A group of European corporate sustainability and responsible investment research groups have signed up to a joint set of voluntary quality standards (VQS) they say will act as a benchmark for the way companies are assessed. The standards – CSRR-QS 2.1 – which are independently audited, have been launched by the Association of Independent Corporate Sustainability and Responsibility Research (AI CSRR). They have so far been met by research houses, Ecodes, EIRIS, EthiFinance, GES, imug, Oekom, and Vigeo, which are members of AICSRR, the owner of the standards. Their initiation followed a European Commission consultation with stakeholders including investors, civil society, and responsible investment sector experts, led by AI CSRR. To meet the standards, research companies have to abide by eleven principles. These include ensuring that independent sources such as regulators, relevant stakeholders and NGOs, not just company-provided information, is used for corporate assessments. Ratings must also cover the global impacts and operations of the quoted company and performance indicators must be balanced by stating whether the company is improving or deteriorating.The standards also demand that ratings criteria and methodology are applied equally to comparable companies, are up-to-date and transparent.
The number of companies joining the United Nations Global Compact rose by 30% – 1,473 new companies – between 2007 and 2009 taking it above the 5,000 signatories mark, according to the Compact’s annual review. Significantly, China and India are now both among the top ten countries per signatory. The Compact said it received 1700 ‘communications on progress’ (COPs) in 2009, up by 25% over 2007, but that 400 companies were de-listed in 2008 for lack of progress in implementing the Compact principles, bring the total of de-listed companies to 800. The Compact said it had also noted serious deficits in signatories requiring their suppliers to sign up also with just 7% doing so. The Compact, launched in 2000 by Kofi Annan, former UN general secretary, signs companies up to ten corporate standards ranging from upholding union rights to the abolition of child labour. Investors use corporate adherence to the Compact as a basic standard of good environmental, social and governance practice.
The Co-operative Asset Management has warned companies not to pay their executives discretionary awards through the ‘back-door’ if performance targets have been missed due to the recession. The manager said it believed the upcoming AGM season would be “littered” with companies seeking to pay discretionary awards to management who have failed to hit pre-determined performance targets set for incentive payments.
Clean technology and clean energy investment fell by 53% in the first quarter of 2009 compared with the same quarter in 2008, with just $13.3bn invested, according to New Energy Finance (NEF). Figures produced by the Cleantech Group and Deloitte, the advisory firm showed investment in global clean technology venture capital funds showing similar declines, with just $1bn of investment in 81 companies, down 48% from the first quarter of 2008.
*The US Senate has ruled ou*t fast-track action on plans by President Barack Obama to push through climate change legislation, including a cap-and-trade system to regulate greenhouse gas emissions, proposed by Congressmen Henry Waxman and Ed Markey under The American Clean Energy and Security Act of 2009. The passage of the bill now looks likely to take the remainder of the year.
The World Bank and La Poste, the French postal system, have launched a new investment product for French retail investors called the ‘Toniciel Banque Mondiale,’ where investors place a minimum of €500 in a La Poste 5-year term deposit and the total cash is used to purchase a bond, expected to be the worth €10m, issued by the International Bank for Reconstruction and Development (IBRD), the main lending arm of the World Bank.The Dow Jones Sustainability Korea Index of the country’s largest 200 companies by free-float capital will be launched in the fourth quarter of 2009. The index has been established in partnership with the Korea Productivity Center (KPC), the agency tasked to increase productivity within Korean industry. It follows the recent establishment of Korea’s presidential commission for green growth and the approval of a new “Low Carbon and Green Growth Bill” by Korea’s cabinet at the end of February.
Ethos, the Swiss RI foundation, has published a study of best practices in codes of conduct among the largest companies listed in Switzerland. The study considers the existence, content and implementation of the codes of conduct of 65 of the one hundred largest companies listed in Switzerland that have published a code. It said most of the 65 codes of conduct relating to business ethics, corporate social responsibility and corporate environmental responsibility, while other key issues such as the relationship with civil society, suppliers and shareholders, and whistle-blower policies were only marginally dealt with.
Link to study
A study by the UK Local Authority Pension Fund Forum of passive fund managers has found that many do not exercise their voting rights. LAPFF said this amounted to “billions of pounds of investments that were not being represented through voting or engagement,” although it said investors were beginning to push index managers to use their votes.
ASSET4, the Swiss ESG research company has launched Sovereign Supra, a set of on-line ESG KPIs for government bonds and other issues including companies and supranationals.
Norges Bank Investment Management (NBIM), which runs the Norwegian Government Pension Fund assets has reported an “overall low”, albeit varied level of compliance by companies cocoa, mining, steel and apparel compared with best practice on children’s rights. NBIM analysed 430 companies in which it is invested that have a high exposure to the risk of child labour. It said 30% of cocoa production companies had a child labour policy in place compared to 35% in the apparel sector and just 20% in the steel and mining sectors. NBIM said that while some companies had child labour policies, few referred to the International Labour Organisation (ILO) conventions 182 and 138 concerning the worst forms of child labour and minimum age standards.
