Ethos, the Swiss SRI investment foundation, has dropped a threat of court action against UBS over sub-prime investment losses after the Swiss bank agree to provide a summary of all its reports relating to an inquiry by the Swiss Federal Banking Commission. Ethos, which has been highly critical of risk controls at UBS, said the summary would give shareholders “more in-depth information” than they would normally receive from a special audit.
Institutitional investors have filed a record 54 global warming shareholder resolutions at US companies, double the number filed two years ago, according to Ceres, the environmental investor coalition and the US Interfaith Centre on Corporate Responsibility. Resolutions have been filed with companies in eight industries, including electric power companies, oil and coal producers, airlines and homebuilders.
The two highest profile resolutions will likely be at ExxonMobil and ConocoPhillips in the oil and gas sectors. Investors say Exxon Mobil has been unresponsive to requests during the last ten years that it develop greenhouse gas reduction targets and adopt a policy for renewable energy research and development. ConocoPhillips is being challenged by investors over its plans to become the largest producer of oil from Canada’s tar sands, where extraction has been criticised for environmental damage and greenhouse gas emissions.
Other US companies targeted include Dynegy, the electric power company, Massey Energy, the coal power group, US Airways, and Standard Pacific in the building sector. Many of the investors filing resolutions are part of the Investor Network on Climate Risk (INCR), an alliance of 60 institutional investors with collective assets totalling more than $5 trillion.
The California State Teachers’ Retirement System (CalSTRS), the second largest US pubic pension fund, has filed climate-related resolutions for the first time this year. Jack Ehnes, chief executive officer at CalSTRS, said: “Scientific consensus of the potentiallydestructive impacts of climate change on the global economy is clearer than ever. Companies in every industry, especially energy sectors, should be acting now to assess and mitigate climate change risks.” www.ceres.org
PGB, the €10bn pension fund for the Dutch printing industry, has placed an initial €25m in renewable energy to kick-start an estimated €200m commitment socially-responsible investment portfolio, reports ipe.com. The €25m has been invested in the DIF Renewable Energy fund, which invests mainly in wind and solar energy projects. PGB said it planned to invest a total 2% of assets in clean energy, microcredit and environmental and social sustainability projects. The fund will also monitor its existing investment portfolio checked every six months for environmental, social and governance risks using the UN’s Global Compact principles as a benchmark. Dirk Wieman, chief investment officer of GBF – PGB’s pension provider, said: “The first green investment fits perfectly into PGB’s policy to increasingly take sustainable investment criteria into account. Sustainable energy is an important growth market, and PGB reckons that social and financial returns will go together in the long term.”
The Greenpeace China Finance Campaign has launched a campaign called “Uncovering hidden environmental risks” with the aim of helping fund managers, prime brokers and analysts strengthen the environmental elements of their analysis of Chinese companies: Click for info
UK activist fund manager, Hermes Equity Ownership Services, has lost the services of its chairman David Pitt-Watson to the UK governing Labour party, where he will work as general secretary.
The £3.1bn Lothian Pension Fund is reportedly taking a lead role in a class action against Swedish mobile phone company Ericsson, according to ipe.com. The fund alleges the company issued “materially false and misleading statements” costing it $3.2m (€2.1m) in investment losses.
Fortis Investment Management and Deka Investments have joined the lawsuit against Ericsson. The writ claims alleges that Ericsson broke US federal security laws by publishing false and misleading statements reassuring the market that demand for its products and services remained strong, even though it was actually weakening in some markets, particularly in North America and Europe. The writ alleges that investors purchased shares at “artificially inflated prices”.
The first annual report by the joint ethical council of Sweden’s AP funds will be published next month, including all the names of the companies it is currently engaging with, reports ipe.com. Eva Halvarsson, chief executive of AP2, said there had been 70 incidents, out of 120, which were considered serious breaches, and of these the council had an “active dialogue” with 15 companies.
Milberg Weiss, the US law firm, has topped the RiskMetrics Group fifth annual “SCAS 50” report on the biggest settlements gained from class action lawsuits. Coughlin Stoia Geller Rudman & Robbins was top for winning the highest number of settlements, while Grant & Eisenhofer received the highest average settlement value. RiskMetrics said that settlement values appeared to be rising with the cut-off to make the top 20 in highest settlements last year rising to $148.5m in 2007 against $94.1 million in 2006.
Almost three quarters of UK pension schemes (71%) that responded to a poll of 192 funds do not consider environmental issues in the day-to-day running of the scheme with 7% saying they were not interested in green issues. The survey, by e-share, a pensions administration group, said 94% of respondents believed they could do more to become environmentally friendly.The mayor of London, Ken Livingstone, has reportedly lobbied the £3.6bn (€4.85bn) London Pension Fund Authority, which manages the pension schemes of several London local authorities, to reduce carbon emissions in its choice of investments. Mike Taylor, chief executive at LPFA, told the National Association of Pension Funds investment conference: “My trustees were approached by the mayor of London who asked us to prioritise the reduction of carbon. I have more than 200 employers involved in my scheme and I know that many of them have long-term investment responsibility at the top of their list of priorities. Taylor said trustees should take the impact of climate change into account when making investment choices and warned that they could face legal action in the future if they don’t.
British banks face being drawn into the £3bn Liechtenstein tax evasion scandal after the UK Inland Revenue reportedly asked the British Bankers’ Association for information about institutions based in that country and other global tax havens, according to UK newspaper The Observer. The paper, citing senior City of London sources, said UK-connected financial institutions could face prosecution if it is proved they recommended tax evasion techniques to clients.
