RI round-up March 20

RI’s bite-sized round-up of the week’s responsible investment news.

The Canadian Shareholder Association for Research and Education (SHARE) has submitted a recommendation to the pension regulatory bodies of Alberta and British Colombia to bring in requirements obliging pension trustees to consider environmental, social and governance (ESG) factors in their investment decisions. The proposal would require funds to produce a statement of investment principles akin to those for UK pension fund trustees. Both provinces are currently reviewing relevant legislation.
SHARE has also recommended that shareholder proposal mechanisms be adopted in Quebec, in response to a call for comment on the forthcoming Companies Act. www.share.ca/
Anthony Ling, chief investment officer for global research at Goldman Sachs has reportedly said the terms ‘socially responsible investment’ (SRI) and ‘environmental, social and governance’ approaches (ESG) are hampering the debate on long-term investment. Thomson Investment Management News reports that Ling told a London conference: “If I could get rid of ‘SRI’ and ‘ESG’ I would. We are talking about fundamental analysis to succeed in a long-term investment strategy. The word SRI is not doing any service.”
Ling reportedly said the addition of ethics into the debate was confusing what he said was a purely financial issue: “We can analyse ESG factors until the cows come home but if there is no proof that they make a difference to the company to generate high returns it will not cut the ice with the stock market,” said Thomson.
The Carbon Disclosure Project (CDP), the world’s largest investor collaboration for prompting companiesto report greenhouse gas emissions and environmental policies, has signed a three-year global partnership with Merrill Lynch. The US bank will help the CDP analyse corporate emissions data and help it launch into new regions such as China and Korea.
Graham Sinclair, manager of the UN Principles for Responsible Investment Project in emerging markets and developing countries, is stepping down from the post. Sinclair is taking a short-term position lecturing at the University of North Carolina Chapel Hill Kenan-Flagler Business School on sustainability in investment markets. He is also joining the advisory board of a new SRI fund in Switzerland.
Thierry Deheuvels, former managing director at AGF Asset Management and member of the SRI committee at AFG, the French asset management association, is joining Oddo Asset Management in Paris as director of investments.
WikiLeaks.org, the website that allows corporate whistleblowers to post documents anonymously, has been given legal backing to go back online following attempts by Swiss Bank Julius Baer to shut down the site after internal documents regarding alleged tax evasion and money laundering in the Cayman Islands were posted on the site. In the US, Judge White denied the Swiss bank’s request to silence following a first amendment defence by groups including the Reporters’ Committee for Freedom of the Press and the American Civil Liberties Union. The case continues next month. www.wikileaks.org
Bear Stearns, the troubled US investment bank, is reportedly being investigated by Keller Rohrback, the US
law firm, over allegations that the bank’s share ownership and pension plan trustees may have continued investing assets in Bear Sterns shares when it was no longer a prudent investment. The law firm said this could potentially violate the Employee Retirement Income Security Act of 1974.
EU leaders say they will finalise talks before the end of 2008 to fight climate change by implementing a 20% cut in greenhouse gases by 2020, compared with 1990 levels.
The US Securities and Exchange Commission has warned pension funds to tighten up compliance procedures so as not to risk anti-fraud and insider trading laws in their asset management. The warning followed an insider trading inquiry into stock purchases by The Retirement Systems of Alabama (RSA), a state pension fund. RSA purchased shares of The Liberty Corporation while in possession of material, non-public information about the prospective acquisition of Liberty. RSA learned about the transaction because it was providing financing for the acquisition. RSA had no program, policy, practice, or training to ensure its investment staff understood and complied with insider trading laws. When the information became public, the value of RSA’s Liberty shares increased by more than $700,000.
Hermes Equity Ownership Services, the governance activist manager, has reportedly won mandates totalling £1.76bn (€2.29bn, $3.57bn) from VicSuper, an Australian superannuation fund, and PNO Media, which manages the pension scheme for 340 Dutch media companies, according to FTFM. The paper reported it had also won athird mandate from an unnamed Dutch corporate pension fund.
More than half of UK finance directors say defined contribution pensions will not provide workers with sufficient income in retirement, according to research from Fidelity, the fund manager. Simon Fraser, president of Fidelity’s investment solutions group, said: “Marginally higher contribution levels this year cannot mask the fact that many employers remain conscious their schemes are unlikely to produce good pensions for their employees.”
Thousands of UK companies, including supermarkets, banks and hotels face financial penalties if they do not meet carbon reduction targets from 2010 under the government’s Carbon Reduction Commitment. UK business and public sector organisations whose annual half-hourly metered electricity use, is above 6,000 MWh will pay a fixed price for allowances until 2013 when the government will impose a cap on the number of allowances, and all allowances will be sold each year via an auction.
German institutional investors are seeking to reclaim damages of at least €10m over sub-prime investment losses at IKB Deutsche Industriebank via a German class–action lawsuit, reports ipe.com. Munich-based law firm Rotter said two dozen German and other European institutional and private investors were behind the suit. IKB, currently on offer for sale, told investors in July last year it expected a good first quarter and dismissed concerns about the US subprime. Shortly afterwards, it issued a profit warning, and chief executive Stefan Ortseifen resigned.