WHEB Ventures, the London-based clean tech venture capital firm has launched a listed companies offshoot, WHEB Asset Management. The new company has also launched its first fund, the IM WHEB Sustainability Fund, focusing on water, climate change and demographic opportunities, managed by the experienced SRI team of Clare Brook, former director of SRI at Morley, and Nicola Donnelly, former director at UBS Wealth Management.
FTSE, the index group has launched a new classification system for environmental companies and added seven new equity indices in its Environmental Opportunities series the UK, US, Japan, Europe and Asia Pacific based on the methodology. FTSE said the system, developed in tandem with Impax, the green fund manager, allowed companies to be classified by sector and sub sector according to the environmental products and services they provide. This, it said allowed companies who provide environmental products, activities and services, to be identified more easily and compared between peers on a global, regional and pan-regional basis. It said it would also be used for the launch of sector based investment products such as ETFs, mutual funds and derivatives.
Legal & General, one of the UK’s biggest fund managers, has published a five-point plan to overhaul company practice. The fund manager said that the chairman, senior independent director and heads of committees at listed companies should face re-election each year and that eventually all directors should be approved by shareholders each year. The plan is part of the group’s submission to the Walker inquiry into bank governance to be published next month.
The OECD has said shareholders need to be more proactive as owners in order to improve corporate governance globally. Mats Isaksson, head of corporate affairs at the OECD, said many shareholders “took their eye off the ball when times were good”. Isaksson said: “A firm’s rising price is not necessarily a sign of good governance. History tells us that it could actually be the opposite.” Isaksson said company pay structures should not just look at high-profile chief executives and seniorstaff but demonstrate that the overall corporate culture is aimed at long-term sustainability with limits to short-termism in pay and bonuses.
Nasdaq OMX Group has allied with CRD Analytics, a New York-based sustainability investment analysis firm, to launch the Global Sustainability 50 Index. The index tracks the performance of leading companies in sustainability performance reporting in line with the Global Reporting Initiative’s G2/G3 guidelines whereby companies must report at least 20% of their core environmental performance indicators, 20% of social indicators and 70% of financial indicators.
Markit, the London-based financial information services company is planning to launch one global and three regional investment indices in the UK, European and the US based on data from the Carbon Disclosure Leadership Index (CDLI), which ranks responses to the Carbon Disclosure Project such as greenhouse gas emissions data and climate risks and opportunity policies.
EIRIS, the Centre for Australian Ethical Research (CAER) and Survival International are backing a UN PRI programme to sensitise investors and their investee companies to the rights of indigenous peoples around the world. A report by EIRIS said it had identified 250 companies with a total market value of £1.7 trillion with risk to indigenous rights issues, of which 17% were deemed to be high risk, in a n area that generates significant media interest. It also found that few companies report on indigenous rights issues. Stephen Corry, Director at Survival International said ‘Investors must use their considerable power to persuade companies to respect and protect the rights of indigenous peoples, otherwise they risk being charged with complicity in abuses they bankroll. As EIRIS has shown, this vital issue is chronically under-reported by companies. The United Nations Declaration on the Rights of Indigenous Peoples and ILO convention 169 should be used as benchmarks for the development of company policies on indigenous rights. Companies that fail to gain the free, prior informed consent of indigenous communities affected by their projects are in flagrant breach of international law.’
A resolution filed by investors at the AGM of Freeport McMoRan, the copper and gold mining group, asking it to appoint a company director with high level expertise and experience in environmental matters relevant to mining, has been supported by one third of shareholders. The resolution was filed by a coalition of the five New York City Pension Funds, APG, which manages the €173bn assets of the Dutch ABP pension fund for civil servants, the Swedish government AP 1-4 pension buffer funds, and the General Board of Pension and Health Benefits of the United Methodist Church in the US.
The SEC reportedly plans to focus on climate change disclosure requirements once it completes working on corporate compensation disclosure proposals, according to Pensions & Investments. The paper cited a statement from SEC spokesman John Nester in response to a letter sent last week by 41 institutional investors including CalPERS and CalSTRS and co-ordinated by the Investor Network on Climate Risk, urging the SEC to require corporations to disclose climate change and other environmental and social risks.
Unite, the UK’s biggest trades union has joined forces with the West Yorkshire Pension Fund to file a resolution at the July 3 AGM of Tesco, the UK supermarket chain, alleging discrimination against agency workers in the meat packing and supply sector. The resolution proposes that Tesco push for its suppliers to eliminate discrimination and treat all workers equally regardless of employment status and support for UK meat and poultry suppliers on employee equality. Tesco has recommended that shareholders oppose the resolution, saying that its adherence to the Ethical Trading Initiative covers such issues.
