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RI ESG Briefing, October 21: PGGM supports political spending resolution at Procter & Gamble

The round-up of environmetnal, social and governance news

Environmental

The European Investment Bank (EIB) has provided an €85m loan facility to Austrian wind power firm WindLandKraft GmbH (WLK) for four new wind parks east of Vienna. The EIB said WLK would receive low-interest loans via special purpose vehicles (SPVs) created by the firm for the wind parks. The parks, which have a combined capacity of 105MW, are in the towns of Leopoldsdorf, Untersiebenbrunn and Engelhartstetten, and the EIB said the first 16 turbines would come on stream at the end of 2015. Link

The UK’s Prudential, via its M&G fund management division, is reportedly about to become the cornerstone investor in a £1bn (€1.3bn) tidal power station in south Wales. The Daily Telegraph said it would “inject up to £100m” in the Swansea Bay Tidal power station, which is scheduled to open in 2018. The proposed scheme involves building a six-mile (10km) semi-circular sea wall in Swansea Bay, the paper added.

Hannon Armstrong Sustainable Infrastructure Capital, the New York-listed sustainable infrastructure investor, has announced a $144m investment in a portfolio of 10 operating wind projects owned by an affiliate of investment bank JP Morgan Chase & Co. Hannon Armstrong also raised $115m of new fixed-rate non-recourse debt from Bank of America, using the investment as collateral.

A subsidiary of China’s Central Huijin Investment, asset management firm JIC Capital, has signed a financing deal with solar developer SunEdison for up to 1GW of utility-scale solar photovoltaic (PV) projects in China over the next three years. The joint venture will focus on facilitating and structuring nonrecourse financing for solar PV plants. Under the deal, New York-listed SunEdison, directly or through an affiliate, including a “yieldco”, may purchase the projects developed by the joint venture at fair market value.

Social

The €7bn pension fund for Dutch airline KLM’s ground workers, Algemeen Pensioenfonds KLM, reportedly sold off its entire holdings in Russia during the third quarter. IPE.com, citing the fund’s latest quarterly report, said that besides market risk, the potential escalation of the European Union’s boycott of Russia also posed too big a country risk.

Raghuram Rajan, the former chief economist at the International Monetary Fund who is the governor of the Reserve Bank of India (RBI), has responded positively to a proposal to use social impact bonds to help finance the “Build Andhra programme’. The Times of India reports that the Chandrababu Naidu government has floated the idea, and that Rajan has asked it to submit a detailed proposal on social impact bonds and assured that RBI would have no objection in clearing the proposal.

Three-quarters of UK investors would like their pensions and investments to be invested more in environmental and social sectors, finds new research by Triodos Bank. The data, released for Good Money Week (19-25 October), shows that on average, only a quarter of investors (26%) say they are aware of the true extent to which the activities that their funds / pensions invest in are ethical or not. The research does however show that awareness is growing among UK investors, with a six per cent increase compared with the previous year (20%).h6. Governance

PGGM, the Dutch pension manager, was among shareholders who voted in favour of SRI firm NorthStar Asset Management’s shareholder resolution at Procter & Gamble’s AGM on October 14 calling for a “congruency analysis” between corporate values and political contributions at the consumer goods giant. The investor said “shareholders would benefit from greater transparency” about the firm’s policies and oversight mechanisms for facilitating a greater alignment of corporate political expenditures and shareholder interests. Other investors including Norges Bank, CalSTRS and APG voted against the motion, according to their voting records.

The Nigerian Stock Exchange, in collaboration with the Convention for Business Integrity, the Lagos-based ethical business practices body chaired by former diplomat Christopher Kolade, is to launch the Corporate Governance Rating System (CGRS) for listed companies on November 3. The framework is designed to evaluate companies based on the quality of their corporate integrity; corporate compliance; understanding of fiduciary responsibilities by their directors and their corporate reputation. Announcement

Listed Polish companies are generally forthcoming about their corporate governance yet fall short when it comes to details on their social and environmental performance. This is the key finding of a study of around 900 of the companies published by GES Investment Services, the Swedish engagement firm. GES said the study, which it jointly compiled with the Polish Association of Listed Companies and Crido Taxand, a consultant, comes as the Polish government transposes into law a recent EU directive regarding disclosure of non-financial information. Listed Polish firms have two years to comply with the new law.

There has been a surge amongst the largest Dutch pension funds initiating or supporting shareholder resolutions promoting CSR, with 45% taking this step in 2014 compared with none last year, finds a new study from the VBDO, the Dutch Association of Investors for Sustainable Development. The study, Benchmark Responsible Investment by Pension Funds in the Netherlands 2014, scores the largest 49 Dutch pension funds, which have a combined assets under management of around €1trn, on responsible investment activities. Forty-seven pension funds (96%) demonstrably vote on a part of their public equity holdings. Out of this total, 76% do so while paying explicit attention to ESG-issues.

A new study by Oekom, the German ESG research firm, shows companies that score highly on ESG issues often are better capitalised than those that don’t. Firms with “Prime Status” on sustainability had, on average, capital ratios that were 5% higher than those without. Investors pay attention to capital ratios, as they are an important indication of risk. Indeed, the study, unveiled at an event in Frankfurt, also showed corporate bonds from such issuers offered investors a lower spread versus government bonds like German Bunds.

MSCI is now offering ESG ratings for 13 South African Real Estate Investment Trusts (REITs). REITs are essentially listed companies that buy, sell and operate real estate. Including the South African vehicles, MSCI scores the sustainability of more than 260 REITs globally. The ESG firm said that in rating their sustainability, it looked at what they are doing in terms of investment in green buildings, corporate governance and human capital development.