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RI Round Up: Desjardins; RiskMetrics; CalSTRS

RI’s regular round-up of the most important responsible investment news

Canadian mutual fund giant Desjardins Funds has become a signatory to the United Nations Principles for Responsible Investment. Dejardins Funds, with around C$12bn (€9bn) in assets, launched its first Environment Fund in 1990. Last year it introduced its ESG-led SocieTerra Portfolios. Parent Desjardins Group is the largest cooperative financial group in Canada and the sixth largest in the world, with assets of $157bn.
The issue of whether RiskMetrics should be regulated by the Securities and Exchange Commission in the same way as ratings agencies has been raised by the Stanford Graduate School of Business. A paper called “RiskMetrics: The Uninvited Guest at the Equity Table” has highlighted the firm’s “central position in the proxy voting process”. Link to paper
CalSTRS, the California State Teachers Retirement System, is among investors backing solar thermal power plant developer BrightSource Energy. CalSTRS and French power firm Alstom joined existing investors such as Morgan Stanley as BrightSource raised $150m in equity financing. The proceeds will be used to build 14 solar power plants in the South-western US by 2016 as well as international expansion.
Former Man Group chairman Stanley Fink’s Earth Capital Partners has launched a forestry fund. ECP Forestry Fund One LP Fund will invest in sustainable plantations in Latin America, targeting up to $300m from institutional investors. The first close will be later this year with a final close in 2011.Almost 9% of the votes cast at the Lloyds Banking Group annual meeting declined to approve the directors’ remuneration report. Investors are reportedly upset at chief executive Eric Daniels’ bonus award of over £2m. Chairman Sir Win Bischoff told the meeting that the board “believed that he merited a bonus because of his significant personal contribution and the group’s overall performance, albeit loss-making, in 2009”.

AIM-listed emissions markets exchange Climate Exchange, the operator of the European Climate Exchange, the Chicago Climate Exchange and the Chicago Climate Futures Exchange, is being bought by US exchange company IntercontinentalExchange for around £395m (€311m). Climate Exchange was founded by interest-rate futures pioneer Richard Sandor, the former chief economist at the Chicago Board of Trade. Link to announcement

Three directors at US coal mining firm Massey Energy Co. narrowly avoided being ousted by investors at its annual shareholders’ meeting. The trio – Dan Moore, Baxter Phillips and Richard Gabrys – all gained just over 50% of votes. The company has faced shareholder pressure following an accident at its Upper Big Branch facility in West Virginia.

Walden Asset Management’s Tim Smith and the Center for Public Accountability have been named as this year’s winners of the Joan Bavaria Awards at the Ceres annual conference in Boston. The awards for

Building Sustainability into the Capital Markets are named after the Ceres and Trillium Asset Management founder who died in 2008. Link

The €1.4bn pension fund for KLM’s cabin staff – Stichting Pensioenfonds voor Cabinepersoneel – has set up a ‘green pool’ investment portfolio. Some 10% of its equity portfolio (45% of assets under management), has been invested in sustainable sectors like alternative energy, water and microfinance. Asset manager Blue Sky Group said the move was the first step in a new SRI initiative.

Kirsty Jenkinson, former associate director for governance and sustainable investment at F&C, has left the London-based fund manager to join the Washington DC-based World Resources Institute (WRI) as director of its Markets & Enterprise Programme. She represented F&C at the United Nations Environment Programme Finance Initiative and the UN Principles for Responsible Investment.

The Africa Sustainable Investment Forum (AfricaSIF), a pan-African not-for-profit network of investment practitioners promoting sustainable development in Africa, is to be formally launched on June 9 at the Johannesburg Stock Exchange. Further launch events are scheduled in Cape Town, Lagos, Nairobi, Cairo, Geneva, London, Paris and New York.

Investment in responsible companies is a key factor in the pensions choices of charity workers, according to research by the Pensions Trust in association with University of London and Mercer. Members of charity schemes were asked to rate the most important attributes of a pension and investment in ethical companies scored 7.64 on a 9-point scale just behind the size of pension pot (7.93).The Long-Term Investors Club, created in 2009 by the European Investment Bank, the French Caisse des Dépôts et Consignations, the Italian Cassa Depositi e Prestiti and the German KfW Bankengruppe, to bring together major long-term institutional investors to coordinate their activities in the global economy in support of sustainable economic growth, will hold its second conference on June 17th 2010 at the Accademia dei Lincei (The National Academy of Science) in Rome. Link

The new UK coalition government has announced a raft of key planned initiatives in the environmental space, including the creation of a green investment bank and the provision of home energy improvement paid for by the savings from lower energy bills. The government has also said it will look at provision for a floor price for carbon.