The UK Local Authority Pension Fund Forum has filed a resolution at Marks & Spencer, the UK retailer, calling for it to respect the UK Combined Code on Corporate Governance and split the role of current chairman/chief executive Stuart Rose.The UK National Association of Pension Funds has called for the UK Financial Reporting Council to strongly advise companies that performance-based pay should be largely in shares, ahead of the FRC’s review of the effectiveness of the Combined Code on corporate governance. The NAPF said disclosure on corporate remuneration policies, including the role of risk in setting objectives, could also be improved.
Link to NAPF
The French SRI market hit just under €30bn by the end of 2008, a rise of 37% on the year despite the financial crisis, according to Novethic, the French research company. Novethic said new institutional mandates as well as the conversion of some mainstream retail funds into SRI offerings had been behind the rise. Institutional mandates now represent 75% of the French SRI market with 22.5bn in assets, a rise of 54% on the year.
Link to Novethic report
Claire McLetchie, executive director of ASrIA, the Association for Sustainable and Responsible Investment in Asia has left the association for personal reasons. Wai-shin Chan, a former analyst with JP Morgan’s SRI team takes over as executive director.
The US is to introduce legislation that will allow shareholders in publicly-traded companies an annual non-binding vote on executive compensation and give the SEC power to ensure that corporate compensation committees are independent of management. A further bill put forward by Republican senator Gary C. Peters, if passed, would also give shareholders the right to nominate directors in company proxy materials and other powers to strengthen investor oversight of management and boards, including electing directors by a majority of the votes cast in uncontested elections, separating the roles of board chair and CEO and barring severance payments to executives who are terminated for poor performance. Peters’ proposed Shareholder Empowerment Act has been praised by the US Council of Institutional Investors.
Investors can quantify the long-term portfolio risks of corporations’ labour and human rights (LHR) behavior, according to a study by Harvard Law School’s Labor and Worklife Program (LWP). The study, titled: “Quantifying Labor and Human Rights Portfolio Risk” suggests an assessment system applicable to companies’ global supply chains that is based on the factory auditing system built by the Fair Labor Association (FLA), a multi-stakeholder initiative that monitors the supplier factories of companies such as Adidas, Liz Claiborne, Nike and Nordstrom. The study was written by Aaron Bernstein, a Program Senior Research Fellow and prepared for the LWP’s Pensions and Capital Stewardship Project. The paper is part of a broader Project initiative to develop metrics by which pension funds and other investors can assess the ‘S’ in ESG.
Link to Harvard paper
Just 30% of 224 companies responding to a survey by IBM, were found to be collecting data frequently enough that would enable them to make strategic decisions on issues such as CO2 emissions, water, waste, energy, sustainable procurement, labor standards, product composition and product lifecycle. The survey found that 24% were collecting relevant information only monthly and 32% no more than quarterly, It found that six out of every ten companies aren’t checking supplier data for labour standards. All the respondents, however, said they were committed to corporate social responsibility (CSR) principles and wanted to improve their business performance, contributions to society and reputation.
Vigeo, the French CSR rating agency and Novaster, the Spanish retirement and investment consultancy firm have signed a partnership targeting institutional investors in the Iberian markets with combined financial and ESG analysis of portfolio companies.
The Human Rights Solutions Forum, a web-based discussion forum on human rights dilemmas for multi-national corporations has been launched by the UN Global Compact and Maplecroft with funding by the GE Foundation. The forum has launched with a set of 30 human rights themes, including child labour, non-discrimination, privacy and access to water.
Link to forum*The US Securities and Exchange Commission* (SEC) is reportedly seeking information from more than two dozen pension fund managers, placement agents and other intermediaries as part of an investigation into pay-to-play issues at public pension funds. SEC spokesman, John Nester said the regulator was interested in the issues of finders fees, other payments and the work done in exchange. The move follows SEC investigations into alleged fraud in connection with a kickback scheme involving the New York State Common Retirement Fund (CRF) and David Loglisci, its former deputy comptroller and chief investment officer who has been charged with illegally accepting fees for asset managers in return for fund investments.
Institutional investors and asset management firms running assets of over $400bn have jointly founded the Conflict Risk Network (CRN), a project of the Genocide Intervention Network, that aims to work together to mitigate investor risk on holdings in conflict zones, notably in Sudan. Founder members include the State Board of Administration of Florida, CalSTRS, the Office of the Treasurer, State of Connecticut and the State Retirement and Pension System of Maryland.
