The Network for Sustainable Financial Markets has prepared a PDF communication tool that can be used by members and others to share its latest thinking on how to make financial markets more sustainable. It identifies some of the structural issues in the way financial markets operate and offers pragmatic guidance on potential areas for reform. The network has also issued a report on reform oriented shareholder engagement: http://www.sustainablefinancialmarkets.net
Eurosif has published a report in partnership with INrate, the Swiss research house, highlighting critical environmental, social and governance (ESG) issues facing water-dependent industries. Eurosif highlights four critical water issues and their associated risks and opportunities for water-dependent businesses: water scarcity and unequal distribution of current supply, drinking water and sanitation, water pollution, and climate change. To view the report, go to: www.eurosif.org/publications
Swiss independent rating agencies INrate and Centre Info have announced a partnership to develop SRI research products.
Stanley Fink, chairman and chief executive of Man Group, the world’s largest listed hedge fund firm, is backing the launch of an environmental fund manager that hopes to raise $5 billion over the next five years. The company, Earth Capital Partners (ECP), which is headed by Rufus Warner, former chief executive officer of Close Investments, plans to launch private equity andinfrastructure funds, focusing initially on sustainable agriculture, bioenergy, clean technology and renewable energy. Fink will act as chairman of the company. Other founding partners include Richard Burrett, former head of sustainability at ABN Amro, and Coen Weddepohl, former head of Man Group’s environmental finance business. ECP is currently seeking regulatory approval and aims to launch funds early next year.
The Rainforest Action Network (RAN) has praised Bank of America for a decision to phase out financing for companies involved in the controversial practice of mountaintop removal coal mining. RAN said it hoped to persuade Citi, JPMorgan Chase and other banks to follow suit.
While French investors prioritise social issues, UK investors emphasise governance, although both play down the environment as a major investment concern, according to a survey by Novethic, the French sustainability research group. The survey found the premise that ‘responsibility’ issues are fundamental to the long-term management of a company was shared by 79% of UK investors but only 40% of their French peers. Social factors are the number one priority for 48% of institutional investors in France, while governance carries it for 79% of UK investors. Less than 25% of those surveyed in both countries perceived the environment as a priority that requires their involvement. Link to survey
A class action brought by Lothian Pension Fund in the UK against Vodafone, relating to its purchase of the German telecoms company Mannesmann, has reportedly
been dismissed by a New York court for being outside the US court’s jurisdiction. In November 2007, the fund lodged the action claiming Vodafone directors had “artificially inflated the company’s stock price through allegedly false statements about its financial health and business prospects”, reports ipe.com. The fund’s legal representatives Coughlin, Stoia, Geller, Rudman & Robbins – are appealing the decision. The Lothian pension fund has also applied to become lead plaintiff in a class action brought against Freddie Mac over allegations it concealed its true financial position before its government bail-out earlier this year.
The £19bn (€22bn) UK Railways Pension Scheme has launched a campaign to promote better shareholder rights in Japan via engagement with companies through a partnership called the Japanese Engagement Consortium created by its shareholder-rights adviser Governance for Owners and Japanese life insurance group Tokio Marine. Governance for Owners plans to invite other institutional investors with assets in Japan to join the consortium. Tokio Marine is taking a 40% stake in Governance for Owners’ recently-established Japanese subsidiary. An international advisory board will be chaired by Frank Curtiss, the Railway fund’s head of corporate governance. Peter Butler, chief executive of GO, said: “This is a new approach to responsible share ownership in Japan. Collective engagement by a group of institutions is advantageous as it pools resources efficiently and enables those investors without in-house expertise on Japanese corporate governance matters to conduct a high quality dialogue with portfolio companies. Japan is at a turning point and we see that as a positive development for long-term share owners in Japan.”US investors are asking the top 500 global asset managers to explain how they evaluate climate risks and opportunities when making investment decisions. The survey initiative, led by seven members of the US-based Investor Network on Climate Risk (INCR) including CalPERS and CalSTRS, will be analysed by Ceres, the US environmental, and manager of the 70-member INCR, will analyse the survey results to develop a set of best practices. Link to survey
Shareholder activism will increase in the coming year, according to the results of a survey published by Schulte Roth & Zabel, the US law firm and Mergermarket Group. The survey, based on interviews with 25 senior corporate executives and 25 activist investor, found that 56% expect to see an increase in shareholder activism in the next 12 months, rising to 72% amongst the shareholder activists. Financial services is expected to be the most targeted sector for shareholder activism, according to 71%, mainly due to underperforming shares. Link to site
The US Justice Department has reportedly expanded a criminal investigation into foreign banks that sell offshore private banking services to include Credit Suisse and HSBC, according to the New York Times, citing sources close to the Justice Dept. It said the investigation is focusing on whether the two banks allegedly helped wealthy American clients hide up to $30 billion in offshore accounts that was not declared to the US Internal Revenue Service.
