RI ESG Briefing, Sept. 8: Robeco’s Munsters resigns, Sustainable Stock Exchanges, Norges Bank

The round-up of the latest ESG news

Environmental

The London Stock Exchange’s Market Open ceremony today (September 8) celebrated the start of the ninth PRI in Person and the launch of the Sustainable Stock Exchange’s Model Guidance on Corporate Reporting. The LSE acted as the Chair for the Advisory Group that created this Guidance, which will serve as an important resource for exchanges in their work to provide direction for issuers on enhancing ESG disclosure. Link to Model Guidance.

Norges Bank has warned the Norwegian government that shifting out of coal and coal-related utilities risks giving its huge portfolio a different risk/return profile. In a submission to the Ministry of Finance, Central Bank Governor Øystein Olsen and Yngve Slyngstad, CEO of Norges Bank Investment Management (NBIM), the arm of the bank which runs the giant Government Pension Fund, also said there would be “direct transaction” costs estimated at NOK400m (€43m) relating to the exclusions. The Norwegian parliament, the Storting, reached agreement in May that the fund would no longer invest in coal companies. The government then invited Norges Bank for guidance in preparing the criteria for the withdrawal. “Utilities companies often have a more stable revenue profile than companies in the fund’s other sectors. Over time, the exclusion of such companies could give the portfolio a different risk/return profile,” Olsen and Slyngstad write in their response. They also say it will be a “challenge” to obtain good information about the companies.

Most of the world’s largest listed firms do not provide information on sustainability factors and the growth in the number of firms that do so has slowed, a new study from Corporate Knights, a Toronto-based research firm, reflects. In the study, which was sponsored by Aviva Investors, Corporate Knights examined the disclosures on seven sustainability factors by almost 5,000 listed companies (market capitalisation above $2bn) for 2013. The factors included greenhouse gas (GHG) emissions, water and energy consumption, waste management, injury rates, employee turnover and payroll.

Social

US Secretary of State John Kerry has released a joint statement with 17 other developed countries on collaborative efforts to scale up climate finance for developed nations. The countries met this weekend in Paris to discuss the goal set by President Obama and other heads of state six years ago in Copenhagen to mobilize $100bn a year by 2020.

It’s been reported that an official from the $172bn (€154bn) Florida State Board of Administration has called President Obama’s pending deal with Iran “a direct assault on Florida’s divestment from state-sponsored terror”. Pensions & Investments quoted Jeff Atwater, the state’s chief financial officer and one of three trustees of the SBA as making the comment in a letter to state legislative leaders. A 2007 Florida statute requires the fund to divest companies with activities in the Iran petroleum energy sector if they fail to respond to concerns about their operations. The SBA has divested more than $1.1bn from firms involved in the Middle Eastern country, the letter goes on, P&I reports.h6. Governance

Roderick Munsters has resigned as Chief Executive Officer and member of the Management Board of Robeco, the Dutch fund manager. Munsters has been CEO of Robeco since 2009 and had group responsibility for Robeco’s subsidiaries including RobecoSAM, the Zurich based sustainable investment manager. A former executive director at Dutch pension funds ABP and PGGM, Munsters was a firm supporter of responsible investment. It has not been announced what his next professional move will be. Robeco was acquired by ORIX Corporation, the Japanese lease finance company two years ago. Robeco said Munsters would leave the manager following a succession handover, with his replacement to be announced “in the near future”. Munsters is a member of the Capital Markets Committee of Dutch regulator Authoriteit Financiële Markten (AFM). He was Chairman of Eumedion (the Dutch Corporate Governance Forum) from 2006 until 2009.

Australia’s 10 highest-paid chief executives collectively reaped A$70m (€43.7m) more than reported in their companies’ FY14 annual reports, according to new research from the Australian Council of Superannuation Investors. ACSI’s annual CEO Pay study, now in its 14th year, is the first to review what has actually been received by CEOs across the S&P/ASX200 index in a financial year, rather than the usual estimates of the value of their pay included in annual reports.

PIRC, the UK-based governance research firm, is urging shareholders in Liontrust, the UK asset manager, to reject plans to allow CEO John Ions to take home up to 10 times his salary in share options as performance incentives. The Financial Times cited PIRC, an advisor to many UK local authority pension funds, as saying that for the year to March 2015, John Ions gained £4.8m from exercising share options under incentive schemes. PIRC, noting this is equivalent to more than 1,000 per cent of his salary, said the sum is “excessive”.

The Investment Association, the UK fund management trade group, has reportedly warned about planned changes to a multimillion-pound bonus scheme at Sports Direct, the retail chain run by Mike Ashley, the owner of Newcastle United football club. The body, formerly the Investment Management Association (IMA) issued a “red top” alert ahead of the retailer’s annual shareholder meeting on September 9 over pay concerns, the Guardian reported.

New research from business service firm PwC has reportedly “cast doubt” on whether the boards of large listed firms in the UK are setting effective pay targets. The Financial Times cited the research as saying chief executives have received the same proportion of their bonus entitlement for the past three years. Bonuses are supposed to be related to CEO performance but, since 2012, have remained steady at an average of 72% of the maximum available, it said.

RBC Global Asset Management has announced that it has become a signatory of the United Nations-supported Principles for Responsible Investment. “While ESG integration is not new to our investment process, adopting the UN PRI further demonstrates our ongoing commitment to responsible investing,” said Dan Chornous, chief investment officer of RBC GAM. “As investment managers, we have a fiduciary duty to explore all factors that could potentially impact the performance of companies in which we invest.” RBC GAM is a founding member of the Canadian Coalition for Good Governance (CCGG) and Chornous has been the board chair since 2011. It’s also a Sustaining Member of the Responsible Investment Association.