorer quality accounts produced by smaller listed and AIM quoted companies. In April 2014, it established a project to help improve the quality of reporting by smaller companies within the next three years.

Directors’ pay at FTSE100 companies in the UK has risen 21% in the past year while average wages in the UK have not kept up with inflation, according to the Financial Times citing Incomes Data Services, a research group that extracted data from companies’ annual reports. It found chief executives at FTSE100 companies earned 120 times more than a full-time employee – when shares as well as cash were included – compared with 47 times more in 2000. The growth in directors’ total earnings was bumped by share awards rather than salaries: the median salary increase for directors was 2.5%, but there was a 44% increase in vested long-term incentive share awards and a 12% increase in bonuses.

An investor class action has been started against solar tech firm GT Advanced Technologies and the underwriters of two public offerings of the company’s securities. The complaint alleges that during the offering, the defendants misrepresented or concealed GT’s financial position. This month, GT announced that it had a liquidity crisis and filed for bankruptcy. On the news, GT’s share price declined by almost 93%. Bernstein Litowitz Berger & Grossmann LLP have filed the securities class action on behalf of Adam S.Levy. GT today (October 16) announced its shares were suspended by Nasdaq.

Some UK businesses will have to publicly state each year what action they have taken to ensure their supply chains are slavery free, the UK’s Home Office Minister Karen Bradley has announced. The measure is to be included in the Modern Slavery Bill, currently going through Parliament, and goes further than any similar legislation in the world by applying to businesses regardless of the nature of a company or what it supplies. A consultation will be held to set the exact threshold for the size of business to ensure the system is both fair and robust. Statutory guidance will also be produced setting out the kinds of information that might be disclosed to help companies comply. There are similar transparency requirements in California but they only apply to businesses producing goods for sale.