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RI ESG Briefing, Sept. 18: Investors in plea over UK audit market reforms

The round-up of environmental, social and governance news

Environmental

US sustainable fund firms Trillium Asset Management and Calvert Investments have responded to mining giant Anglo American’s decision to withdraw from the proposed Pebble Mine Project in Alaska. “Anglo American’s withdrawal is a defining moment in this long running controversy which highlights the unique natural resource that is Bristol Bay,” they say. Investors have repeatedly expressed their concerns in a series of letters to the Environmental Protection Agency. Trillium and Calvert added they would be working with fellow investors in the next few weeks to communicate their “ongoing concerns” to the EPA and other interested parties.

The role of state-backed financing in the Jädraås Onshore Windfarm in Sweden has been examined in a case study by the Climate Policy Institute. It shows how a combination of public policies and financial instruments, and “robust private risk management measures” mobilized €360m of private investment in Scandinavia’s largest windfarm, delivering power to 100,000 homes. A feature of the financing was innovative lending from Danish pension fund PensionDanmark, whose position was guaranteed by the Danish state-backed export credit agency, EKF. Link

French bank Crédit Agricole has arranged a private placement bond issue for Caen-based cooperative agricultural group Agrial. The transaction, for a nominal total of €95m, is the first private placement involving bonds listed on the European market to be carried out by a French agricultural cooperative group with no financial agency ratings.

Social

Sustainable banking group Triodos is working with London-based Greenwich Leisure Ltd. (GLL), the sports and leisure charitable social enterprise, to raise £5m through a five-year bond paying 5% gross fixed interest per year. Proceeds will go towards developing venues used in the 2012 London Olympics and other projects. Dan Hird, Head of Corporate Finance at Triodos, said: “An investment in the GLL bond promises to deliver a decent financial return and positive social impact.”

The Child Labour Platform, an initiative of the International Labor Organisation (ILO), the International Trade Union Confederation, the International Organization of Employers and the UN Global Compact, is due to launch tomorrow (September 19) in New York. It identifies obstacles to the implementation of ILO Conventions in supply chains and the surrounding communities, as well as solutions to these obstacles and ways to catalyse collective action. Link. Governance

A group of leading investors in the UK with more than £600bn (€717bn) in combined assets, have urged the authorities not “water down” reforms of the audit market. They urge the Competition Commission to back mandatory auditor rotation, and warn that provisional remedies announced earlier this year fall short. They argue that the current situation – where auditors can remain in situ indefinitely and undertake non-audit work for the same executives they are checking – represents a conflict of interest and a threat to auditors’ independence. Signatories to the letter include: the Environment Agency Active Pension Fund, Governance for Owners, Legal & General Investment Management, Local Authority Pension Fund Forum, London Pensions Fund Authority, Royal London Asset Management
RPMI Railpen, Sarasin & Partners, UK Shareholders’ Association and USS Investment Management.

Norges Bank Investment Management, the manager of the giant Government Pension Fund, has provided an asset manager’s perspective on high frequency trading (HFT) in a 28-page discussion note. NBIM says there are a number of issues of concern to large, long-term investors. They include: anticipation of large orders by some HFTs leading to potential adverse market impact; transient liquidity due to propensity for HFTs to rapidly cancel quotes real-time; “un-level playing field” amongst market makers from low latency ultra HFT strategies.

Proxinvest, the France-based corporate governance and proxy adviser, has released a new rating for companies listed on the blue-chip CAC 40 index. The Proxinvest Governance Metrics is based on 42 metrics organized into three categories (Shareholder Democracy, Board Composition, Executive Pay) and developed from the Proxinvest principles of governance. Real estate firm Unibail- Rodamco is rated in first place (rated A + with a score of 256/300). Other companies rating well include Air Liquide, Essilor International, Gemalto, Kering Legrand and Technip. Twelve companies combine poor governance and negative shareholder returns.

The US Securities and Exchange Commission has fined Canada’s Ontario Teachers Pension Plan Board a total of US$224,835 for short-selling violations. The SEC said OTPP agreed to pay disgorgement of $144,898.00, prejudgment interest of $11,642.90, and a penalty of $68,295. Twenty-two other investors were also sanctioned as the SEC is focusing on preventing firms from improperly participating in public stock offerings after selling short those same stocks.