RI round-up: Long-term mandates, PRI signatories merge, ‘century’ green bonds

RI’s bite-sized look at the rest of the week’s important news.

Environment

The International Investors Group on Climate Change, which represents around 90 European investors worth €7.5 trillion, has welcomed the energy efficiency Communication from the European Commission, saying it sends a strong signal that energy efficiency is a key pillar of the EU’s 2030 climate and energy framework. Stephanie Pfeifer, Chief Executive of the Institutional Investors Group on Climate Change, said: “In order to achieve the 30% energy efficiency target, additional measures will be required in sectors not covered by the Emissions Trading Scheme, for example in the buildings and construction sector where there is great potential for emissions reductions. We now urge the Council to come to an agreement on the 2030 climate and energy framework at its meeting in October. Agreement is critical to help establish a more certain, long-term policy environment which will stimulate investment in low carbon solutions and energy efficiency.”

The Washington District of Columbia (DC) Water and Sewer Authority (DC Water) has issued $350m in green ‘century’ bonds with a 100-year final maturity, the first municipal century bond issued by a water/wastewater utility in the United States. The issuance represents DC Water’s inaugural green bond issue and the first “certified” green bond in the US debt capital markets with an independent sustainability opinion. DC Water also priced $100 million of tax-exempt, subordinate lien, variable-rate demand bonds during the week of July 21st bringing the total green bond allocation to $450 million. Goldman Sachs and Barclays jointly led the bond sale. DC Water said strong investor demand had enabled it to increase the transaction by $50m from an initial offering size of $300m. The century bonds were offered at an interest rate of 4.814% with a final maturity of 2114. Proceeds from the bonds will finance a portion of the DC Clean Rivers Project, a $2.6bn effort to construct a deep tunnel system that will transport combined stormwater and sewage to DC Water’s Blue Plains Advanced Wastewater Treatment Plant.

Alliance Trust Investments (ATI), the UK funds house, has this week added two more balanced funds to its “Sustainable Future” fund range, bringing the total number of products in the group to five. ATI said the two funds, known as “Sustainable Future Defensive Managed Fund” and “Sustainable Future Cautious Managed Fund,” will invest in shares, bonds and cash. The defensive fund will typically hold 45% in global equities – with the rest in bonds and cash – while the cautious fund’s exposure to global stocks will be 60%. “In line with other funds available in the Sustainable Future range, the managers will aim to invest in sustainable companies which have good business fundamentals and are undervalued,” said ATI.

The creditors of embattled German wind energy firm Prokon have overwhelmingly approved a plan by Dietmar Penzlin, Prokon’s insolvency administrator, to salvage the firm. A spokeswoman for Penzlin said that of the votes allowed during an extraordinary meeting yesterday (July 22), 99% were in favour of the plan. Under the plan, two Prokon business that have nothing to do with wind parks will be sold and 150 jobs at the firm axed. Penzlin hopes that the firm’s creditors, who entrusted €1.4bn to the firm, will get 30% of their capital back. A vote on an alternative plan proposed by Carsten Rodbertus, Prokon’s founder and former CEO, was not allowed by the Hamburg Court overseeing the firm’s insolvency proceedings. Penzlin fired Rodbertus in April after discovering that Rodbertus failed to have the firm’s accounts for 2012 and 2013 certified and amid allegations of possible embezzlement. Rodbertus is currently under investigation by local authorities.CDP and South Pole Group are holding a webinar on July 31 from 3-4pm GMT to examine the climate change implications of investment portfolios including comparison to appropriate benchmarks to explain the effect of stock selection and sector allocation decisions. Speakers include Susan Seymour, Trustee, Joseph Rowntree Charitable Trust.
Link for more information

Social

The UN-supported PRI has opened a consultation on long-term mandates. It has written a discussion paper that presents a range of potential ways in which investors can look at a long-term investment horizon. It is seeking feedback on its ideas and has also asked PRI signatories to share examples of their approach to long-term investment and in particular mandate design. Responses should be sent to Will Martindale by Friday 12 September. It is also seeking examples of leading academic research on long-term investment.
Link to PRI discussion paper

The UK all-party parliamentary group on international corporate responsibility has called on the British government to intervene and push for investigations into deaths at a British-owned gold mine in Tanzania run by African Barrick Gold (ABG), amid unconfirmed allegations that four people may have been killed there this year. Lisa Nandy MP, who chairs the group, reportedly said: “In the past six years we know that 16 people have been shot dead by the Tanzanian police, which indicates that this is a major problem.” Nandy, said the North Mara mine had ‘a major problem’

Two PRI signatory fund managers are to merge after Legg Mason, the US fund manager announced it was acquiring $9.8bn (€7.3bn) UK asset manager Martin Currie for an undisclosed sum, with the latter retaining its branding identity.
The deal is set to finalise by the fourth quarter of the year.

Governance

Board members at CalPERS, the $290bn (€215.3bn) pension fund for California public employees, must undergo at least 24 hours of investment training every two years as a result of a new law signed on July 18 by California Governor Jerry Brown. According to the trade medium Chief Investment Officer, the training includes understanding fiduciary responsibilities, pension investments, governance, actuarial matters and administration. CalPERS’ Board has 13 members, six of which are elected by beneficiaries and four of which are public officials, including California’s treasurer and controller. Two other members are appointed by California’s governor and one by the California Senate Rules Committee.

The level of shareholder voting at Dutch AGMs this year rose to a new record with a median of 70% of the issued capital voting at each meeting, against 63% in 2013, according to a report by Eumedion, the Dutch investor governance group. Eumedion said the most controversial 2014 agenda item (defined as more than 20% voting against) concerned pre-emptive rights of shareholders against rights issues by companies.

CalSTRS has asked Pepsi to give activist investor Nelson Peltz a seat on its board. The Californian fund, which owns a $250m stake in Pepsi, reportedly made the request in a letter to Pepsi’s senior independent director Ian Cook. It is supported by at least one of the company’s top 10 shareholders, according to the Financial Times. However, CalSTRS’ Californian state peer fund CalPERS has said it does not support the move.