Link to Conflict Risk Network
Masdar, Abu Dhabi’s state-owned green energy firm, has said it has invested $3bn out of $15bn it earmarked last year for renewable ventures both domestically and abroad. The fund said it planned to invest a further $10 billion by early 2016.
The Canadian Shareholder Association for Research and Education (SHARE) has named four new members to its Board of Directors. They are Margot Sunter, director of finance and administration, Community Foundation of Ottawa, Gerry Tiede, chairperson, BC Teachers Pension Fund, Ellen Pekeles, senior vice president of strategy, Vancity Credit Union and Bill Kuehnbaum, trustee and chair of the investment committee of the Pension Plan of the Evangelical Lutheran Church in Canada.
Approximately 50% of German retirement providers are reportedly offering ethical criteria in their product, but little is going towards specialist equity or private equity funds, according to a study by SD-M, a German sustainability consultancy on sustainability and
commissioned by the German Environment Ministry and Fortis Investment. IPE.com reports that the survey said 85% of all German pension assets is invested in fixed-income. The study claimed there was a need for tax-incentives to increase sustainable investment among institutional investors.
Zurich-based Sustainable Asset Management has hired Michael Baldinger, former head of distribution in the Americas for Credit Suisse Asset Management in New York, as head of clients & distribution, starting July 1st. Baldinger will also be a member of SAM’s executive committee.
UK companies are reportedly failing to meet accepted guidelines for paying bonuses to chief executives, according to voting agency Manifest. Financial News reports that in its annual report on remuneration, prepared in conjunction with consultants MM&K, Manifest said that on average UK companies, including fund managers Schroders, Hermes, Aviva Investors and Newton Investment Management, were breaching terms set out in 2004 by the Pay Performance Group, which required companies to keep bonus payments below 60% of total pay, as overuse of performance-related rewards might encourage risk-taking. Manifest said pay packages of the UK’s 100 top company bosses rose 7% last year to an average £2.6m (€3m), in a year when the FTSE 100 dropped by 31% and the country’s average wage stayed flat at about £24,900, according to figures from the Office for National Statistics. Manifest said it believed a review before the end of this year of the UK Combined Code on corporate governance would lead to a new obligation on companies to include risk management in their pay criteria.
Financial services companies are the worst offenders when it comes to failing to disclose climate change risks and mitigation strategies, according to analysis of US Securities & Exchange Commission (SEC) documents by Ceres, the environmental investor coalition. The analysis showed that 76.3% of annual reports filed in 2008 by S&P 500 companies failed to mention climate change, a figure that rose to more than 90% for financial companies in the index. Ceres said: “The fact that thelarge majority of S&P 500 companies neglect to even mention climate risk demonstrates the fundamental failure to implement securities law and protect investors.”
on the corporate compensation disclosure proposals.”
The first SRI index measuring the sustainability practices of Indonesian listed companies has been launched by the Indonesian Biodiversity Foundation KEHATI. The index will be calculated and maintained by the Indonesian Stock Exchange (IDX). The ESG methodology for the benchmark is being provided by OWW Consulting, the Kuala Lumpur and Singapore based CSR specialist.
A group of independent research companies in Asia are launching AsiaIRP, an industry association and advocacy group. AsiaIRP aims to enhance the reputation, awareness and regulatory environment of independent research in Asia and will be affiliated with its European equivalent, EuroIRP, but operate independently.
A survey of the SEC regulatory filings of 100 US leading US-listed firms has found that 59 made no mention of greenhouse gas emissions, while 28 did not discuss potential risks from rising sea levels or other aspects of climate change and 52 provided no information on what steps they were taking to adapt to climate change. The study by the Corporate Library analysis firm was based on information from the first quarter of 2008. It was carried out on behalf of Ceres, the environmental investor coalition and the Environment Defence Fund
The European Sustainable Investment Forum (Eurosif) has published a report highlighting critical business risks and opportunities in various industries linked with biodiversity and ecosystem services.
Link to Eurosif report
Climate change is moving up the agenda of mutual funds, with an increasing number voting in favour of resolutions that ask companies to assess the impact climate change is having on their business. A total of 61 mainstream mutual funds voted for climate change-related shareholder proposals, an average of 23.6 per cent of the time during the 2008 proxy season – up from 13.6 per cent the previous year, according to a Ceres study.