RI ESG Briefing, October 5: Japan’s GPIF sets up Stewardship & ESG division

Environmental

French public sector pension scheme Ircantec has adopted a coal-exclusion policy, according to reports. IPE.com quoted scheme president Jean-Pierre Costes as saying the €9.2bn scheme will exclude mining companies that account for more than 1% of global coal production, based on turnover. It would also exit energy producers where the energy mix is more than 30% derived from coal or that have a carbon intensity in excess of 500g of CO2. And firms whose turnover is more than 20% linked to coal would also be excluded.

InfluenceMap, a non-profit group whose advisory board includes CDP Executive Chairman Paul Dickinson and green pioneer Tessa Tennant, says EU business lobby group BusinessEurope “misrepresents” European business on climate issues. “Amid one of the busiest periods in EU climate policy-making ever, business calls for ambitious action are getting louder, but Europe’s leading cross sector trade association remains opposed,” it said. BusinessEurope is headed by Emma Marcegaglia, chair of Italian energy group Eni. “Economic instability resulting from climate change is a major risk to pension funds and other long-term investors. Our members want the companies they invest in to engage with policymakers in a responsible, transparent fashion on this important issue,” said Luke Hildyard, Policy Lead: Stewardship and Corporate Governance, at the Pensions and Lifetime Savings Association. Edward Mason, Head of Responsible Investment for the Church Commissioners, tweeted that of BusinessEurope’s stance was “deeply disappointing”. “It doesn’t reflect the wishes of investors in European companies,” he added.

Catholic institutions and communities from all over the world have made a joint announcement of their decision to divest from fossil fuels. They include: the Jesuits in English Canada; the Federation of Christian Organisations for the International Voluntary Service (FOCSIV) in Italy; the Presentation Society of Australia and Papua New Guinea; SSM Health in the United States; the Diocese of the Holy Spirit of Umuaramá in the Brazilian state of Paraná; the Missionary Society of St. Columban. The initiative was coordinated by the Global Catholic Climate Movement.

Brazilian exchange BM&FBOVESPA has launched the second edition of the “Novo Valor – Corporate Sustainability: How to begin, who to involve and what to prioritize” Sustainability Guide, in line with international sustainability indicators such as Sustainable Stock Exchanges (SSE), the World Federation of Exchanges (WFE), the Global Reporting Initiative (GRI) and Corporate Knights Capital. The new guide is an evolution of the first edition, published in 2011.

Social

Impact investing database ImpactSpace says it is bringing CSRHub’s environmental, social and governance ratings into the world of impact investing. ImpactSpace users seeking company information will be able to see CSRHub CSR/ESG ratings and data whenever available. CSRHub provides access to corporate social responsibility and sustainability ratings and information on more than 16,500 companies.

Business intelligence provider RepRisk has launched a new series of publications which build upon the company’s thought leadership: RepRisk Case Studies. Each Case Study demonstrates the materiality of ESG issues – and shows how these issues can translate into reputational, compliance, and financial risks for a company. Link

Italian complementary pension fund Cometa has reportedly picked seven asset managers to run more than €8.3bn in assets via 10 five-year mandates, with a strong responsible investment slant. IPE.com said the Milan-based fund awarded the mandates to Allianz Global Investors, Candriam Investors Group and BlackRock Investment, Credit Suisse, Eurizon Capital, Groupama Asset Management and State Street Global Advisors (SSGA). There was an emphasis on responsible investment in the tender process, the report said.h6. Governance

Japan’s giant JPY135trn (€1trn) Government Pension Investment Fund (GPIF) has set up a new division in the fund called “Stewardship & ESG”, which formally started work on October 1. It succeeds the former “Stewardship Enhancement Group”. The new division will continue to be led by Hiroshi Komori, Senior Director of the Public Market Investment Department. GPIF says the aim of the division is to strengthen the fund’s fiduciary duty for beneficiaries by furthering stewardship and ESG activities from a more strategic perspective, and to increase the understanding of responsible investment principles in Japan.

The Global Reporting Initiative, the corporate sustainability body, says the GRI Standards will officially launch on October 19 following the approval of the draft GRI Standards by the Global Sustainability Standards Board in late August. The new standards are a development of the GRI G4 Guidelines and will include all of the main concepts and disclosures from the G4 Guidelines, presented with “clearer language and a new structure” that the GRI says meets the expectations and requirements of a global standard. “With the new modular structure, there are three universal Standards, applicable to all organizations, and a selection of 33 topic-specific Standards which cover specific economic, environmental, and social topics.”

Tesco, the UK-based retail giant, is facing legal action from 60 large investors that claim to have suffered £150m in losses because of its 2014 accounting scandal. The Financial Times, noting it is the first collective lawsuit against the company in the UK, cited litigation funder Bentham Europe as saying a group of asset managers, hedge funds and pension funds, including UK and international investors, will file the lawsuit in the UK within the next four weeks. The FT said Tesco declined to comment.

Legal and General Investment Management (LGIM) has written to all companies in the FTSE350 with a series of demands on executive pay practices. It has asked companies to stop the annual use of benchmarks, publish the pay ratio between the CEO and median employee and reduce focus on annual bonus. LGIM also wants the disparity between executive and employee pension contributions reduced over time; and employee representatives to meet with the remuneration committee annually.

Swiss governance advisory firm Ethos said the Minder Initiative – a movement against inflated executive pay for the governing bodies of listed firms – had “shaped” AGMs in the country over the past two years. “These provisions have significant increased pressure on boards,” the report said, but added that remuneration was still “generally high”, with an average of CHF7.2m for the CEOs of the 20 companies in the Swiss Markets Index. The research claimed that there was a disconnect between remuneration packages and company performance. It said, for example, that half the firms analysed that had posted a decrease in operating market has not offered correlating decreases in remuneration for their bosses. Swiss companies are also “well behind” other European centres when it comes to having women on boards, according to Ethos.

UK Prime Minister Theresa May has said the government will later this year publish its plans “to have not just consumers represented on company boards, but workers as well”. Speaking at her Conservative Party’s annual conference, she said: “Because we are the party of workers. Of those who put in the effort. Those who contribute and give of their best.” Moving on to tax, she said: “If you’re a tax-dodger, we’re coming after you. If you’re an accountant, a financial adviser or a middleman who helps people to avoid what they owe to society, we’re coming after you too.”

The Korea Investment Corporation (KIC), South Korea’s sovereign wealth fund, has reportedly lodged a lawsuit against Volkswagen on behalf of the South Korean government and the Bank of Korea over the German carmaker’ emissions cheating scandal. The Korea Economic Daily was quoting senior government sources.