The €34.5bn French pensions reserve fund (FRR) this week started an internal review of its responsible investment strategy on climate change issues and is expected to announce the findings by the middle of April. In December, Responsible Investor revealed the fund was reviewing managers for mooted clean tech mandates, although details have yet to be made public.
A spokeswoman for the FRR declined to comment. The fund also announced its investment return for 2007 of 4.8% or €1.6bn, six per cent down on its 11.1% return for 2006.
Jean-Louis Nakamura, chief executive officer (CEO) of the €8.4bn French public service supplementary pension scheme, ERAFP, is leaving after less than six months. The fund is one of Europe’s most notable responsible investors and runs all its assets according to SRI principles since it became a signatory to the United Nations Principles for Responsible Investment (PRI) in 2005. In March 2006, ERAFP adopted an SRI Charter, similar to that of the €34bn French Reserve Fund, built around five values: respect for the rule of law and human rights, social advances, labour participation, the environment and proper governance and transparency. It also mandated BNP Paribas AM, Integral Development AM, Robeco Institutional AM for SRI equity mandates worth between €100m and €400m. Pictet AM was put on standby for a similar mandate. It is understood that Nakamura, who was previously chief investment officer at FRR until joining ERAF in August, 2007, is joining Lombard OdierDarier Hentsch. Investors look set to lock horns once again with the US Securities & Exchange Commission (SEC) after it ruled that companies including Bear Sterns, JPMorgan Chase and E*Trade Financial could block shareholders from voting on proxy-access proposals including the shareholder nomination of company directors, without breaching federal regulations. Richard Ferlauto, director of pension and benefit policy at the American Federation of State, County, and Municipal Employees, one of the largest unions in the US which co-filed four of the access resolutions, said it would shortly announce whether it would follow up on threats of legal action against the SEC. Last year, some of Europe’s largest pension funds threw their support behind a campaign by US investors to quash the SEC’s proxy access proposals, which they said could undermine their right to representation on the board of companies they invest in. However, in a debate that became increasingly split along Republican versus Democrat political lines, the SEC pushed through the proxy-access veto. Read proxy season feature
Cheryl Smith, executive vice president and senior portfolio manager at Trillium Asset Management, has been named the new chair of the board of the US Social Investment Forum. Smith replaces outgoing SIF chair, Tim Smith senior vice president of Walden Asset Management who served from 2002-2007.
More than 400 of the world’s biggest institutional investors will meet in New York on February 14 to
discuss climate change and potential investment solutions. The conference is hosted by the United Nations Foundation and Ceres, the institutional investor coalition, which directs the Investor Network on Climate Risk (INCR), a network of 60 institutional investors with collective assets of more than $4 trillion. Delegates in New York will listen to speakers including Al Gore and Nobuo Tanaka, executive director of the International Energy Agency. A statement from the organisers on previous summits, said: “The information they shared raised profound concerns about investor exposure to climate risk, the future security of investment assets, and the fiduciary duty to take prudent steps to address climate risk on behalf of shareholders and beneficiaries.”
In November, 2007 Ceres led a coalition of US investors managing more than $1.4 trillion (€960bn) in assets in writing to the US Congress appealing for it to toughen up environmental standards and promote renewable energy.
Proposals for a new multi-billion dollar international low-carbon technology transfer fund proposed by UK, US and Japanese finance ministers at the G7 meeting of finance ministers of the biggest industrialized nations in Tokyo, appear to have met lukewarm support from other governments. A communique issued after the G7 summit said the group had “discussed” the idea, but there was no commitment from France, Germany, Italy or Canada to sign up to the fund. Work on the fund is expected to continue with a spokesperson for the World Bank telling Reuters that a formal announcement was expected soon following discussion with other UN agencies and the private sector. The aim of the fund will be to accelerate lowcarbon investments in developing economies.
The state of Michigan is reportedly suing Tyco International in a US federal court on behalf of the $62bn Michigan Retirement Systems, according to US newspaper Pensions & Investments. It said the lawsuit said the fund had lost $50m because of alleged misconduct at Tyco, which it said had inflated its earnings and manipulated its books to hide excessive executive compensation. The fund is seeking $51m to $81m in damages.
Testimonies to the US Congress have suggested controls be placed on sovereign wealth funds investing in US financial services firms. Larry Wortzel, chairman of the US-China economic and security review commission told a congressional hearing on the implications of sovereign wealth fund investments for national security: “Some observers have questioned whether one nation’s sovereign investments could lead to influence over key industries, access to technology, or influence over another nation’s policies.” Sovereign wealth funds from the Middle East and Asia are estimated to have invested $44.3bn (€30.6bn) since 2006 in US financial services groups. Former US treasury secretary Larry Summers recently told an audience of business and political leaders at the World Economic Forum in Davos, Switzerland, that sovereign wealth funds should sign up to a ‘responsible’ code of conduct.
