France’s Forum for Responsible Investment (FIR) has announced the winners of the fourth FIR Prize for European Research in finance and sustainable development, supported by Eurosif and the UNPRI. Each research winner was awarded €5000. The prize for best research article was awarded to the joint paper by Diego Nocetti (USA), Elyès Jouini (France/Tunisie), and Clotilde Napp (France) on the cost/benefit analysis of social and environmental projects titled: “Properties of the social discount rate in a Benthamite framework with heterogeneous degrees of impatience.” The best Master’s thesis was awarded to Mélanie Oschlies, a German studying at the University of St Gallen in Switzerland, for a paper looking at why renewable energy is not yet attractive enough for investors, titled: “A behavioral finance perspective on sustainable energy environment decisions. The best doctorate paper was awarded to Nils Kok at Maastricht University for a paper on the environment and long-term property values, titled: “Corporate governance and sustainability in global property markets. FIR also distributed three research bourses worth €3000 each: the first to Dorothee Techmann, studying at Paris-Dauphine University for research on internalising costs in large infrastructure projects; the second goes to Oguzhan Karakas and Elroy Dimson at London Business School for work on the relationship between the corporate social responsibility (CSR), practices of a firm and its value/performance; the third to Sonia Rahal at the Sorbonne in Paris on reconciling solidarity and profit in microfinance projects in Senegal. Link to site
A group of the largest US foundations has launched a campaign challenging their peers to dramaticallyincrease their investments in community development, environmental sustainability and other so-called “mission investing” strategies. The More for Mission Campaign, with a leadership committee of 24 foundation CEOs that represent close to $19 billion in assets, is challenging other foundations to increase mission investments by at least 2 percent of total foundation assets – some $12 billion over the next five years. The campaign has developed a resource centre at the Boston College Institute for Responsible Investment. Link to site
Sustainable Asset Management (SAM), the Swiss RI manager has opened an office in Toronto for a push into the Canadian market. The manager has hired Andrew Kavouras, a former vice-president for institutional client services at CDP Capital, the fund management arm of the Caisse de dépôt et placement du Québec, to head its Canadian office.
A sub-prime losses lawsuit against Merrill Lynch led by the Ohio State Teachers Retirement System has resulted in a $475m (€367m) settlement by the US bank. The suit, originally filed in 2007, alleged that the pension fund and other investors in Merrill Lynch stock suffered “substantial losses” when the company wrote down billions of dollars in assets backed by sub-prime mortgages two years ago, according to a statement from the office of Richard Cordray, Ohio Attorney General.
A report by the US Government Accountability Office (GAO) released by Senators Byron Dorgan and Carl Levin said that a majority of the largest publicly-traded companies and federal contractors in the United States use subsidiaries in offshore tax havens to conduct business, potentially depriving the US of $100 billion in lost tax revenues each year.
Senator Dorgan said: “This report shows that some of our country’s largest companies and federal contractors, many of which are household names, continue to use offshore tax havens to avoid paying their fair share of taxes to the U.S. And, some of those companies have even received emergency economic funds from the government. I think we should take action to shut down these tax dodgers and we will be introducing legislation to do just that.”
F&C, the UK fund manager, has issued a report titled: ‘Factory labour standards in emerging markets: an investor perspective’. It focuses on four main areas of concern: security of supply, impact on consumers, transparency and factory labour standards and looks at a number of major companies who source heavily from emerging markets and identifies leaders and laggards. It concludes with a set of four recommendations to companies to address these risks. Link to F&C report
A controversial pay and bonus scheme for executives at Bellway, one of Britain’s biggest builders, has been defeated with 58% of shareholders voting against, in a sign that institutions are stiffening their fight against excess remuneration. Bellway had proposed paying directors revised, generous bonuses despite a significant drop in revenues and share price. Peter Montagnon, director of investment affairs at the Association of British Insurers (ABI), said: “This is a very clear message that there must be a proper link between reward and performance, even in a sharp economic downturn. “ The ABI, whose members control about 15% of the stock market, had placed a “red top” warning on Bellway’s remuneration plan, illustrating its highest level of concern.Paul Myners, the UK Financial Services Secretary has said the UK government will act as a responsible shareholder in banks such as Royal Bank of Scotland, in which it now owns a majority stake. Myners said: “As a responsible lead shareholder, the Government ensure that the board is appropriately resourced, that the company’s approach to risk is professional and consistent with protecting and enhancing the value for shareholders and that the company’s control regimes and its approach to remuneration comply with the best standards.” Myners has also strongly criticised institutional investors for failing to crack down on excessive boardroom pay or raise questions over the doomed business strategies of major financial institutions in an interview with the Observer newspaper. Myners said: “I’m disappointed there’s not more evidence that institutional investors have been seized by the challenge of addressing the shortcomings that have emerged in corporate governance as a result of this crisis. Institutional shareholders need to be asking themselves: were they appropriately engaged in asking questions about the risk appetite of our banks? Were they asking sufficient questions about competency of directors, and were they appropriately engaged in examining and approving compensation cultures?” Myners, author of the well-known eponymous report on institutional investment and a former chairman of Gartmore Investment Management, also warned about the potential ‘reckless caution’ of banks not extending credit to companies, which he said would ultimately damage the portfolios of institutional investors.