US and European shareholders including Dutch pension funds ABP and PGGM will receive an additional payment of $35m from Royal Dutch Shell after the group said it had settled a US class action lawsuit relating to its oil reserves downgrade in 2004. Shell has agreed to pay more than $80m to settle a class action filed by the Pennsylvania State Employees’ Retirement System and the Pennsylvania Public School Employees’ Retirement System. The oil group agreed an initial $353m settlement with European shareholders last year.
The settlements still have to be agreed by courts in the US and the Netherlands. Shell said in a statement: “The proposed US and Dutch settlements, if approved by the courts, would put an end to all pending litigation arising out of the 2004 reserves recategorisation.”
Hong-Kong-based companies are increasingly willing to disclose and elaborate on ESG operating risks, according to ASrIA, the Asian SRI association, which has released its second report on supply chain listings in Hong Kong. The report covers companies listed on the Hong Kong Stock Exchange during 2006 and 2007. http://www.asria.org/publications
Industrial Fund Management, based in Shanghai, plans to launch a fund investing in shares of “socially responsible” Chinese listed companies. The company received regulatory approval to launch the fund earlier this month. The fund manager said it would invest in companies with a good record on environmental protection, social responsibility and operating in the public interest.
The European Union says it wants developing countries to make more effort to cut greenhouse gas emissions rather than rely on carbon-offset schemes, a Commission official said. Yvon Slingenberg the EC’s head of emissions trading, said: “If developing countries continue to be only offset suppliers we simply will not reach desired emissions levels. We expect a gradual shift from offsetting to cap and trade.”
PIRC, the UK governance advisory firm, is to start rating companies on their corporate responsibility (CR) performance and risks. The new GovernancePlus Rating service will score companies on the extent of forward thinking, their degree of independence and freedom from conflicts of interest, and their equitable treatment of key stakeholders, before producing an overall companyrating. PIRC will also comment on future developments relating to the company that could radically alter its CR Rating. The rating will initially be applied to FTSE100 companies before being extended to the rest of the FTSE during 2008. PIRC said it would also explore whether to extend the rating service to markets outside the UK.
Sovereign wealth funds have an estimated $1.3 trillion, or 44% of their total assets, managed by external managers, according to a report by Cerulli Associates, the US research firm. Sovereign funds have come under increasing pressure recently from regulators in the US and Europe, as well as corporate governance associations, to act as responsible investors.
Australia’s Garnaut Climate Change Review has released its interim report. The Review’s role is to advise on effective policy responses to climate change, including a market-based emissions trading scheme (ETS), and the interim report provides some early guidance on the likely sector effects of these policies.
UK SRI fund managers have slammed this week’s government budget, which had been expected to bring a raft of new environmental regulations, as a missed opportunity regarding investment. UK Chancellor, Alistair Darling, announced he would include a “carbon budget” alongside next year’s main budget. He pledged, amongst other measures, to create than one million jobs in environmental industries in the next two decades and said all non-domestic buildings would have to be zero-carbon by 2019, on top of a similar target for all new homes by 2016. He also said high pollution car drivers would pay higher road tax in the first year, while drivers with low emission cars would be exempt for the first year. Seb Beloe, head of SRI research at Henderson Global Investors says: “Investors are crying out for greater clarity on the regulatory structure that will enable the UK
to meet its challenging carbon reduction targets over the coming decades. Today’s Budget was a golden opportunity to set out more clearly the fiscal framework designed to channel investment and behaviour in support of these objectives. Instead of offering coherence however, the Budget has only created confusion.”
The International Finance Corporation (IFC) and the United Nations Secretary-General’s Special Representative on Business and Human Rights (SRSG), Professor John Ruggie of Harvard University, have released a consultation draft of a research paper commissioned on foreign direct investments and human rights. This joint study aims to raise awareness of the relationship between the protection of investor rights and a host state’s human rights obligations under international agreements. It specifically examined the impact of stabilisation clauses, where foreign investors sign agreements opting out of onerous future legislation changes, on host state’s ability to adopt and implement human rights laws and regulations in areas such as labour, non-discrimination, and protection of health and the environment. The report can be obtained from: Link to report
Willis, the world’s third largest insurance broker, has reportedly pulled out of involvement in Burma. The company was placed on the Burma Campaign UK’s ‘Dirty List’ in 2004 over allegations that it directly or indirectly helped finance Burma’s brutal military dictatorship.The Burma Campaign UK said Willis had ceased its Burmese links. The campaign has written to all insurance companies operating out of the United Kingdom urging them to follow the example of Willis, Swiss RE and AON by ceasing to insure companies operating in Burma. The FTSE4Good global index has removed 15 companies and added 41 companies. For the list of companies removed and included Click here
Large UK and European companies are improving their management of greenhouse gas emissions and related business risks, according to Taking the Temperature, a report issued by Insight Investment, which analysed 125 companies from the FTSE 100 (excluding investment trusts) and Europe. However, the research identified 21 companies that scored poorly, which it said suggested “significant gaps” in their environmental management. Rory Sullivan, director of responsible investments at Insight, said: “We intend engaging with these companies to understand the reasons for their poor scores. We need to know whether it is it just a question of poor disclosure or whether there are fundamental weaknesses in these companies’ management systems and processes.” He added: “From an investment perspective, the overall results are extremely positive. Looking forward, 80 (of the 125 companies analysed) have published greenhouse gas emission targets, with 39 expecting their total emissions (excluding offsets) to stabilise or reduce over the next five years.”