RI ESG Briefing, Sept 22: Council of Institutional Investors takes stand over Dodd-Frank repeal

Environmental

A coalition including Ceres and the US SIF, have called for the SEC to strengthen corporate disclosure requirements. It comes as the SEC seeks public feedback on its requirements through the SEC’s Concept Release. To bolster its case, the coalition has released a report analysing responses to the SEC’s Concept Release. The report claims that commenters expressed clear support for expanded and enhanced disclosures, particularly in the area of taxes, climate change, political spending, human rights and financial stability risk. Link

The Board of Trustees at Boston University have “unanimously approved” a broad strategy, including efforts to avoid investments in companies that extract coal and tar sands oil, the most carbon-intensive fuels. The board also authorized a Climate Action Plan that will lay out goals and timetables for greater energy efficiency and green energy use, more climate research and education on campus, and addressing climate change effects on BU’s physical plant. A third board-approved measure calls for BU’s endowment investment office to include managers with expertise in renewable energy and technology, a move the office had begun on its own.

The Institutional Investors Group on Climate Change (IIGCC) has released a new report with recommendations to EU policy-makers on aligning the financial system with change. Recommendations include improve disclosure on climate change risks and reforms to the Emissions Trading Scheme in the EU.

UK Prime Minister Theresa May has pledged to ratify the Paris agreement before the end of 2016. Speaking at the UN General Assembly in New York, May said the country would play its part in the international effort against climate change.

Social

Brexit could hamper social entrepreneurship and social investment in the Britain, according to leading figures in the industry speaking to the Thomson Reuters Foundation. Peter Holbrook, chief executive of Social Enterprise UK, a membership organization for social enterprises, said: “While there is no blueprint to know what will happen after Brexit we can expect there will be less government support, financially and in terms of policy, because there will be some economic contraction.” A Thomson Reuters Foundation poll found Britain came seventh when experts were asked if government policy supports social entrepreneurs.

The Swedish government is proposing legislation for gender quotas for listed and state-run companies. Business Insider Nordic reports that the proposal would impose penalties on companies not having achieved corporate boards composed of at least 40% women by 2019.

UK-based social investor Big Society Capital has made a “six figure investment” into London-based impact venture capital firm Mustard Seed. Mustard Seed was founded by Henry Wigan, former BlackRock portfolio manager and Alex Pitt, a former Goldman Sachs director, in 2015. Big Society Investment Director Alexander Goodenough said: “Mustard Seed has a growing network of engaged and socially driven high net worth investors who collectively wish to support socially impactful businesses across the UK. We are delighted to support its work to enable early stage social enterprises and mission-driven businesses to raise the investment capital they need in order to grow. We hope this will help to further develop the infrastructure of the social investment market.”

Investor and philanthropist George Soros has pledged $500m to support migrants through social impact investing. Writing in the Wall Street Journal, Soros says any profits from the investments will fund his grantmaking networks Open Society Foundations.h6. Governance

The Council of Institutional Investors (CII), which represents $3trn of pension funds and foundations, is taking a stand against the proposed repeal of “crucial” provisions of the Dodd-Frank Act, the US act that came in after the financial crisis. CII says the Financial CHOICE Act would reduce the frequency of say-on-pay votes, repeal a section in the act supporting reasonable, appropriately structured executive pay-for-performance programs at financial institutions, eliminate a provision allowing for proxy access and restrict the ability of proxy advisory firms to provide voting information to institutional investors who voluntarily contract for such information. Home page

Swedish state fund Sjunde AP-fonden (AP7) is reportedly suing Facebook over the social media firm’s plans to issue a new class of shares to allow co-founder Mark Zuckerberg retain control over the company while selling much of his own stake. IPE.com reported that AP7 has launched a legal case against Facebook in the Delaware Court of Chancery.

The Canada Pension Plan Investment Board (CPPIB) has added human rights as one of its focus areas for engagement with Hermes Equity Ownership Services (EOS)’ global engagement platform supporting this drive. The C$264.6bn fund joined Hermes EOS last year to complement its engagement activity globally expect for in Canada. CPPIB’s four focus areas for engagement had previously been climate change, water, executive compensation and extractive industries. The new human rights focus area replaces extractive industries that CPPIB says will be captured under human rights, climate change and water.

Volkswagen is facing a reported €8.2bn in damages claims from investors relating to the emissions scandal. Reuters reported that the Braunschweig court near its base said it received some 750 lawsuits on Monday alone — the first business day after the anniversary of the diesel test-rigging scandal. The reported added the court said it has taken on more staff to process suits submitted by shareholders.

Trade Union Share Owners (TUSO) have welcomed the announcement by embattled retailer Sports Direct that there will be an independent review of the company’s working practices and corporate governance. The announcement follows a resolution calling for an independent review that was tabled at the company’s AGM earlier this month by TUSO, and supported by a majority of independent shareholders.

US retail giant Wal-Mart must face an investor class-action lawsuit accusing it of defrauding shareholders amid its Mexican bribery scandal, according to reports. Reuters reported U.S. District Judge Susan Hickey in Fayetteville, Arkansas as rejecting the company’s argument that the City of Pontiac General Employees’ Retirement System in Michigan had no standing to lead the case because it had not suffered losses on the retailer’s stock.

SEB Investment Management has appointed Hermes EOS to provide engagement and screening services. SEB Investment Management is part of SEB, the Stockholm-based corporate bank. Hermes EOS will advise on €33.15bn of holdings comprising SEB’s global holdings outside the Nordic region.

Saker Nusseibeh, Chief Executive, Hermes Investment Management has said the current lack of yield and increased volatility may have pushed increasingly under-pressure investors to turn their back on responsible capitalism. His comments come on the back of Hermes Investment Management’s first paper from its annual Responsible Capitalism survey Many rivers to cross – Slow progress towards responsible capitalism. Nusseibeh said: “Dwindling income streams and escalating volatility may have caused an increasing amount of normally ethically-minded investors to eschew principles of responsible investing and adopt an investment strategy based on short-termism.” Link