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RI ESG Briefing, Sept. 25: Trillium files privacy resolution at Apple

The round-up of environmental, social and governance news

Environmental

BP has been added to the NASDAQ OMX Clean Edge Global Wind Energy Index, which is designed to act as a benchmark for the global wind energy sector. But 15 companies will be removed – among them China WindPower, Arise Windpower, Eolus Vind, Falck Renewables SpA, Greentech Energy Systems and Western Wind Energy Corp. Announcement

The Overseas Private Investment Corporation (OPIC), the US development finance institution, has approved an investment of up to $250m for its first solar power project in South Africa, a 60MW plant in Boshoff in the Free State province that will help displace around 140,000 tons of greenhouse gas emissions in its first year alone.

Seven companies were ejected from the FTSE4Good Index following its semi-annual review, which also saw 21 new additions. Four companies: Best Buy Company, Mattel, Nippon Express and PCCW were deleted for not meeting the FTSE4Good Human & Labour Rights Criteria. Nippon Express also fell foul of FTSE’s environmental management criteria as did three other companies: Ageas, Dr Pepper Snapple and Pendragon. Tiffany & Co, the jewellery retailer, was one of the companies to enter the FTSE4Good index. The USA contributed 11 new additions to the Index, with three from the UK, three from Australia, two from Japan one from Switzerland and one from Canada. Link

Social

The European Parliament’s Legal Affairs Committee has voted in favour of assuming a strong position on European anti-corruption legislation, that would force extractives companies to to report what they pay to governments in countries in which they work. The move has been welcomed by NGOs Oxfam and the European Network on Debt and Development (Eurodad). It “represents a real step forward in the fight against corruption and the resource curse in developing countries”said Catherine Olier, Oxfam’s EU overseas development expert.

News and data firm Thomson Reuters has launched a global Shariah-compliant bond index. The Thomson Reuters Global Sukuk Index was unveiled at the Global Islamic Finance Forum (GIFF) 2012 in Kuala Lumpur, Malaysia. The firm says the $1.2trn Islamic finance industry is currently growing at more than 15% per annum.

Women on boards: Nine EU member states have reportedly joined forces to try and block EU moves to set a 40% quota for women’s representation on the boards of listed companies. The countries that reportedly signed a letter to Viviane Reding, Vice-president and commissioner responsible for justice, fundamental rights and citizenship, who is promoting the proposal, are believed to be Bulgaria, the Czech Republic, Latvia, Estonia, Lithuania, Hungary, Malta, the Netherlands and Britain.

A new Malaysian Ringgit corporate Islamic bond index has been launched by data giant Bloomberg, the Association of Islamic Banking Institutions Malaysia (AIBIM) and exchange operator Bursa Malaysia, according to reports. The Bloomberg AIBIM Bursa Malaysia Corporate Sukuk Index is offered for investors of ringgit-denominated Islamic bonds in Malaysia, the world’s biggest sukuk market.

The winners of the FIRPRI Award for academic research were named in Paris on September 24. The winner of the best Master thesis was Enguerran Petit of Italy’s Politecnico di Milano for a paper titled: “Socially Responsible Mutual Funds : The Impact of Fund Governance on Performance and Attractiveness.” The laureat for the best PhD went to Ioannis Oikonomou of the University of Reading in the UK for a paper titled: “Empirical Investigations of the Relationship between Corporate Social and Financial Performance.” Best academic article went to a team comprising Paul Lanoie, Jérémy Laurent-Lucchett, Nick Johnstone and Stephan Ambec, for a paper titled: “Environmental Policy, Innovation and Performance: New Insights on the Porter Hypothesis.” Three research grants were also awarded. The first is to Michael Barnett, Xing Chen, Andreas Hoepner & Qian Li of the University of Oxford & University of St Andrews for research titled: “Responsible investment and the Chinese stock market. A second award was made to Daniela Laurel of Politecnico di Milano, for a paper titled: “Institutional complexity in a transition industry: the case of responsible investment.” A third bursary goes to Elsa Savourey and Daniel Litwin of University Paris I Panthéon Sorbonne & McGill University in Montreal for research titled: “Rethinking financial disclosure for retail investors: a tailor-made approach based on recent reforms in nutritional labelling.”h6. Governance

US sustainable funds firm Trillium Asset Management has filed a shareholder resolution – on behalf of its clients – at computer giant Apple over privacy concerns. Trillium has concerns about the unauthorized collection, disclosure, or misuse of personal information and its proposal asks the company to publish a report explaining how its Board of Directors is overseeing privacy and data security risks. Link

Governance research firm GMI Ratings has announced a licensing agreement with index provider Global Index Group to develop corporate governance indices. The new set of indices will incorporate non-traditional risk metrics developed by GMI Ratings. GMI’s Accounting and Governance Risk (AGR) rating will be applied to an index that reflects the impact of corporate governance practices, the companies said. They expect to have the index available for licensing within the next 60 days and are already in discussion with one investment management firm interested in licensing it for a fund.

Scottish Life, the pensions arm of the £47bn (€59.1bn) Royal London Group, has confirmed its support of the UK Stewardship Code – and says it encouraging its fund managers to “fully disclose where they stand” in relation to the Code. “We take the view that investment managers should act as stewards in terms of engaging with companies and attempting to improve corporate performance. So it’s important that managers should ‘comply or explain’ clearly,” said Investment Marketing Manager Lorna Blyth.

The London Stock Exchange has launched a new corporate governance guide for pre- and post-IPO companies. It has been written by a range of legal, accountancy and advisory firms and in conjunction with the Financial Reporting Council. It is intended to “encourage transparency, accountability and best practice and enhance the long-term stability of companies”. Download

Nykredit, the Danish financial services provider has selected MSCI ESG Research to provide ESG research, ratings, and screening tools for both internally and externally managed portfolios, as well as to engage with selected companies and exercise active ownership.

The fixed pay of CEOs in Australia’s Top 100 ASX listed companies was static in 2011, but bonuses fell according to research by the Australian Council of Superannuation Investors (ACSI). Overall, the average cash pay for Australia’s top 100 CEOs declined by 8.9% from 2010 levels to $3.055 million. Average bonuses ($1.255 million in 2011) fell to their lowest levels since 2004; however the overwhelming majority of CEOs in the sample – close to 90% – still received a bonus. ACSI CEO Ann Byrne, said: “It is clear that directors began listening to shareholder views on bonus sizes during 2011 and began making the adjustments that have continued into the first part of 2012”.

Say-on-pay: At least two thirds of 35 responding asset managers and pension funds to a survey said they strongly believed that companies should hold a say-on-pay vote every year, but that the vote should be advisory rather than binding. The report by Sodali, the corporate governance advisory firm said just over half of the respondents said they wanted to vote on general compensation policies rather than on specific elements of compensation.

The International Corporate Governance Network (ICGN) has decided to defer recruiting a successor to Carl Rosén, its former Executive Director who left in June after three years, for at least the next 12 months, while it reinforces its financial position. The ICGN said its Board and Policy Committee Chairmen would represent ICGN and work with its Secretariat team. Kerrie Waring, Chief Operating Officer at the ICGN has been made Acting Head of the Secretariat, following the ICGN’s September board meeting. The ICGN said it aimed to make its finances more sustainable based on a balance of revenues of one-third from each of three sources: conferences, membership fees and initiatives.