Return to search

RI ESG Briefing, October 29: Sweden’s AP3 measures carbon footprint of equity portfolio

The round-up of environmental, social and governance news

Environmental

Tredje AP-fonden (AP3), the third Swedish AP fund, says it has examined the carbon footprint of its equity investments – and found that it is 27% lower than its MSCI All Country World Index benchmark. AP3 is a signatory to the Montreal Carbon Pledge, which commits investors to measure and publish the carbon footprint of their shareholdings. The fund used environmental analysis firm Trucost. Link (Swedish)

Asia Climate Partners, a joint venture by the Asian Development Bank, ORIX Corporation and Dutch fund firm Robeco has officially launched its headquarters office in Hong Kong. The venture targets mid-market, growth-oriented private equity opportunities in the clean energy, resource efficiency and environmental industry sectors in Asia. Separately, Robeco has announced that its Chief Financial Officer Jurgen Stegmann is stepping down in June 2015. Stegmann was appointed CFO in 2011 and helped oversee the firm’s acquisition by ORIX. Robeco said it is looking for a successor.

Stockland, Australia’s largest diversified real estate trust, has issued the first green bond in Australia. It is a €300m, seven-year bond, rated A-, achieving a 1.5% coupon. The bond is listed on the Singapore Stock Exchange, and the underwriters are HSBC and UBS. The green bond framework was reviewed by KPMG and proceeds from it will finance developments with ratings from the Green Buildings Council of Australia.

The Institutional Investors Group on Climate Change, which represents more than 90 European investors worth €9 trillion, has welcomed the decision by the European Council to agree at least a 40% reduction of emissions across the EU by 2030 but warned that a non-binding 27% energy efficiency target sends a weak investment signal. Stephanie Pfeifer, Chief Executive of the Institutional Investors Group on Climate Change, said: “The EU has said that the Emissions Trading System will be the main driver of emissions reductions. It can only do this when it is properly reformed, yet under the current plans this will not happen for another six years. Waiting until 2021 before introducing the market stability reserve would compromise the ability of the ETS to deliver emissions reductions and new low carbon investment. The EU should bring forward the market stability reserve start date to 2017 to strengthen the carbon price and kick-start investment.”

Social

Triodos Bank, the Omidyar Network and Threadneedle have been honoured in the UK’s inaugural social investment awards designed to celebrate the growth of the market and demonstrate its potential to mainstream investors. Triodos won the Investor Access award for being best at creating a market which caters to all investors, while Threadneedle and Big Issue Invest won the New Market Award for its UK Social Bond Fund most recently backed by Warwickshire County Council with a £30m investment.

South Korea is looking to become the first Asian country to launch social impact bonds. CEO of Korea Social Investment Chongsoo Lee told delegates at the Social Enterprise World Forum in Seoul that the country is working to implement a social impact bond model based on those in the UK. Korea Social Investment was set up in 2012 by Korean micro-finance institution the Social Solidarity Bank. It currently manages the $US100m (€78.9m) Seoul Social Investment Fund.h6. Governance

The Ecumenical Council for Corporate Responsibility (ECCR), the church investor advocacy coalition, has marked its 25th anniversary by releasing a report, titled ‘Using Ethical Investment to Close the Gap’, a call to action for the investor community to use their ownership responsibilities to address increasing levels of wealth inequality in the UK. The report calls for FTSE All-Share companies to ensure their staff, including contractors, are paid a living wage, and to provide greater transparency on differences in pay by disclosing the extent to which senior executive pay exceeds average employee pay. To see a full copy of the report, contact: John Arnold, Executive Director at the ECCR.

The UK Financial Reporting Council (FRC) is planning to review its guidelines on corporate succession planning next spring over growing concerns over the way some companies are dealing with new appointments at executive and board level according to the FT. David Styles, director of corporate governance at the FRC, the guardian of the UK corporate governance code, said: “Board succession planning and the quality of management are very important, and it is not just at chief executive level, but throughout companies too.”

A new study by German economic think-tank DIW has found that just under one-quarter of all boards for the 30 companies traded on the Dax equity index are female. Moreover, one-third of Dax companies have already fulfilled the government’s future requirement that at least 30% of the board be female, the study said. That requirement is to take effect at the start of 2016. Regarding the management of Dax companies, the DIW study said 7% of the executives were female, up from 5.5% as late as July of this year. Link

Texas pension fund the Irving Fireman’s Relief and Retirement Fund has filed a class action lawsuit against Tesco following the UK retailer’s widely publicized accounting irregularities, according to reports. The lawsuit was filed in New York federal court on the day Tesco Chairman Sir Richard Broadbent resigned over the issue, Reuters reported.

Sovereign wealth funds’ commitment to the Santiago Principles, a set of good governance and financial disclosure standards, is “still uneven” according to a new report from political risk and advisory firm GeoEconomica. It finds that “numerous funds still need to substantially advance their financial disclosure policies and become more transparent about governance arrangements”. The findings come in GeoEconomica’s new Santiago Compliance Index 2014.

J. Safra Sarasin’s legal troubles have grown as a result of two lawsuits from Carsten Maschmeyer, a German multi-millionaire who made his fortune as the founder of AWD, a financial advisor for retail clients. The lawsuits, one of which is directed at Sarasin Deputy Chief Executive Eric Sarasin, claim that the bank misled Maschmeyer regarding the security of a complex investment product it had sold to him. The millionaire says he lost €20m with the product. It comes on top of a lawsuit filed in August 2013 by Erwin Müller, a German retail magnate.