RI round-up April 25

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

Investors including Sweden’s AP1 And AP4 government pensions buffer funds, The Public Service Alliance of Canada (PSAC) Staff Pension Fund and The Ethical Funds Company in Canada, have pushed Canadian mining firm Goldcorp to conduct an independent human rights impact assessment on its operations in Guatemala. Godlcorp has been criticised over the environmental and human rights impacts of its mining operations in the country. The investors, who have been lobbying the company for two years, said they hoped the assessment would become a benchmark for mining companies operating in high-risk countries. As a result of Goldcorp’s announcement, the investors have withdrawn a shareholder resolution submitted to the company in March. The assessment is expected to be completed in the next 8-12 months, with Goldcorp subsequently develop a plan for implementing its recommendations. Helene Regnell, research director of GES Investment Services in Sweden, sustainability advisor to the Swedish AP funds, said: “The outcome of this process could set a precedent for the entire industry and is crucial for Guatemala, since the mining industry has rapidly expanded there. However, after ending 36 years of civil war, the country is extremely vulnerable. Therefore, mining companies and others have a responsibility to make sure their business operations are sustainable over the long-term, and respect the Maya culture.”
CalPERS the $240bn pension fund for Californian public employees, has sharpened its requirements for companies to disclose and act upon climate risks like carbon emissions. The fund said its new environmental guidelines, which reference a 14-point “Corporate Governance Checklist” developed by Ceres, a coalition of investors, environmental groups and investment funds, aimed to protect issues that “could diminish investment returns”.CalPERS said it would also work with the Investor Network on Climate Risk to survey public equities’ investment managers regarding their ability to evaluate climate risks and opportunities of the companies in which they invest. It said the survey results could help investors identify best practices to incorporate into their review process for current and prospective fund managers. The fund has also adopted new diversity guidelines for ensuring a better mix of sex and race among its corporate board nominees. Russell Read, chief investment officer at CalPERS has also announced he will step down on June 30, 2008, to pursue interests in environmental and clean-tech investing.
The Council of Institutional Investors (CII), the US corporate governance and shareholder lobby group, has elected Dennis Johnson, senior portfolio manager in charge of global corporate governance at CalPERS as its chair. He succeeds Jack Ehnes, CEO of California State Teachers’ Retirement System (CalSTRS). At a recent general meeting, the CII adopted new policies on board succession planning, CEO succession planning and shareowner access to a company’s proxy materials. The latter recommended that companies provide proxy access for a long-term investor or group of long-term investors owning in aggregate at least 3 percent of a company’s voting stock for at least two years to nominate less than a majority of the directors. Click for CII website
German bank KfW, one of Europe’s largest bond issuers, has started to apply sustainability criteria to the management of its own €20bn fixed income securities portfolio, as a result of its membership of the UN Principles for Responsible Investment. Scoris, the German sustainable research company, part of the Siri network, will advise on KfW’s choice of investments and issuers ratings. 

European companies lose market value when involved in reported environmental incidents, according to a study from Umeå School of Business in Sweden, based upon companies appearing in the alert service of GES Investment Services in Sweden. The study, financed by Mistra, the Swedish sustainable investment foundation, looked at 142 reported environmental incidents over three years and found they were generally associated with negative returns, albeit not always statistically significant, except for incidents involving companies in Europe. A further study will be made on the possible financial impact of human rights risk ratings and incidents.
Dutch shareholders association, VEB, has reportedly called for a takeover code to be introduced in the Netherlands after a commercial court rejected its request for an inquiry into management at ABN Amro over its decision to enter exclusive merger talks with Barclays, the UK bank, before eventually merging with a consortium of RBS, Fortis and Santander. Thomson Investment Management News reported the VEB saying takeover situations should be made more transparent, more predictable and fair.
ABP, the fund manager of Dutch civil service pension scheme APG, and one of the world’s largest investors in SRI strategies, will seek new pension clients in Italy, Belgium and the Central/East European region, according to senior vice president Jaap Maassen. Maassen outlined the plans at the signing of ABP’s merger with Cordares, the pension manager for the construction industry, which will create a joint pension administrator managing €240bn in assets. The merger isexpected to be ratified in July.
Sir Nicholas Stern, author of the UK Stern report on climate change, has told Reuters that he “badly underestimated” the degree of damages and risks of climate change in his 2006 report, which argued that emissions be cut to at least 25 per cent below current levels to avoid a dangerous temperature rise of over two degrees.
Shareholders from a group of eleven US and UK-based fund managers have criticised BP’s decision to invest in extracting oil from Canadian tar sands, citing high environmental impacts. The fund managers involved in filing the joint declaration at BP’s recent AGM included the Ecumenical Council for Corporate Responsibility and Christian Brothers Investment Services.
Citigroup faced its first ever climate change resolution based on its external financing of coal-fired power plants at its AGM this week. The resolution was filed by investors including Boston Common Asset Management, Catholic Healthcare West and Pleroma.
Aircraft makers including Boeing and Airbus, as well as airlines and airports have pledged to work towards “carbon-neutral growth” and reduce their industry’s contribution to global warming. They also petitioned governments to develop a global emissions trading scheme for the aviation sector, rather than introduce carbon taxes. The UN Intergovernmental Panel on Climate Change said last year that the aviation industry made up 3% of total global carbon dioxide emissions in 2005, expected to rise to 5% or more by 2050.
The European Commission has reportedly said it will not backtrack on its target of getting 10% of
road transport fuel from crops and biomass by 2020. The proposals have become increasingly controversial amid soaring world food prices and fears that farmland in developing countries is being diverted away from food crops towards biofuel. Stavros Dimas, EU environment commissioner told Reuters that the target would meet strict conditions to prevent social harm and promote second-generation biofuels from domestic and agricultural waste.
Merrill Lynch, the US banking group, has agreed to buy $9m in carbon credits for projects aimed at avoiding the felling of rainforest in Indonesia. The project will be run by Australia’s Carbon Conservation and Fauna and Flora International, an NGO.
Clean energy stocks have taken a tumble since the beginning of the year. New Energy Finance, the clean tech index specialist, said the value of Wilderhill New Energy Global Innovation Index, which tracks clean tech firms, had dropped 17.9% in the first quarter, underperforming both the NASDAQ and S&P500.
Société Générale Index has launched the SGI Global Carbon Index in collaboration with Centre Info, the Swiss sustainable research company. The equity index covers companies with the lowest carbon intensity amongst the worldwide industrial, utilities, energy, capital goods and materials sectors.
RCM, the London-based fund manager, has expandedits sustainability research team by hiring James Britland to the position of analyst. Britland joins from Goldman Sachs where he worked for two years in the Pan European Mid-Cap team focusing on capital goods companies. He will primarily support fund manager Bozena Jankowska, running the Allianz RCM Global EcoTrends Fund.
EEA Fund Management, the carbon and clean energy investment specialist, has hired Paul Bowden as principal engineer to review and advise on investment opportunities and transactions involving renewable energy assets and, for business development of EEA’s asset financing business.
Shareholders at Washington Mutual, including Change to Win, the US labour union coalition, have prompted the resignation of Mary Pugh, chair of the finance committee at Washington Mutual over huge mortgage-related losses as a result of sub-prime lending.
Innovest Strategic Value Advisors and the Inter-American Development Bank (IDB) have launched the Opportunities for the Majority (OM) Index of publicly traded firms operating in the Latin American and Caribbean (LAC) region for investors. The index will rate and rank companies based on their management of opportunities for broad public wealth creation and sustainability.