RI ESG Briefing, September 7: Pension funds’ legal action vs. Wal-Mart and BP

Environmental

The UK government has announced that one of its newly appointed green infrastructure fund managers has made its first investment in the small scale waste sector, ahead of the launch of the Green Investment Bank. Foresight’s UK Waste Resources and Energy Investments (UKWREI) fund is investing £2m (€2.5m) with a further £2m of matching private sector funding, in a £21m project to build a food and green waste processing plant in Dagenham, east London. Link

Shell, the oil company, has said it will go ahead with the first carbon capture and storage (CCS) project for an oil sands operation in Canada. The Quest project will be built on behalf of the Athabasca Oil Sands Project joint venture owners – Shell, Chevron and Marathon Oil -with support from the Governments of Canada and Alberta. Announcement

SAM, the Zurich-based sustainable fund manager, has publishes a new study titled: Harvesting Opportunities for a Sustainable Food Supply, which examines the current factors straining food production and suggests long-term investment solutions for sustainable food production. The report is available for free in English and German from: email

Social

Cambridge Associates, the US institutional advisory firm, has started a programme of work with hedge fund managers to get them to create a separate share class that excludes securities that are screened out based on SRI guidelines. Cambridge said it would ask hedge funds interested in creating an SRI share class to audit their portfolios against a list of restricted securities. It said the audit will ensure that a screened class maintains standard portfolio management attributes and that its performance does not materially deviate from that of the main fund. Cambridge said it would actively recommend to clients a diversified array of hedge funds implementing SRI screens.

The UK Sustainable Investment and Finance Association (UKSIF) has submitted evidence to the Cox Review into business short-termism, which closed on August 31. The review was commissioned by the opposition Labour Party and is being led by Sir George Cox, former head of the Institute of Directors. The review, whose steering group includes David Pitt-Watson, Chair of Hermes Focus Asset Management, will examine whether long-term wealth creation and the interests of responsible capital providers is well served by capital markets and the investment chain. Cox will look at corporate governance and equity markets, the tax treatment of debt, equity and the extent to which the tax system could encourage long-termism. UKSIF said measures to encourage companies to take such a long-term approach should include ensuring stable social and environmental policies and “leading the way” through sustainable public procurement.h6. Governance

The South Yorkshire Pension Fund Authority is among a group of six investors who are suing oil giant BP for losses arising from the Deepwater Horizon oil spill in 2010, according to reports. They allege they lost substantial sums because of BP’s “misleading statements”; they are suing under Texas law for common law fraud and negligent misrepresentation, and for statutory fraud. The plaintiffs are being represented by law firm Pomerantz Haudek Grossman & Gross.
Separately, governance research firm GMI Ratings has released a governance review of BP in the wake of the US Department of Justice’s legal action against the company. GMI says: “BP just can’t seem to keep its hands clean. Time after time after time, the company finds itself involved in one calamitous event after another.” It concludes BP still presents “a high level of risk for shareholders”.

The California State Teachers’ Retirement System (CalSTRS), the New York City Employees’ Retirement System and the Indiana Electrical Workers Pension Trust Fund have been named as co-lead plaintiffs in a suit relating to Wal-Mart’s Mexican bribery allegations, according to a Bloomberg report. The funds say company officials may have violated the US Foreign Corrupt Practices Act.

Media giant News Corp cut founder and chief executive Rupert Murdoch’s annual bonus for 2012 in the wake of the phone hacking scandal, according to its new proxy statement. The firm said its compensation committee “determined to award only half of the qualitative portion of the annual bonuses” to four top executives in fiscal year 2012.

Professor John Ruggie, author of the UN’s 2011 “Protect, Respect and Remedy” Framework for Business and Human Rights and Guiding Principles on Business and Human Rights, has penned an article claiming that legal moves by Shell in the long-running Kiobel v. Royal Dutch Petroleum case are seeking to undermine the application of the US Alien Tort Statute to corporations. The US courts will next month debate whether Nigerians from the Ogoni tribe can bring a case in the US over alleged human rights abuses by Shell. The application focuses on whether the court will apply US Alien Tort Statute to human rights abuses on foreign soil. The case is a companion to the case of Ken Saro Wiwa v Royal Dutch Petroleum, which was settled in 2009.

Consumer products company Unilever has joined the Pilot Programme of the International Integrated Reporting Council (IIRC). The programme, which comprises more than 75 organizations and 25 investors, is designed to test the principles, content, and practical application of Integrated Reporting < IR >.