RI round up: Sept 4

RI’s round-up of the week’s most important responsible investment news.

Taiwan’s $24bn Labour Pension Fund is reportedly looking to adopt a set of SRI principles for its investments, according to Asian Investor magazine. It quoted Lee Ruey-ji, vice chairperson of the fund’s supervisory committee in Taipei, as saying that in the near-term, the fund would start avoiding investment in businesses involved in labour rights violations and begin taking a more active role in shareholder activism in relation to ESG issues in companies in which it holds substantial stakes. The fund is also planning to adjust its benchmarks to exclude so-called “sin” industries, including tobacco, alcohol and gaming establishments.
The Irish Association of Pension Funds (IAPF) has reportedly said that pension funds are confused over how they should apply ethical criteria to issues such as investments in companies in pariah countries like Zimbabwe. Jerry Moriarty, director of policy at the IAPF, told European Pensions & Investments News: “This kind of thing comes up quite regularly for the Irish National Pensions Reserve Fund (NPRF). It’s a very difficult area. The NPRF is signed up to the UN’s charter (UNPRI) and was one of the first sovereign funds to do so. “It’s difficult because how far down do you take it? Some of it was because they invest in BAT, which has tobacco farms in Zimbabwe, so does that mean they’re directly invested or not? It’s also difficult because irrespective of the issues in Zimbabwe, we need to know the stage at which it is it ok, and when it is not ok. And how quickly can funds react practically to those issues?” Recently Irish newspaper reports claimed the NPRF had nearly €500m invested in assets with links to Zimbabwe, a figure which the NPRF said was exaggerated.The US state of New Hampshire has ordered its two public pension systems to shed any investments that support the Sudanese government, which is accused of a campaign of genocide and rape in Darfur. However, pension officials reportedly say the order could be unconstitutional and are mounting a legal challenge against. The funds have been given 90 days to identify problematic investments in companies doing business with the Sudanese government, including oil and arms trading. They then have 90 days to engage with the companies to remedy the problems, but, failing any action, would have to sell their investments. Opponents say the law is at odds with the trustees’ fiduciary responsibility and say the constitution says public retirement plans must make investment decisions “for the exclusive purpose” of benefiting current and future retirees and retirement funds and “shall not be encumbered for, or diverted to, any other purposes.”
New York Attorney General, Andrew M. Cuomo, has announced the first-ever binding and enforceable agreement for a major national energy company to disclose the financial risks that climate change poses to its investors. The agreement with Xcel Energy, requires it to provide detailed disclosure of climate change and associated risks in its Form 10-K filings, the annual summary report on a company’s performance required by the SEC. It comes as many power companies, including Xcel, are investing in new coal-burning power generation that will significantly contribute to global warming emissions. Cuomo said: “This landmark agreement sets a new industry-wide precedent that will force
companies to disclose the true financial risks that climate change poses to their investors.”
The United Nations Conference on Trade and Development (UNCTAD) and the UN PRI will host a public-private sector workshop on November 7 in Geneva to explore how the investment community and policy-makers can work together to further common goals. The organisations says the conference is designed to discuss the fact that investors alone can only go so far in encouraging responsible corporate practices and that public policy is required to address externalities in the economy, to the benefit of investors and society at large.
The UNEP FI Property Working Group has issued a report recommending ten strategies and case studies to increase the environmental and financial performance of investor property portfolios.
Link to report
UNEP FI has also launched a Global Water & Finance Survey. The study, deadlined for September 12, aims to find whether or not financial institutions and their service providers are currently taking water-related issues into consideration within decision making processes, especially regarding agribusiness activities: download it from: Link
Australia is launching the Responsible Investment Academy, which is expected to open in the second quarter next year. 
Louise O’Halloran, executive director of the Responsible Investment Association Australasia,said the academy would include a combination of web based and live events in line with a CPD program in RI to be launched next year.
Noble Environmental Power, the US wind farm developer, is continuing planning for a $375m floatation on Nasdaq, despite an investigation into the company by New York State Attorney General. Noble says it will offer about 24.4m common shares for the float. The New York State Attorney General is investigating Noble over alleged improper dealings with public officials and anti-competitive practices. First Wind, another US developer, is also planning a $450m floatation despite similar investigations in New York over allegations of improper practices in obtaining land and permits to build wind farms.
Citi, the US banking group, has announced it has entered into a five-year contract with ACCION Texas, the microfinance company to purchase up to $30m of its micro enterprise loans. The companies said the transaction was a first for the U.S. microfinance industry and will give ACCION Texas expansion capital to become Citi’s national microfinance service provider, handling underwriting, servicing and collections.
The UK government has upheld allegations against UK company Afrimex that it broke international guidelines by sourcing minerals from a Congolese war zone. Global Witness, a UK-based NGO, which campaigns to break the links between the natural resources and armed
conflict made the allegations in a report in 2007. The government also upheld allegations that the company had bought minerals produced in harsh conditions, including forced and child labour.
Directors of the UK’s top companies can retire on pensions of over £200,000 a year, according to the TUC PensionsWatch survey.
The TUC’s sixth annual PensionsWatch survey analysed the pension arrangements of 346 directors from 102 of the UK’s top companies. It shows that top bosses have amassed pension pots that average around £3 million each, providing an annual pension of £201,700 a year – 25 times the average workplace pension that ordinary workers receive (£8,100). Three quarters of the directors surveyed (76%) belonged to defined benefit (DB) schemes.
The International Monetary Fund (IMF) says it is optimistic that agreement can be reached on voluntary investment practice guidelines for sovereign wealth funds. The IMF is attempting to broker the agreement ahead of the IMF-World Bank Annual Meeting on October 10.
The total assets of the world’s largest 300 pension funds grew by over 14% in 2007 to reach $12 trillion, a rise of $1.5 trillion on the previous year’s figure, according to research by Pensions & Investments and Watson Wyatt. The survey said the US remains thecountry with the largest market share of pension funds assets accounting for 43%, although its share has been eroded (54% in 2002) due to a weak dollar and various significant developments around sovereign pension funds elsewhere. Japan has the second largest market share on 14%, largely because of the Government Pension Investment Fund of Japan which is still at the top of the ranking, a position it has held for the past five years, with assets of over US$1 trillion. The UK, Netherlands and Canada all have the third largest market share of 6%.
APG Investments – the wholly-owned asset management company of giant Dutch pension fund ABP, one of the world’s largest responsible investors, has formally merged with Cordares, the €25bn pension fund manager for the Dutch building industry. The merger creates a giant pension administrator managing €230bn in pension assets covering four million government, education, construction and housing corporation workers.
Exxon Mobil has reportedly agreed to pay out 75% of a US$507.5 million damages ruling to settle the 1989 Exxon Valdez oil spill off Alaska. The Anchorage Daily News said the oil giant would release about $383m for distribution to the nearly 33,000 commercial fishermen and others who sued Exxon after the worst tanker crash in US history.