The OECD corporate affairs division is running a public consultation on “corporate governance and the financial crisis” with a deadline for contributions of 16 April
Link to consultation
The UNEP FI Property Working Group (PWG) has written and will shortly release an article presenting the essential differences between Socially Responsible Investment (SRI) in equities and in property.
Link to site
More should be done to measure and evaluate green buildings and their costs in a bid to give investors on the commercial rationale of sustainable property investments, according to research by CB Richard Ellis (CBRE). In a report, entitled Who pays for green?, CBRE called for agreed definitions for measuring running costs, investment prices and rent levels of sustainable buildings versus conventional ones. CBRE’s said ‘greening’ new build could add up to 7.5% to construction costs while achieving basic levels of sustainability could increasedevelopment costs by 2-3% more than with a standard building. However, it said US data showed that green buildings could attract higher rents averaging between 2-6% than for conventional buildings.
H.S.H. Prince Albert II of Monaco presented awards to cutting edge firms in environmental technology at the CleanEquity Monaco Awards run by Innovator Capital. The award for excellence in the field of environmental technology research went to General Fusion (Canada), a privately held development company commercialising magnetised target fusion for energy production. The award technology development was presented to Solar ETC (USA), a development stage company working in solar thermal power plant with long-term storage capabilities, while best technology commercialisation was won by Biograde (Australia), a leading developer, manufacturer and marketer of biodegradable packaging resins derived from renewable sources for the global plastics packaging industry.
Global warming legislation could lead to the creation of an enormous, poorly regulated derivatives market with failures mirroring those of the current financial crisis, if not properly regulated, according to a report by Friends of the Earth U.S. The report, titled Subprime Carbon? Re-thinking the World’s Largest New Derivatives Market , says existing financial regulations, as well as those in major cap- and-trade bills, are inadequate to govern carbon trading, creating a potentially huge regulatory gap.
Link to report
The Global Reporting Initiative (GRI) has released a report examining how companies can frame their ESG disclosures to meet the needs of mainstream investors.
Link to report
Crédit Agricole Asset Management (CAAM) has launched CAAM Funds Clean Planet, which invests in technologies with a low environmental footprint in the areas of renewable energy, energy efficiency and waste treatment. To be eligible, companies must generate at least 25% of sales in these sectors. The French fund manager has also made a major pledge to integrate ESG factors into its entire mainstream portfolio management operations via I.DE.A.M., its SRI fund management arm.
The R786bn (US$83.2bn) South African Public Investment Corporation (PIC), which manages pension fund assets for the South African government, has announced it is to shift R65bn to black African fund managers with good track records, as part of an apartheid compensation programme.
UKSIF has launched a new blog titled: “Finance for a Sustainable Recovery” Link to blog
Leading US public pension funds running more than $900bn in assets in global markets have developed a set of five financial regulation principles aimed at restoring trust and confidence in the global capital markets.
The principles are greater disclosure and transparency, true regulatory independence, an increased and effective shareowner voice in the capital markets, earlier identification by regulators of overall market risks, and the preservation of institutional investors’ freedom to invest in the full range of investment opportunities.
Jack Ehnes, chief executive officer at CalSTRS, said: “These troubled times demand immediate action by all with a stake in strengthening the marketplace. Institutional investors have a unique voice to articulate how to build the economy for long-term value. That voice comes through loud and clear in these principles.”
MN Services, the Dutch pension fund and investment manager, has joined the UK’s Merseyside and North Yorkshire pension funds as co lead plaintiffs in a classaction lawsuit against Royal Bank of Scotland. The funds allege that RBS “sought and obtained billions of dollars from US investors and the funds were raised in order to finance a securities fraud that was perpetrated on investors worldwide”. US law firm Coughlin Stoia Geller Rudman & Robbins Coughlin, which could lead the case, has appointed Cherie Booth QC, wife of former UK Prime Minister Tony Blair, as a “special adviser” on the suit.
Governance for Owners has appointed Gavin Morris to its senior management team as a managing director with responsibility for engagement. Morris was formerly group finance director at D S Smith.
Standard & Poor’s has launched a ‘carbon efficient’ version of its benchmark US equity index, the S&P 500. The S&P US Carbon Efficient Index excludes the 100 most carbon-intensive components of the S&P 500, as calculated by environmental researchers Trucost. The index has an average annual carbon footprint 48% lower than the S&P 500.
Muzinich & Co, the specialist global high yield bond manager, has launched a new socially responsible high yield bond fund. It will invest primarily in US dollar denominated high yield bonds issued by companies chosen for their environmental, sustainable and governance practices.
Pax World, the US SRI fund manager, & KLD, the US index provider, have joined forces to construct the first Gender Investment Index series for International Finance Corporation (IFC), a member of the World Bank Group. The groups will produce five indices based on the FTSE All-World Developed Index but slanted towards companies with gender equality policies. The IFC said it aims to show that gender equality is an important indicator of financial health, and that companies that empower women and encourage gender diversity outperform others over the long term.