NYSE Euronext has launched the Low Carbon 100 Europe Index, identifying European companies with a low carbon footprint. It adds to the growing numbers of index providers setting up environmentally based benchmarks. The index uses data provided by Trucost, the UK-based environmental research company and Crédit Agricole Cheuvreux, the Paris-based brokerage firm. BNP Paribas, the French banking group, has announced it will base its first low-carbon exchange traded fund on the NYSE Euronext index. The Low Carbon 100 Europe Index measures the performance of the 100 largest blue-chip European companies with the lowest carbon (CO2) emissions in their respective sectors or sub-sectors. It is based on a methodology developed in collaboration with Paris Dauphine University and validated by an independent scientific committee. Non-Governmental Organisations (NGOs) including AgriSud, GoodPlanet.org and WWF were also involved in advising on the index. Jean-François Théodore, deputy chief executive officer at NYSE Euronext said: “There is a growing investor appetite for products that are carbon efficient. This innovative initiative enables NYSE Euronext to offer investors a new trading tool and to enlarge our environmental offer, which already includes Bluenext and Metnext.”
Renewable energy companies are generally smaller and more volatile than the market on average, according to MSCI Barra, the index provider in its latest researchbulletin: ‘Is there a Green Factor?’ However, the index house said a statistically significant ‘green factor’ has emerged in recent years in green portfolios, which is not fully accounted for by firm size, sector, style and geographical distribution and warrants further investigation of the risk and return characteristics of such portfolios.
Link to the research bulletin
Canada’s Meritas Mutual Funds has filed shareholder proposals requesting an annual say-on-pay advisory vote at eight Canadian companies: Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Nortel Networks, Royal Bank of Canada, Sun Life Financial, Toronto-Dominion Bank and TSX Group, which operates the Toronto stock exchange and Montreal futures exchange.
Meritas Mutual Funds’ chief executive officer, Gary Hawton, said: “Canada’s largest issuers provide their shareholders with solid, and ever-improving, executive compensation disclosure, but no efficient and inclusive way to respond to the decisions that have been made by the board on their behalf.” Canada’s Shareholder Association for Research and Education (SHARE), which assisted Meritas said a similar proposal had received average support of 40.5% when Meritas put it on the ballot at the 2008 annual meetings of Canada’s five largest banks. None of the banks elected to implement the advisory vote.
New York City pension funds could start investing in local infrastructure projects after the city’s Comptroller William C. Thompson, Jr. said he feared development projects could be derailed by a weakening economy. Thompson said the city’s funds could invest in projects to repair and expand roads, bridges, power plants, and schools.
US mutual funds and asset managers offering clean tech and renewable energy funds say they continue to see strong demand and will launch new funds during 2009. A survey using responses from 14 members of the US Social Investment Forum found that 72% plan to introduce new funds, which would result in a total of 10 or more new green mutual funds, ETFs or indexes. The survey found that eight such green fund related products had been launched since January 1, 2007. The survey respondents were Calvert, Eric Smith and Associates, First Affirmative Financial Network, 1st Portfolio, Green Century Capital Management, Troy Hunter (Walnut Street), KLD Research & Analytics, Krull & Company, MMA Praxis Mutual Funds, Pax World, Progressive Asset Management, SJF Ventures, Trillium Asset Management, and Winslow Management Co. Also contributing to the favourable outlook is the expectation that a federal greenhouse gas cap-and-trade programme will be developed in the US in 2009 or 2010. Bennett Freeman, senior vice president for social research and policy at mutual fund manager Calvert, said: “That would give even greater impetus to investment in alternative energy.”
CAFOD, the Catholic aid charity, has alleged that a nickel mining project run by a partner company of Anglo-Australian giant BHP Billiton has been imposed on aPhilippine island community through bribery and poor information. CAFOD said residents of Macambol on the island of Mindanao, claimed that BHP Billiton’s joint venture partner, AMCOR, and Philippine government officials, had allegedly offered members of the community bribes in return for supporting the proposed mine and to silence opposition. The charity said there were numerous environmental and livelihood concerns over the mine. CAFOD’s report and executive summary can be found here: www.cafod.org.uk/inthedark
The British Telecom Pension Scheme (BTPS) has seeded a new absolute return fund investing in long term equity opportunities in South East Asia launched jointly by BTPS-owned Hermes Equity Ownership Services (EOS) and Corston-Smith Asset Management. The ASEAN Corporate Governance Fund will invest in approximately 20 companies at any one time with EOS providing a governance overlay and Corston-Smith managing the portfolio. The fund aims to raise £200m from institutional investors. Colin Melvin, chief executive offficer of EOS, said: “This Fund is the first governance and engagement fund of its kind and we are excited to be applying our expertise in corporate governance towards developing good practices in South-East Asia. We will be looking for well governed and accountable companies that have potential for improved growth and performance.” Corston-Smith is also launching the ASEAN Shariah Corporate Governance Fund, which it says is the first shariah corporate governance fund globally.
AccountAbility, the non-profit research institute, has launched a new edition of its sustainability
assurance standard AA1000AS (2008). The standard enables corporate stakeholders to verify the nature and extent of an organisation’s understanding of and response to its non-financial, sustainability issues and on the quality of its publicly disclosed information on its sustainability performance.
Fourteen of the largest US institutional investors have called on the Securities and Exchange Commission (SEC) to require improved corporate climate risk disclosure and address a broader range of environmental, social and governance (ESG) risks in disclosure requirements. The letter was sent in response to the SEC’s request for public comment on its 21st Century Disclosure Initiative, File No. 4-567, which proposes to modernise the current SEC disclosure system to enhance its usefulness to investors. The 14 signatories include asset managers and leading U.S. institutional investors such as CalPERS, CalSTRS, and the Maryland, New Jersey, New York City and New York State public pension funds or treasurers. The letter asks the SEC to appoint an investment professional as a member of the Federal Advisory Committee to ensure that investor views on climate risks are represented. It also proposes the creation of a subcommittee of the Advisory Committee to consider how material environmental, social and governance (ESG) data can be integrated into registrants’ SEC filings.Pirc, the UK voting advisory group, has criticised executive pay at Ashmore Group, the emerging market fund manager, claiming that chief executive Mark Coombs’ remuneration package is too short-term and based on unchallenging performance criteria. Pirc said it was concerned that Coombs’ £4.2m (€5.4m) bonus last year was worth 42 times his base salary. While Ashmore caps base salaries at £100,000, Pirc said this could encouraging excessive risk-taking by executives seeking to make up pay. Pirc, which advises institutional clients with more than £1.5 trillion in assets is recommending a vote against the pay package at Ashmore’s annual general meeting on October 30.
The UK based Association of Chartered Certified Accountants (ACCA) has published a discussion paper examining the causes of the current financial crisis and potential remedies including realigning executive pay for the growth of sustainable businesses and improvement of risk management systems. The project was led by Paul Moxey, head of corporate governance and risk management at ACCA, who is also a member of the Network for Sustainable Financial Markets. Link to the paper