JPMorgan Investor Services, the global custodian, has launched a service to alert institutional clients when their investment portfolios have breached limits they have set on environmental, social and governance (ESG) criteria. The alerts, which can be set up as web-based reports, are incorporated in JP Morgan’s Compliance Reporting Services. The research, taken from reviews of company filings, corporate websites, policy statements, and CSR reports, covers about 50 categories, including adult entertainment, gambling, tobacco, weapons, country ties, board diversity, corporate governance, climate change and faith values. JP Morgan is sourcing the screening data from Institutional Shareholders Services (ISS), part of the RiskMetrics Group. Rajesh Kumar, executive director for compliance reporting services, JPMorgan Investor Services, said: “We have partnered with leading institutional and asset manager clients to further advance our investment compliance reporting application to support the growing interest in socially responsible investing.”
Eurofer, the €300m defined contribution pension plan for Italian railway and transport workers, which has stipulated responsible investment guidelines for its investment managers since it started in 2004, is reportedly tendering new mandates in equities and bonds. Riccardo Cesari, chief investment officer at the fund, told European Pensions & Investment News that the new mandates would comprise a new investment option forits 44,000 members. The new investment option will be split between 50% equities and 50% bonds. The fund’s two current DC options both invest heavily in bonds. Cesari said the fund was also considering investments in real estate and private equity.
PensionDanmark, the DKr70.4bn (9.4bn) Danish pension fund, is seeking to hire a custodian or corporate governance agency to handle voting on its listed equity investments. A spokesman for the fund said: “We are having conversations with a few providers in order to expand our own knowledge of the area before we sign up to the UN Principles for Responsible Investment later this year. We want to esnure that we can meet UNPRI governance requirements before we sign.”
The UN Principles for Responsible Investment (PRI) is reportedly preparing to create a version in Portuguese of its six principles for investor action in recognition of take-up amongst Brazilian investors. In Brazil, 22 institutions, mostly pension funds including Centrus, Funcef, Sistel, Petros and Valia, have signed up to the PRI, making it one of the biggest emerging markets countries for PRI interest.
Seperately, the PRI has also met with around 40 private equity firms and investors at a meeting in New York with the aim of signing up more private equity firms. Only two private equity companies –Doughty Hanson and Pantheon Ventures – have so far signed the PRI, out of a total of 360 signatories.
The US state of New Hampshire has reportedly agreed to divest its state pension funds from the worst-offending companies doing business in Sudan, according to the Sudan Divestment Task Force.
Sarasin, the Swiss private bank is reportedly hiring senior SRI professionals for a marketing push into the Nordic countries, according to Thomson Investment Management News. Andreas Knoerzer and Aris Prepoudis, Sarasin’s heads of sustainability and institutional clients, said the bank was also aiming to open a representative office in Stockholm by 2010. Sarasin manages approximately €5bn in sustainable investments, both pooled and segregated.
Friends of the Earth International claims that European banks including Barclays, Deutsche Bank, BNP Paribas, Axa, HSBC, UBS and Credit Suisse are increasing human rights abuses and adding to the problems of global food shortages by investing billions of euros in the production and trade of sugar cane, soybeans and palm oil in Latin American.
The NGO says the funding of agrofuels is leading to large scale rainforest deforestation in Brazil, Argentina, Paraguay and Colombia and has urged the banks to stop lending to companies in the sector.
Hermes, the UK fund manager, has asked the Dutch courts for an injunction to have preference shares at Dutch semiconductor equipment maker ASM International (ASMI) withdrawn. Hermes, which is understood to own about 15% of ASMI, is seeking to dismiss the company’s chief executive Chuck del Prado and five members of ASMI’s supervisory board over performance concerns at a forthcoming AGM. Hermessaid management at ASMI had borrowed money to exercise an option for the company to issue preference shares as protection against an unwanted takeover and thwart Hermes’ plans to put renewal of the board to a shareholder vote. The fund manager said: “Preference shares were not approved to dilute the ability of shareholders to influence the company through voting at AGM’s.”
Baring Asset Management is reportedly launching a global agriculture fund. Professional Pensions magazine reports that the fund managed by Jonathan Blake is aiming for long-term capital growth from investments in companies with earnings derived from activities relating to food and biofuel production.
European finance ministers have attacked excessive executive remuneration and said that so-called ‘golden parachute’ arrangements paid to departing executives in the event of corporate mergers and acquisitions represents a “potential conflict of interests” and should be fully taxed. The 15 finance ministers said the link between executive pay and company performance was often ‘weak’ if not ‘inexistant’. Jean-Claude Juncker, Luxembourg’s finance minister and president of the Eurogroup of finance ministers said: “The out-of-control excessive pay of company directors that we see now is scandalous.” He said each EU member state should put forward a plan of action to fight what he called a “social plague”.
Seung-Soo Han, Prime Minister of the Republic of Korea, is to address the plenary of the joint session held in Seoul on June 17 and 18th by the United Nations’ three leading sustainability organizations: The Principles
for Responsible Investment (PRI), UNEP Finance Initiative and the UN Global Compact. The conference, titled: ‘‘Changing Landscapes: Towards a Sustainable Economy in Asia Dialogue on Sustainable Finance”, is expected to attract more than 600 participants from South Korea and abroad to examine environmental, social and governance (ESG) factors across the business activities of financial institutions, institutional investors and corporations.
UNEP FI is to release a study on the barriers and drivers to commercial microfinance in Africa at its West African roundtable on “Sustainable Finance: Opportunities and Challenges” in Lagos, Nigeria on the 21-22 May.
US presidential candidate Barack Obama has backed a bill in the US senate that could make say-on-pay at US companies mandatory, as is the case in the UK and other European countries.
The UK Local Authority Pension Fund Forum (LAPFF), which represents assets of £95bn, said it welcomed moves by energy giant British Gas to cut its greenhouse gas emissions target by 8%, following three years of corporate engagement on climate change issues. LAPFF said it was in similar discussions on disclosure and reporting of emissions levels with FTSE350 companies in the oil, gas and transport sectors.A poll of the UK public carried out for F&C, the London-based fund manager, has shown that 88% of respondents felt that it was either “fairly” or “very” important for companies to take environmental, social and governance issues seriously, while 86% agreed that “companies can act responsibility”.
F&C presented the research findings at a conference for financial advisers interested in ethical and green investment. The survey questioned 2,000 people.
The most cited area of ethical concern was avoiding companies operating in countries with poor human rights records (25%) followed by avoiding companies whose activities damage the environment (21%).
Royal Dutch Shell faced an investor revolt at its annual meeting last week when just under half of voting shareholders failed to back a plan to award three executives €1m (£795,000) bonuses to stay in their jobs.
US private equity group Kohlberg Kravis Roberts & Co (KKR) has signed a ‘green portfolio’ partnership with the Environmental Defense Fund (EDF), a US NGO, which it says aims to measure and improve the environmental performance of companies within its US portfolio.
The two groups said they would develop a set of analytic tools for the environmental impact and energy efficiency of private equity portfolio companies which they will make publicly available later this year.