Charlie McCreevy, the European Commissioner for internal market and services, is to start a wide-ranging public consultation on the supervision and risks of hedge funds. The consultation will study the adequacy of transparency measures, oversight responsibility, risk
management practices, assessment of systemic risks, the need for capital requirements and supervisory responsibility. A separate review on the private equity sector is expected to end in the next three months.
Vigeo, the Paris-based research agency and oekom research in Munich are to partner for SRI bond research. Under the agreement, Vigeo will exclusively sell oekom´s non-sovereign bond research in France, Benelux, Italy, Spain and Portugal. The two have also developed a common social and environmental rating methodology for local authority debt in Germany, France, Italy, Spain and Canada.
Estelle Mironesco has been appointed as director of SRI at Vigeo, the Paris-based research agency. Mironesco was formerly director of SRI research at Natixis Asset Management.
South Africa’s R711bn ($69bn) Government Employees Pension Fund, a founding signatory of the UNPRI, is reportedly planning to increase pressure on the companies it invests in to adhere to socially responsible principles. The fund’s actuarial and investments head, John Oliphant, told Business Day, the South African publication, that responsible investing had become ‘non-negotiable’and that companies the fund invested in should address governance, social and environmental issues. Oliphant was speaking at the launch of the new constituents for the Johannesburg Stock Exchange’s SRI index, the first year in which the fund actively collaborated in pushing companies to improve ESG reporting. As a result, 61 companies made it on to the index, up from 58 last year and 51 when the index was launched in 2003. Oliphant said. “Unlike smaller funds, we cannot simply buy and sell specificshares to avoid systematic social, environmental and governance issues that affect share prices across the board. The only option available to us is to influence corporate behaviour.”
UK forestry investors have reportedly seen capital growth of 125-150% over the past five years, according to a report by UPM Tilhill, the UK’s timber harvesting company, and Savills. The annual snapshot of the commercial forestry market, based on properties larger than 25 hectares, found prices had increased by 10-20 per cent in the year to September, reports Financial News. However, the report said forest investment would not escape the downturn in construction and associated falls in timber prices.
PREVI, the Bank of Brazil’s pension fund and one of the country’s most active responsible investors has issued a Brazilian Guide to Participation in Shareholder Meetings. It aims to assist Brazilian companies in achieving best practice in corporate governance which will make them more attractive to international investors. Colin Melvin, chief executive of Hermes Equity Ownership Services, which will adopt the guide for its work with Brazilian companies, said: “Encouraging shareholders to participate in electing directors and ratifying amendments to articles of association will bring Brazilian companies in line with globally accepted best practice and we believe adopting the practices recommended by the Guide will enhance the relationship between companies and their shareholders.”
Royal Dutch Shell last year suffered more workforce deaths than any other large western oil company, with a rate of fatalities twice as high as BP’s, according to a report by the Financial Times compiled from company reports.
Shell was recently prosecuted in a case that resulted in some of the highest fines imposed on companies operating in the North Sea. The FT said two employees and 28 contractors were killed working for Shell in 2007, compared with three employees and four contractors for BP, and eight contractors for ExxonMobil. Shell has a slightly bigger workforce than its peers, with 104,000 employees at the end of last year, compared with 98,000 for BP and 81,000 for Exxon.
Global Governments have gathered in Norway to sign an international convention banning the production of cluster bombs. About 100 of the United Nations’ 192 members were expected to ratify the convention, which will then become part of international humanitarian law.
Clean-tech and biotech investment will be the basis of a “sixth technology revolution”, according to a research report by Merrill Lynch. Steven Milunovich, research analysts at Merrill said the need to decrease global warming, secure energy independence and tackle rising fossil fuel costs would drive investment in growth technologies that optimise natural resource use and reduce environmental impacts. It recommends a portfolio of renewable energy technologies, notably via venture capital investments, but argues that solar power should be a long-term winner because the sun is “by far the largest energy source and solar enjoys the steepest price-performance improvements”. However, Milunovich said he expects pressure on clean-tech stocks tocontinue for some time yet until a combination of positive government policies and an economic upturn leads to investment growth opportunities in 2010-11. Link to report
HG Capital, the UK-based mid-market private equity buyout firm, has made two hires to its team covering the renewable energy sector, reflecting a growing renewables drive by private equity firms. HG has hired Luigi Pettinicchio, a former untilities and renewables specialist with Goldman Sachs and Luis Quiroga, who was previously
with Credit Suisse’s European energy group, focusing on mergers and acquisitions activity in the European power, utilities and renewables sectors.
A group of major international financial institutions has joined with The Climate Group to launch a new code to guide best practice across the sector to deal with the risks and opportunities of climate change.
The new code, titled The Climate Principles, is the first comprehensive industry framework for the sector’s response to climate change and has been adopted by Crédit Agricole, HSBC, Munich Re, Standard Chartered and Swiss Re.The Climate Principles will not only guide operational greenhouse gas (GHG) emission reduction commitments, but also provide strategic direction across the full range of financial products and services including research, asset management, retail banking, corporate banking, insurance and re-insurance, investment banking and project finance. Link to code