RI ESG Briefing, October 28: UN Global Compact assessing VW in wake of emissions scandal

The round-up of the latest ESG news


The European Investment Bank has launched what it says is the first ever green bond offering in Canadian dollars by an international SSA (supranational, sub-sovereign and agency) issuer. The transaction was backed by strong demand from a diverse investor base including investors with an explicit SRI approach, the EIB said. The CAD500m (€343m), five-year ‘Maple’ Climate Awareness Bond (CAB) had 25 investors participating in the order book. Canadian investors took just over half of the transaction, with balanced global distribution of the remaining half. Lead Managers for the transaction were BMO Capital Markets, Scotiabank and TD Securities.

The University of East Anglia in eastern England says it’s seeking to develop a framework of fund managers to deliver fund portfolio management services for a range of investment funds, including “developing low carbon goods and services and/ or growing, developing or expanding in a manner consistent with the progression to a low carbon economy”. There is no clear idea as to how much will be spent with the fund manager/s as this is dependent on the value of the fund, it says in a tender.

Barclays Bank is “mulling” issuing a green bond next year, according to Peter Mason, its managing director and Head of Fixed Income Group. Mason was speaking at the China Green Bond Conference at the London Stock Exchange. Barclays pledged to invest a minimum of £1bn in green bonds last year.

Australian trade union the National Tertiary Education Union has pledged to divest from fossil fuel companies and shift towards renewable energy. It is the first trade union in the country to make this move. The decision comes on top of the Australian Academy of Science, a representative group for Australian scientists, announcing this week that it would also divest from fossil fuels.


A social impact bond backed by Goldman Sachs has reportedly triggered an outcome payment of $267,000 after meeting measurable targets to prevent at risk pre-kindergarten children from entering special education services. The $7m programme is based in Utah and received loan finance from Goldman Sachs and Chicago Investor J.B. Pritzker. The loans carry an interest rate of 5% that will be paid if the programme meets measured outcomes. Future payouts depend on the number of students who avoid the use of special education each year through sixth grade.

A group of UK MPs has asked their pension scheme, the Parliamentary Contribution Pension Fund, for a meeting to discuss where it invests. The group includes the Shadow Minister for Energy and Climate Change Barry Gardiner and the country’s sole Green Party MP Caroline Lucas. The move follows previous engagement by MPs with the pension fund on the issue of climate change.h6. Governance

The UN Global Compact, the world’s largest corporate citizenship initiative, has contacted German auto giant Volkswagen (VW) in the wake of the diesel emissions scandal to find out what it is doing to remedy the situation and what steps it is taking to prevent the event from reoccurring. “This process is important as we assess Volkswagen’s participation and interest in recommitting to the principles and spirit of the UN Global Compact,” a spokeswoman for the organisation said. VW has been a member of the Compact since 2002 and has to report its next ‘Communication On Progress’ to the body on December 4 this year. It comes as VW today (October 28) reported a net loss of €1.7bn for the third quarter.

Elsewhere, the Norwegian giant Norges Bank Investment Management has said its investment in VW has cost it NOK4.9bn, according to reported comments by Deputy Chief Executive Trond Grande at a news conference. He said it was “natural” for it to have a dialogue with the company, he was quoted adding by Reuters. The fund had written in the past to Volkswagen about its concerns over the company’s leadership structure, the report added.

The Wall Street Journal reports that fast food giant McDonald’s has adopted proxy access, increasing investors’ ability to choose board members. Up to 20 McDonald’s shareholders will be able to place their director nominees on the official corporate ballot, the company said. Elsewhere major investment bank JPMorgan has reportedly said it will consider adopting proxy access.

Helena Morrissey, chief executive of Newton and chair of the UK’s Investment Association, has said climate change is not a “top ten issue” exercising the fund management trade body’s members. Morrissey was responding to a question at a conference held in London yesterday to discuss the financial implications of COP21. She said when the Investment Association members talked about industry issues it tended to be “introspective” matters like fees or transparency. “Climate change as a key issue on the agenda is just not present,” she said.

Toshiba, the under fire Japanese technology firm, reportedly plans to file a damages lawsuit against several former top executives, with former Presidents Hisao Tanaka, Norio Sasaki and Atsutoshi Nishida are likely to be named, over their role in the company’s accounting scandal.

Harvard Law School, the U.S-based professional graduate school, convened its roundtable on Executive Compensation & Corporate Governance on October 21, 2015. The roundtable, featuring 62 prominent experts, including senior officers from leading institutional investors (including CalPERS, J.P Morgan, TIAACREF and CalSTRS) with assets under management exceeding $13tn, discussed issues relating to executive compensation, including a discussion of the work of proxy advisors.