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RI ESG Briefing, September 23: APG plans to double sustainable energy investments

The round-up of environmental, social and governance news

Environmental

Dutch pension investment giant APG wants to double its investments in sustainable energy generation such as wind and solar power to €2bn in the next three years. Speaking at the UN Climate Summit in New York today (September 23) on behalf of the Global Investor Coalition on Climate Change, APG’s Chief Financial and Risk Officer Angelien Kemna emphasized the role that pension funds and institutional investors can play in combating climate change. She was speaking on behalf of a coalition of nearly 350 institutional investors and financial institutions; she noted that in 2013 around $250bn was invested in clean energy solutions worldwide.

Spanish renewable energy and engineering group Abengoa says it plans to issue, via affiliate Abengoa Greenfield, €500m in green bonds. The five-year bonds will be issued in a combination of dollars and euros and will finance Abengoa’s existing and future eligible green energy projects. The bond will be offered to eligible traditional high yield investors and “dedicated Socially Responsible Investments buyers”. French ESG consultant Vigeo is helping to set the criteria for the bonds.

UN Secretary General Ban Ki-moon has been urged to set up an Expert Committee for Climate Change and Responsible Investment at the $51bn UN Joint Staff Pension Fund (UNJSPF) by Inflection Point Capital Management, the fund manager set up by industry pioneer Matthew Kiernan. Such a group would advise the fund on how to “align its investment activities with the United Nations’ own climate change mission”. The current UN Climate Summit, Kiernan says, provides the UN with the opportunity for the UNJSPF to become a leader in mobilising climate finance: “We believe this is a pivotal opportunity not to be missed.”

UK banking giant Barclays says it will invest £1bn (€1.3bn) in green bonds by November 2015, building on a portfolio that is already worth £430m. In a statement, the bank said it would buy investment grade green bonds from corporate and government issuers, including notably the World Bank. It said that another example of its commitment to the sector was its underwriting and distribution of green bonds. Barclays, like virtually all of the world’s biggest banks, is a signatory to the Green Bond Principles. Announcement

Social

German mortgage bank MünchenerHyp says its €300m Pfandbrief, or covered bond, for social housing was 1.6 times oversubscribed when it was floated last week. The triple A-rated bond, said to be the first of its kind, has a maturity of five years, and a coupon or interest rate of 0.375% per annum. The bank said that of the investors in the bond, one-third were from the socially responsible sector. Banks made up the single-biggest investor group, accounting for 47% of the demand. MünchenerHyp also clarified that proceeds from the bond would go to finance 200 cooperative housing schemes and not, as it had previously stated, 200 residential houses in socially disadvantaged areas of Germany. The bond has been certified as socially benevolent by Oekom, the German ESG (environmental social and governance) research firm. Link

The opposition Labour Party in the UK would create a legally binding definition of social enterprise, Chi Onwurah, the shadow social enterprise minister has said at this week’s Labour annual conference. “It amazes me that something like social enterprise has escaped definition for so long,” she said. “So we will work with the community to define what a social enterprise is.”h6. Governance

Average pay for chief executives at Switzerland’s biggest companies has fallen by almost one-fifth in the last seven years, according to a new study by consultants PwC. The study reflected that the CEO of a company listed on Switzerland’s blue-chip SMI index is paid an average of CHF6.7m (€5.5m) per annum, or 18% less than the CHF8.1m paid in 2007. Meanwhile, board Chairs at SMI-listed companies are earning a bit more – CHF1.1m against almost CHF1m in 2007 – while the average pay of board members has remained steady at CHF320,000.

US express courier FedEx faces shareholder proposals from the blue-collar union Teamsters and the $160bn New York City Retirement Systems which, respectively, urge an end to FedEx’s practice of paying the taxes on executive stock awards and more disclosure of the company’s political spending. FedEx, which is urging shareholders to vote against the proposals, holds its AGM on September 29. As to why it opposed the Teamsters, FedEx said that as it paid the taxes on stock awards, its executives “receive fewer shares of each award by an amount equal in value to the (tax) payment”. As for the New York funds’ proposal, the firm said there is already “ample public information” about its political contributions. FedEx proxy

APG Asset Management, the Dutch investment pension giant with €377bn in assets, has unveiled guidelines for executive pay at what it says are the 100 most relevant companies in its portfolio – “to clarify its perspective as a shareholder”. Among other things, the guidelines urge the companies to cease paying their executives according to metrics like “total shareholder return”, which often leads to “an excessive focus on short-term share price movement” or inappropriate levels of risk, APG said. Guidelines

The newly-formed Uganda Retirement Benefits Regulatory Authority (URBRA) is to develop and publish guidelines on corporate governance for pension funds as the country enters the final stages of liberalizing its pension sector, in a move which will see more than 300 players join the market presently dominated by the National Social Security Fund. Miriam Musali, chief legal affairs manager at Uganda’s Capital Market Authority, said integration of corporate governance in the managing of pension funds would promote transparency and accountability, and reduce the risk of corruption.

The Australian Council of Superannuation Investors (ACSI), which provides research and advice to its member superannuation funds, has found that termination payments to chief executives of Australia’s largest listed companies have shrunk by almost 70% in the past five years. The findings come in ACSI’s 13th annual survey of CEO pay, conducted by research firm Ownership Matters. The. ACSI puts the change down to “continued investor scrutiny, and increased vigilance” by company boards.

It has emerged that German development bank KfW, a global leader in environmental finance, provided €3.4bn in funds for coal power-related projects between 2006 and 2013. However, in an answer to a query from the opposition Green party, the German government said the KfW’s support of coal made up just 0.5% of the bank’s new business during the period. The government, which wholly owns the KfW, added that last year alone, environmentally friendly projects made up 38% of the bank’s new business. The KfW itself says that in several emerging countries, coal is the only alternative for power as renewables are not yet feasible. It adds that the coal-related projects it has financed meet the highest social and environmental standards available.