RI ESG Briefing, Oct. 6: Investor Group on Climate Change, Amnesty, OECD, Prince of Wales’s Corporate Leaders Group

Environmental

The Investor Group on Climate Change, National Climate Change Adaptation Research Facility and Australian National University have launched a practical guide for investors on climate adaptation. The guide looks at the key implications for investors of climate change and includes factsheets on key risks, interdependencies and opportunities. Link

The Prince of Wales’s Corporate Leaders Group (CLG) has backed a call by the Friends of Fossil Fuel Subsidy Reform Communiqué, for reform and longer-term elimination of fossil fuel subsidies. The communiqué calls on the international community to increase efforts to phase out subsidies to fossil fuels ahead of the United Nations Framework Convention on Climate Change (UNFCCC) conference of the Parties (COP 21) in Paris in December. The International Energy Agency estimates that fossil fuel subsidies amounted to US$510bn in 2014, six times more than that allocated to renewable energy.

The Guardian newspaper has launched the next step of its climate change campaign, focusing on increasing solar energy. The first step of its campaign highlighted the divestment movement, with a campaign urging British charity the Wellcome Trust and US-based Bill and Gates Melinda Foundation to divest from fossil fuels.

Social

Six more fund managers, including Australian and US firms, have joined the Business Benchmark on Farm Animal Welfare, an international collaborative initiative aimed at encouraging major global food companies to strengthen their management systems and processes on farm animal welfare. The new joiners, adding to the existing 10 members, are Actiam, Australian Ethical Investment, Nelson Capital Management, Royal London Asset Management (RLAM), Trillium Asset Management and Walden Asset Management. The Benchmark is a framework for investor engagement with companies on the issue, while the annual results on food companies’ management and reporting enable the effectiveness of the engagement to be tracked.

UK Chancellor (finance minister) George Osborne has announced plans to pool the assets of 89 local government pension schemes to create six ‘British Wealth Funds’ which will invest in domestic infrastructure, though details are scarce. And Climate Minister Amber Rudd defended the government’s policy on renewable energy, which has been sharply criticized by investors in recent weeks. Rudd said: “Our changes to low carbon subsidies since the election are motivated by getting the balance right between supporting new, low carbon generation and protecting billpayers.”

A survey of 1,100 people in France carried out by IPSOS for EIRIS and the French SIF (FIR) found that more than half were interested in the ESG aspects of their investments, but that 63% had never heard of SRI and only 3% had been proposed SRI-linked financial products.h6. Governance

Campaign group Amnesty International has called on a US court to reconsider a decision which it says protects major firms from having to disclose their conflict minerals exposure. It has filed a petition asking the U.S. Court of Appeals for the District of Columbia Circuit to reconsider two decisions issued in April 2014 and August 2015 striking down a disclosure requirement on the basis that it violates companies’ free speech rights under the First Amendment. Three industry groups – the National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable – took the SEC to court in 2012 to invalidate the conflict minerals rule. Announcement

The Organisation for Economic Cooperation and Development (OECD) has presented the final package of measures for a “comprehensive, coherent and co-ordinated” reform of the international tax rules to be discussed by G20 Finance Ministers at their meeting on October 8, in Lima, Peru. The OECD/G20 Base Erosion and Profit Shifting (BEPS) Project provides governments with solutions for closing the gaps in existing international rules that allow corporate profits to “disappear” or be artificially shifted to low/no tax environments, where little or no economic activity takes place. Announcement

Fund firm Southeastern Asset Management has reaffirmed its support for the management and independent board of Swiss industrial group SIKA. The statement comes in light of renewed demands by Schenker-Winkler-Holding, controlled by the descendants of the company founders, to remove board members.

Aviva Investors, Investec Asset Management and campaign group WWF have released a report outlining the risks to investors of involvement with extractive companies threatening World Heritage Sites. ‘Safeguarding Outstanding Natural Value’ says a third of all natural World Heritage Sites has the threat of oil, gas and mining exploration hanging over it. WWF is calling on investors to use the evidence in the report to engage with the extractive sector.

A survey of over 100 institutional investors has found 90% believe fund managers should price in corporate governance risks as a core part of their investment analysis, alongside financial metrics. The survey, by Hermes Investment Management, also finds 79% of respondents consider significant ESG risks with financial implications as sufficient reasons to reject an otherwise attractive investment. However the survey also says a growing awareness of ESG is being undermined by short-termism.

Index firm STOXX and ESG research house Sustainalytics have presented a research report on sustainability at German listed firms. It evaluates companies that are part of the German blue-chip index DAX from a sustainability perspective, and ranks them according to their overall sustainability profile as a group on a global level and within Germany. The results placed Munich Re at the top with the best overall rating, and the company received the STOXX/Sustainalytics German ESG Award 2015.