RI ESG Briefing, Oct. 2: Pension fund mortgage-based securities case vs. UBS dismissed

Environmental

More than 100GW of annual wind power capacity has been installed across the European Union, or enough to meet the power needs of 57m households, the European Wind Energy Association (EWEA) in Brussels has reported. EWEA said that amount of power was equivalent to what 39 nuclear plants could provide or what the mining, transport and burning of 72m tonnes of coal would yield. Using that much coal would, moreover, emit 219.5 metric tonnes of the greenhouse gas carbon dioxide and cost nearly €5bn, it said.

The UN Development Programme says there’s evidence that gender equality in access and control over resources ensures environmental sustainability and improves lives. It has published a new document called: “Powerful Synergies: Gender Equality, Economic Development and Environmental Sustainability” which is available via this link

Social

Generali Deutschland, the German arm of the Italian insurance giant, has hired ESG research firm Oekom research to provide sustainability ratings for securities in a portfolio worth €82bn. The investments rated by Oekom include government and corporate debt, covered bonds, stocks and private equity. The stocks and private equity account for only a fraction of the portfolio, while the fixed income instruments make up the rest.

US and European public pension funds are more than twice as likely as their corporate peers to implement SRI/ESG Strategies, according to a survey from asset servicing giant BNY Mellon. It says 35% of public pensions have a socially responsible investing component, compared to only 16% of corporates. The survey found that, overall, 24% of responding clients have implemented SRI/ESG strategies within their investment process, representing more than $200bn in assets.

Index and ESG firm MSCI has released a new report about the materiality of ESG in China. “As China’s economy continues to expand and its middle class grows the concept of sustainability and associated environmental, social and governance (ESG) factors are receiving greater attention from the general public and media,” write Emily Chew, Katherine Han and Chaoni Huang. “This has the potential to move markets as well as precipitate policy action – both systematic and sporadic – from the Central Government, which may see linkages between ESG factors and potential threats to social instabilityh6. Governance

US pension fund the City of Pontiac Policemen’s and Firemen’s Retirement System has had its mortgage-backed securities lawsuit against Swiss bank giant UBS dismissed by US District Judge Richard Sullivan in Manhattan. Although UBS made a series of bad bets with disastrous consequences for the company and its shareholders, those consequences alone are insufficient to establish and support a claim for securities fraud,” Sullivan said in his judgment.

The £43.7bn (€54.5bn) Universities Superannuation Scheme (USS) is seeking signatories to a position paper calling for enhanced disclosure from auditors, auditor rotation and a 50% limit to non-audit fees. The investor coalition aims to ensure its views are heard before the European Parliament’s deadline for amendments on November 7. Link

A new study has found that controlled companies – particularly those with multiple classes of shares – generally underperform over the long term. The report – Controlled Companies in the Standard and Poor’s 1500: A Ten Year Performance and Risk Review – was commissioned and funded by the Investor Responsibility Research Center Institute (IRRCI) and conducted by proxy firm Institutional Shareholder Services Inc. (ISS). They host a webinar on the findings on October 8.

Governance research firm GMI Ratings has issued a governance update on Rupert Murdoch’s News Corp. following reports the media giant plans to hire former regulators to head up its new compliance unit. The company currently has an ‘Accounting and Governance Risk’ score of 21, which indicates higher accounting and governance risk than 79% of companies.

Asset management giant Janus Capital Management has had a shareholder derivative suit over excessive executive pay dismissed, according to reports. Law 360 reported that a Colorado federal judge ruled that the plaintiffs failed to show directors had explicitly ignored the best interests of the investors.

The National Association of Pension Funds (NAPF), the UK industry group, has had a mixed response to proposed changes to stock exchange listing rules by the Financial Services Authority. “Plans to bolster the corporate governance aspect of the listing rules are important and welcome, but long-term investors are disappointed by the FSA’s thinking on the free float limit.” The FSA says it does not believe that an increase in the free float requirement is a “proportionate way” to address governance issues.