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RI round-up Aug 1

RI’s bite-sized round-up of the week’s main Responsible Investment news.

A survey of 350 investment professionals has found that ‘Environmental, social and governance’, ‘sustainability’ and ‘responsible investment’ are the top three terms favoured to define the integration of ‘off-balance sheet’ issues into the analysis of company performance. The survey by Axa Investment Managers and AQ research found that terms such as ‘corporate health’ ‘non-traditional’ and ‘extra-financial’ were less popular. Axa said an important obstacle to the integrating sustainable analysis into mainstream investing had been the lack of agreement amongst investors about what to call it. The survey also found that 68% of buy-side investors and 56% of sell-side providers said that their principal motivation for considering responsible investment factor in investment was to catch long-term performance benefits.
Hermes Equity Ownership Services, the UK fund manager, has launched an initiative to help investors navigate the legal systems of European member states and know their rights when acting in concert. The UNPRI encourages shareholders to work collectively to effectively and proactively exercise their ownership rights. However, the action of “acting in concert” has been made difficult because each EU member state has different rules on shareholder activism and the legal consequences for shareholders acting in concert differ from country to country.
The principles for an investable Pan African SRI benchmark/index based on global best practices adapted to African realities are to be unveiled at a ‘Roundtable onSocially Responsible Investment (SRI) in Africa’ held at the UN in New York on 16 September.
The first conference of the United Nations Principles for Responsible Investment Academic Network is being held in Maastricht on 17 September in conjunction with the European Centre for Corporate Engagement. The network aims to build a global community of academics and interested practitioners around PRI-related research, and disseminating the latest academic research within the industry. The PRI is also partnering with the Oikos Foundation at the University of St. Gallen in Switzerland, a corporate sponsored body which promoted ecology and social issues in the teaching of business, to conduct the first PhD academy focused on responsible investment, to be held in early 2009. The PRI is also joining forces with the UN Conference on Trade and Development (UNCTAD) in Geneva in November for an investor/public sector dialogue to explore how investors and policy makers can assist each other through responsible investment.
Shell chairman, Jeroen van der Veer, has reportedly dismissed threats of boycotts by ethical investment funds over controversial tar sands operations in North America, claiming campaigners should be careful because failure to exploit unconventional sources of new oil could leave the world using more coal.
 The Guardian UK newspaper reports that oil sands extraction boosted Shell’s earnings by 74% over the last three months and contributed to record profits of nearly $8bn (£4bn) in the second quarter of the year, equivalent to £2m an hour.

Eleven microfinance groups that lend to nearly 26 million people have agreed to publicly report their annual interest rates, amidst accusations that the once-charitable sector is becoming increasingly commercialized. Nobel Peace Prize winner Muhammad Yunus, said this week at the 11th annual Microcredit Summit Campaign conference in Bali, Indonesia: “If you are making profits you are moving into the same mental mind-set as loan sharks.” Yunus says he believes interest rates should be set to cover costs, not maximize profits.
Kent County Council, which oversees the £2.6bn Kent Pension Fund, has reportedly come under pressure from the Green party, which have accused the fund of having £109.5m invested in companies it claims have links with Zimbabwe. The Green party said the groups included Anglo American, Rio Tinto, oil companies BP and Shell and banks Standard Chartered and Barclays. Stuart Jeffrey, Green Party campaign officer, said: “The Mugabe regime has been condemned by all four major parties in the UK. Yet we have an utterly bizarre situation where Kent county councillors refuse to consider the effects of their inaction.”
Seperately, Waltham Forest council has pledged to try and act more ethically in its business practices following revelations last year that its pension fund had invested in companies which do business with Burma. At a full council meeting members passed a motion which instructs officers to report back on areas where they may be ethical concerns.
Eight Chinese NGOs have awarded the first Chinese Green Banking Innovation Award to China IndustrialBank. The award is the first-ever in China specifically about green banking and sustainable finance. It was nominated and voted by eight NGOs: Green Watershed, Friend of Nature, Institute of Public & Environmental Affairs, Green Earth Volunteer, Global Environmental Institute, Civil Society Watch, China Development Brief and Green Volunteer League of Chongqing. SynTao, the Chinese corporate social responsibility consultant, acted as an advisor to this award.
Japan is expected to launch a trial carbon emissions trading scheme in October, according to the government.
Seperately, the Australian Government has issued released proposals for a carbon emissions trading system to start in 2010 following the publication of a green paper proposes that emissions from energy, transport, industrial processes, waste, and oil and gas production would be covered by the cap and trade system. The US states of California, Arizona, New Mexico, Oregon and Washington have also set in motion plans to create a combined carbon trading system along with Canadian provinces British Columbia, Quebec, Ontario and Manitoba. The scheme, part of the Western Climate Initiative launched in 2007, will initially be targeted at large polluters such as utilities, oil refineries and heavy industry from 2012, with emissions from transport and other fuels included from 2015, reports Maplecroft, the risk analysis group.
Graham Sinclair, former manager of the UN Principles for Responsible Investment Project in emerging markets and developing countries, is
launching Sinclair & Company, a boutique ESG investment consultant. The firm sells bespoke consulting to institutional investors on the integration of environment, social, and governance (ESG) factors into investment practice.
Jon Lukomnik a founding member of the International Corporate Governance Network (ICGN), has been named as the new program director of the of the Investor Responsibility Research Center for Corporate Responsibility (IRRCi). Lukomnik is the co-author of “The New Capitalists: How Citizen Investors are Reshaping the Corporate Agenda.”
Investments in oil from tar sands or oil shale are both environmentally and economically unsustainable and can only serve to undermine international efforts to combat climate change, according to a report released by WWF and the Co-operative Financial Services (CFS). The report said oil extracted from tar-soaked shale or sand creates up to eight times as many emissions as conventional oil production, while also using three barrels of water to produce just one barrel of oil and destroying large tracts of arboreal forests in the process.The report said more than $125bn of unconventional oil projects have been announced for development by 2015. Ian Jones, head of responsible investment at The Co-operative Investments, said: “We intend to use this report as the basis of our shareholder engagement with oil companies to try to persuade them to take a more progressive path.”
Three Lloyd’s of London syndicates, Kiln, Atrium and Catlin, have been named by the UK Observer newspaper as helping to insure the Burmese junta’s state-owned airline Myanma Airways.
UK trades unions have discussed lobbying the government to push it to give worker trustees half the seats on pension funds. At a recent three-day Labourunion policy forum at Warwick University, the unions reportedly discussed the issue which they said would allow them to better protect members’ interests and promote ethical investment and good corporate governance by the companies in which funds are invested.