Hermes, the asset manager owned by the British Telecom Pension Scheme, has opened an office in Sydney, Australia. It’s hired former ABN Amro Asset Management Australia head Ian Manton-Hall to run the office. Meanwhile, ex-Hermes Pensions Management and Pictet Asset Management chief investment officer Nick Mustoe has been appointed CIO at Invesco Perpetual in the UK. He takes over from Bob Yerbury.

Colonial First State Global Asset Management, the funds arm of the Commonwealth Bank of Australia, has appointed Nicholas Edgerton to the new role of Manager of ESG Research and Engagement. He will report to Head of Sustainability and Responsible Investment Amanda McCluskey and joins from AMP Capital Investors where he was an ESG Analyst.

RiskMetrics is celebrating 20 years of its FTSE KLD 400 Social Index (KLD400). It was the world’s first
benchmark built using environmental, social and governance (ESG) factors and was launched by KLD Indexes in May 1990 as the Domini 400 Social Index. “Over the past 20 years, the KLD400 has outperformed the S&P 500,” said KLD Indexes Managing Director Thomas Kuh. “A portfolio that’s constructed using ESG ratings can, over the long term, deliver competitive risk-adjusted returns.”

AXA Investment Managers expects climate bonds to become “one of the most important debt securities to be found in the global financial system” and that 2010 will see a lot more issuance. The firm’s CIO of global fixed income, Chris Iggo, cited the “scale of the mitigation funding requirements and the aligned incentives of policymakers, investors and financial intermediaries”. Link

The Climate Bonds Initiative’s advisory panel has four new members. They are: Bryn Jones, investment manager, Rathbones; Christoph Harwood of Marksman Consulting; Paul Dickinson, Carbon Disclosure Project; and Vicki Bakhshi of F&C Investments. The initiative is a joint project of the Network for Sustainable Financial Markets and the Carbon Disclosure Project.

The New York State Common Retirement Fund and the five New York City public pension funds have announced a $624m settlement of their class action against Countrywide Financial – one of the largest securities fraud settlements in US history. The funds had alleged that mortgage lender Countrywide, now part of bank of America, had violated securities laws during the sub-prime crisis.The European Corporate Governance Institute has named five new fellows, taking the total to 42. The new arrivals are: Professor John Armour, University of Oxford; Professor Marco Becht, Université Libre de Bruxelles; Professor Douglas Diamond, University of Chicago; Professor Gérard Hertig, Swiss Federal Institute of Technology; and Professor Josh Lerner, Harvard Business School. Link

Just 10 Australian super funds can claim to be leaders in addressing environmental and social commitments, according to SuperRatings. It reviewed 70 funds, covering over 14m member accounts. The 10 funds are: AMP Super, Australian Ethical Retail Super Fund, BT Super for Life, Catholic Super, Christian Super, Health Super, HESTA Super, Statewide, UniSuper and Vision Super. Link to report

Impax, the AIM-quoted environmental asset manager, says assets under management and advisory have risen to £1.9bn (€2.2bn) as of the end of April, up from £1.3bn at the end of September 2009. First-half revenue was up to £6.3m, with profit up also – to £1.7m.

Tracy Stewart, corporate governance manager at the Florida State Board of Administration, has been named the first executive director of advocacy group ShareOwners.org. William Sherwood-McGrew, a corporate governance portfolio manager at the California Public Employees’ Retirement System, joins the group’s governing board. Link

Pax World Management has launched what it says is the first set of exchange traded funds devoted exclusively to sustainable investing. The three-strong
ESG Shares family will track FTSE/KLD indices that integrate environmental, social and governance (ESG) factors into index design and construction.

The amount of assets in retail ethical funds in the UK has grown to £5.9bn (€6.8bn) at the end of the first quarter of this year, according to the Investment Management Association, although net retail sales of such funds were among the lowest on record at just £16m. Ethical funds represent a broadly steady 0.7% of gross retail sales, the IMA added.

Bridges Ventures has announced two hires to its Sustainable Property Fund team. Guy Bowden joins as acquisitions director while David Schlegel joins as an associate. Bridges, an investment company aiming at both financial returns and social and environmental benefits, had its first close in November 2009.

Triodos Bank is engaging with UK natural gas firm BG Group on linking pay to sustainability performance, renewable energy investment and water management.Triodos says BG’s decision not to invest in renewable energy is “unlikely to change in the near future”. Link

Corporate responsibility research and advisory firm AccountAbility has named Sunil Misser as its new chief executive, taking over from Simon Zadek. Misser is currently chairman of the organisation and has led its advisory arm since June 2008; he is a former Global Managing Partner of the Sustainability Advisory Business at PricewaterhouseCoopers.

Edmond de Rothschild Asset Management has signed up to the United Nations Principles for Responsible Investment. The firm said its voting principles will now respect social, societal and environmental criteria as well as good corporate governance. Chief Investment Officer Bruno Vanier said: “This move is fully coherent with our company’s conservative growth approach to fund management and its determination to defend the interests of minority shareholders while constantly striving for performance and long-term value creation.”