RI ESG Briefing, November 5: GRI sets up new Global Sustainability Standards Board

Environmental

Mirova, the responsible investment arm of French asset manager Natixis, has introduced the ‘Carbon Impact Analytics’ (CIA) methodology to measure companies’ contribution to the energy transition. Mirova announced in March that it had teamed up with Carbone 4, the consulting firm that has worked on carbon analysis for the French Agency for Development (AFD), to develop the methodology and that it would be “shared with all financial actors that are interested in this approach”. Now the broad outlines of the approach have been revealed in a section in Mirova’s new “Investing in a low-carbon economy” guide for investors to become what it terms ‘COP21 compliant’.

PKA, a pension scheme for Denmark’s health care and social service sectors, plans to invest even more in environmentally friendly assets, raising its allocation to the space to DKK20bn (€2.7bn) by 2020 from an originally planned DKK14bn. As to the reason, PKA said: “We actively seek new investments where we are able to combine our focus on mitigating climate change whilst still providing good pensions to our members who believe PKA should lead in the transition to a low carbon economy.” Citing examples of the investments it is seeking, PKA said they included renewables like wind power, forestry, green bonds and energy efficiency.
BlackRock has joined the Climate Bonds Initiative Partnership programme. Kevin Holt, Co-head of the Americas Fixed Income said: “The Climate Bonds Initiative is taking a leading role in building consensus for Green Bond standards and impact reporting mechanisms. As this market evolves, standardization should help attract investor demand and increase the liquidity of these bonds. We will be working closely with Climate Bonds Initiative, bringing our perspective as one of the largest asset managers in the sector.”

Social

A New York Times investigation into a social impact bond backed by Goldman Sachs claims that there are a number of irregularities in how the programme’s success was measured. It was reported last month that the SIB, which aims to increase prevent “at risk” kindergarten children from entering special education, was working and made a first payment of $260,000 to Goldman Sachs. However, the New York Times has said nine-early education experts who reviewed the programme for it say that Goldman and Utah have significantly overstated the effect the investment had achieved in helping kids avoid special education.

Over a third (38%) of independent financial advisors say they have never discussed responsible investing with clients according to new research from sustainable investing firm Alquity. Its survey of 400 global IFAs finds 31% believe they don’t know enough about responsible investing, while 66% say they lack access to information on it. Link

Microsoft founder Bill Gates has sounded a note of caution around impact investment according to the FT. He told the newspaper that, “so many things have a social return but not a financial return.” He continued: “There are a few things like new educational technology or better medicines or bootstrapping new charter schools, where you get into something that has got a non-zero return if things go well. You really have to be careful thinking you have your cake and eat it too.”h6. Governance

The Global Reporting Initiative (GRI), the corporate sustainability reporting standards organisation, has formed a new body called the Global Sustainability Standards Board (GSSB) to develop and approve GRI Sustainability Reporting Standards. The new 15-member board is chaired by former Deloitte & Touche partner Eric Hespenheide and includes Daniel Ingram, Head of Responsible Investment at the BT Pension Scheme. The idea is for it to show that GRI Standards are being developed in an “objective and independent manner”. The current G4 Guidelines will transition into a set of GRI Standards, which will be continually updated. The body will also explore the need for sector specific guidance. Link

The City of Pontiac General Employees’ Retirement System, which is suing US retail giant Wal-Mart for allegedly concealing the extent of the 2012 Mexican bribery scandal, has reportedly urged a Michigan federal court to certify a proposed class action. Law360.com quoted the fund as saying the case would be ideal for certification due to far-reaching common issues for investors. The case satisfies the requirements of “numerosity, typicality, commonality and adequacy” the report quoted the fund as saying.

EdenTree Investment Management will take action to oppose the re-election of nomination committee directors at companies who don’t make meaningful efforts to appoint more female directors, says Neville White, Head of SRI Policy & Research at the firm. It is in reaction to the final Lord Davies report
on gender diversity on FTSE boards that last week recommended that a third of boardroom positions should be held by women by 2020. As a result of the drive by Lord Davies since 2011 there are no more all male boards in the FTSE 100.

The Australian Council of Superannuation Investors’ 14th annual report on Board Composition and Non-Executive Director Pay in ASX200 Companies has found that increasing diversity on boards may be ushering in generational change. It finds 62% of women on boards are aged 40-60, against just 27% of men. In contrast, nearly three quarters of male non-executive directors are aged 60-70 plus. As at June 2014, nearly 23% of board positions were filled by women.

Many of the world’s most powerful Internet and telecoms companies are not doing enough to respect basic user rights, according to new research. In their first annual Corporate Accountability Index, Ranking Digital Rights analyzed a representative group of 16 companies that collectively hold the power to shape the digital lives of billions of people across the globe. ESG research and ratings provider, Sustainalytics, co-developed the methodology. “When we put the rankings in perspective, it’s clear there are no winners,” said Rebecca MacKinnon, director of Ranking Digital Rights. It’s hoped the index will lead to greater corporate transparency.

The Local Authority Pension Fund Forum (LAPFF), the UK investor body, has reportedly challenged the appointment to the Sky board of 21st Century Fox CFO John Nallen. The Guardian cited LAFPP as saying the lack of independence would not assist the company in its dealings with anti-trust regulators.

United States District Court Judge Max Cogburn has granted final approval of a $146.25m settlement on behalf of investor plaintiffs in the securities class action Nieman v. Duke Energy Corp, said law firm Robbins Geller. It said the recovery is the largest ever in North Carolina for a case involving securities fraud, and one of the five largest recoveries in the Fourth Circuit.