RI ESG Briefing, Sep 14. The news you need to know: bite-sized.

Environmental

CarbonTracker has claimed in a report published today (Sep 14) that investors in US regulated coal plants are exposed to $185bn in “regulatory risk” as potential interventions and the phase out of coal power threaten to undermine the industry’s artificially high, government approved prices. The report, No Country for Coal Gen: Below 2°C and Regulatory Risk for US Coal Power Owners, looks at the economics of each US coal power plant and aims to provide investors with a tool to support “a rational closure programme and ensure their portfolios are in line with the Paris Agreement to keep global warming below 2°C”. Link to report

SCOR, the independent global reinsurer, has reported that – as of the 6 September 2017 – it has “no direct investments in companies deriving more than 30% of their turnover from thermal coal”. The move builds on its 2015 – COP21 inspired – commitment to divest 50% of their turnover from coal, and will apply to all types of assets held within SCOR’s invested asset portfolio, including fixed income securities, equities, loans (including infrastructure loans), real estate and other investments.

Companies and governments will increasingly be at risk of extreme weather litigation due to advances in science establishing links with human activity, according to the latest report by ClientEarth. The report Nature: Acts of God, human influence and litigation claims that without government action litigation could play a “key role in spurring states and businesses to mitigate or adapt to risks associated with greenhouse gas emissions”.

Grantham, Mayo, Van Otterloo & Co. (GMO) – the investment firm co-founded by Jeremy Grantham, the backer of the Grantham Institute – has claimed in a White Paper that climate change is likely to bring “tremendous investment opportunities”, and cites the falling price of renewable energy. The paper also highlights the advantages of investing in climate change via the public equity market rather than via private investment as “liquidity, cost, and the ability to diversify”. But the report – co-written by Jeremy Grantham and Lead Portfolio Manager, Lucas White – also cautions investors to maintain a “disciplined value orientation” to make the best returns from the “particularly inefficient” climate change sector.h6. Social

Australasian Centre for Corporate Responsibility (ACCR) is calling on shareholders in Woolworths, Wesfarmers, and BHP to back its respective resolutions on climate change and human rights. ACCR is targeting retail giants Woolworths and Wesfarmers in relation to poor human rights safeguards in their supply chains. It has also filed a resolution at BHP over its “starkly inconsistent” position on climate, questioning the mining firm’s membership within the Minerals Council of Australia. In Australia, it takes 100 or more shareholders to lodge a resolution at a company AGM. 

Governance

PIRC, the UK’s influential shareholder advisory group, has recommended that Ryanair investors oppose all – bar one – Non-Executive Director resolutions at the budget airline’s upcoming Annual General Meeting (21 September 2017) citing “insufficient independent representation on the board”. PIRC also opposes the appointment of Non-Executive Chairman, David Bonderman, claiming he too “is not considered to be independent as he has been on the Board for more than nine years” and “is a shareholder of the Company through Irish Air, L.P”.

ATP, Denmark’s largest pension fund, plans more active ownership of companies – including encouraging good ESG practices – as it increasingly takes management in-house, Reuters reports. Christian Hyldahl, CEO at the $136bn fund, is reported as saying: “[w]e want to be more active at annual meetings, we want to be more active in swaying companies to have good governance and relate to ESG”.

The Principles for Responsible Investment (PRI) has tendered for research on a new benchmark exploring companies’ corporate tax transparency. The request for proposals, which has a deadline of 22 September 2017, specifies that the research will examine tax policy, governance and risk management, and reporting practices of global, cross sector companies. The PRI expects to have selected a research provider by the 6 October 2017.