The £10bn (€13.4bn) Strathclyde Pension fund, the UK’s largest local government pension scheme, has said it is signing up to the United Nations’ Principles for Responsible Investment.
Studies published in the journal Science have
attacked global political policies backing biofuel production, claiming that carbon lost by planting biofuels on rainforest, peatland, savannahs and grasslands outweighs the reduction from burning biofuels instead of oil and natural gas.
California State Controller John Chiang has called on state pension giants CalPERS and CalSTRS to encourage companies they invest in to promote more women and ethnic minority members as directors. In a letter to the funds, Chiang said: “Despite widespread acknowledgement that diversity underpins the composition of a healthy board, women and minorities continue to be underrepresented on corporate boards.” Chiang has asked for the issue be discussed at the funds’ forthcoming board meetings.
In a report issued last week, the Financial Stability Forum, made up of treasuries, central banks, and supervisors in important financial centres, said poorly informed investors and irresponsible banks had been responsible for exacerbating the credit crunch.
Notably, the report singled out performance-pay issues at top financial groups, which, it said: “encouraged disproportionate risk-taking with insufficient regard to longer-term risks”.
It also criticised “off balance sheet” accounting used by banks for borrowing as well as poor investor practices, which it said including “excessive, too often mechanical, reliance on credit rating agencies”.
Companies that put social responsibility at the heart of business strategy believe they will be more competitive, attract and retain the best talent, and gain access to newbusiness opportunities, according to a report released by IBM.
It said 68% of those surveyed focus on generating revenue through CSR activities while 54 % believe CSR initiatives contribute to competitive advantage because of increasing customer and investor sensitivity.
Leipzig-based European Energy Exchange and Eurex, the derivatives exchange are expanding their cooperation in CO2 trading from March 26 by trading futures in Certified Emission Reductions – global emission credits under the Kyoto Protocol, on the EEX. To incentivise trading, the exchanges are waiving fees on the futures for 2008.
Many UK funds labelled ‘SRI’ are investing largely in mainstream stocks such as Vodafone and Royal Bank of Scotland, which regularly appear in their top 10 holdings, rather than pure clean technology companies, according to a report by financial consultancy Holden & Partners.
The report also found that a significant number of SRI funds invest in mining corporations and oil majors including BP, Shell, and Total. Peter Holden, a partner at Holden, said: “This report shows that the SRI and ethical funds have not kept pace with the public’s appetite for environmental solutions. Many are investing in mainstream ‘old economy’ companies whose contribution to solving environmental problems is questionable.”
Faith-based investors have filed 313 shareholder resolutions with 208 companies throughout the United States and Canada, according to the 2008 edition of
the “Proxy Resolutions Book” published by the 275-member organisation Interfaith Center on Corporate Responsibility (ICCR). Issues of greatest concern to socially responsible investors this year are the environment, CEO pay, and access to health care, according to the guide.Seventy-six resolutions were filed on the topic of the environment, 53 on corporate governance, 46 on health care and 32 on human rights. Laura Berry, executive director at ICCR, said: “Our members are at the forefront of the social and environmental shareholder movement. The resolutions collected in the latest edition of ICCR’s ‘Proxy Resolutions Book’ show the depth and breadth of the hard work that goes into our communication with companies.” http://www.iccr.org/publications
Voting by French shareholders on corporate issues jumped by more than 15% in 2007, according to analysis of 270 general meetings by Proxinvest, the French proxy voting group. Voting participation rose to 66.63% of the total number of shares issued compared to 50.26% in 2006 after the lifting of a previous rule blocking shares unless shareholders were identified 3 days before a company meeting. Opposition to board resolutions also rose to 5.13% for the companies of the SBF 250 index compared to 4.15% in 2006 and 1.27% in 1999. Resolutions showing an average negative vote of 10% or more tended to be on issues of anti-take-over devices, shareholders rights limitations, capital increaseauthorisations excluding priority or preferred subscription rights of the existing shareholders and share related plans for employees and managing directors.
Almost three-quarters of UK pension trustees are fearful about possible private equity acquisitions of their own companies, despite significant increases in allocations by their funds to the asset class, according to a survey by Aon Consulting. The survey of 250 trustees of defined benefit schemes, said the figure increased to 80% among trustees of schemes valued at £100m (€134m) or more. For 30% of respondents, the most common private equity fear is short-term funding requirements for pensions, while 20% worried about deterioration in the strength of the employer covenant. A further 20% raised concerns about a lack of interest in scheme members, and 15% admitted to “fear of the unknown.”
Twenty-two high wealth individuals, from life peers to dot-com entrepreneurs, including six members of the House of Lords, two knights and several dot-com experts are backing theBigGive.co.uk, a new online initiative to promote proactive philanthropy. The Big Give encourages high-level donors to proactively search £1.2bn of projects from 4,000 UK charities. Supporters include Lord Salisbury, former leader of the UK House of Lords.