Paul Volcker, chairman of Barack Obama’s Economic Recovery Advisory Board and a former chairman of the
Federal Reserve under Presidents Jimmy Carter and Ronald Reagan, has co-authored a report by the Group of Thirty, a non-profit think tank focused on economic and monetary affairs. The report titled ‘Financial Reform – A Framework for Financial Stability’, sets out 18 recommendations to strengthen the oversight and stability of important financial institutions. Under the proposals, hedge funds and private equity funds would be required to meet higher standards of transparency, while credit rating agencies, accounting standards and clearing arrangements for derivatives are also put under the spotlight. Link to site
Patrick Savadoux, former head of socially responsible investment (SRI) at Natixis Asset Management, has joined Mandarine Gestion in Paris to launch a new SRI fund. Savadoux left Natixis in November 2007 along with Stéphane Prévost to create their own boutique, La Financière Responsible.
Denmark has adopted a law requiring its 1100 largest companies to report on their CSR and socially responsible investment efforts from 2010. Under the bill, publicly listed companies, state-owned companies and institutional investors must include CSR information in their annual financial reports as well as managements’ expectations for the future with regard to CSR/SRI. The law does not oblige companies to adopt a CSR/SRI policy but it does require to stated explicitly if they do not have one. The law says that participants of the UN Global Compact or UN Principles for Responsible Investment (PRI) can refer to their progress for these bodies in the annual reports.
Christine Lagarde, French Minister of Finance, has criticised “certain” EU member states that impose limited responsibilities on custodian banks to ensure that assets entrusted to them exist, in response to the Madoff Ponzi scheme scandal in the US. Lagarde was understand to be criticising Luxembourg, where UBS, the Swiss bank registered two so-called “feeder” funds that investedwith Madoff and where custodianship was delegated to a third party. The two funds are believed to have had assets of about €2bn ($2.7bn) invested with Madoff. Lagarde said a new directive was needed on the responsibilities of depository banks. “It is essential that Europe brings a rapid and co-ordinated response to preserve the confidence of savers.”
PIRC, the London-based proxy voting agency has recommended investors oppose the annual report and accounts at Majedie Investments, the £187m UK-based global equity trust, saying the fund has no clear voting policy, which PIRC said goes against best institutional investor practice. The fund also makes no statement as to whether it considers social, ethical and environmental (SEE) matters as part of its investments. PIRC also raised concerns about special final bonus payments to a director and what it said was insufficient independent representation on the board. Separately, PIRC is to make its shareholder voting recommendations publicly available via its website. Its recommendations on companies will be available the day after the relevant meeting has taken place, with the previous six months’ company meeting available at any time. Link to site
Lloyds TSB has reportedly agreed to pay $350m (£231m) to US authorities in connection with charges it faked records so clients from Iran, and Sudan could do business with US banks, violating the International Emergency Economic Powers Act under which the US president can block commerce with countries deemed a threat to the United States, according to Reuters.
Primark, the UK clothing store, faces allegations that knitwear suppliers in the UK paid illegal immigrants just over half the minimum wage, following an investigation by the Observer newspaper and the BBC. The reports alleges that TNS Knitwear, a Manchester-based Primark supplier breached key employment and immigration laws. TNS Knitwear has denied the allegations. Primark said it was investigating the reports.
A survey by Watson Wyatt of global fund managers conducted at the close of 2008 reveals that managers hold overall bullish views for returns on public equities, investment grade bonds, high yield bonds and emerging markets over the next 5 years. For the same time horizon, it said they hold fairly bearish views of returns on hedge funds, government bonds, money market and real estate. The managers are largely neutral overall on the prospects of private equity and currencies. Carl Hess, global head of investment consulting at Watson Wyatt, said the chief lesson to be learned from the credit crisis is that pension plan investing really is a long-term game and that investment behaviour should genuinely mirror this; that the governance capability of a fund should determine the sophistication of its investment strategy; that risk is multi-faceted and deserves multiple metrics for its measurement and monitoring; and that alpha will always be in short supply and only reliably available to the very best investors.
The International Centre for Financial Regulation (ICFR), which says it is an independent, non-partisan global research body with the aim of restoring confidence and stability in financial regulation, has been launched in London with initial financial backing from more than 15 financial houses, four consultancies and support from the City of London and the UK government. Barbara Ridpath, former executive managing director at Standard & Poor’s, is heading the operation as chief executive.
South Korea has reportedly announced it will invest more than $38bn (£25bn) in environmental projects under a ‘Green New Deal Job Creation Plan’ announced by prime minister Han Seung-soo. At the same time, Japan has pledged to create a million new jobs through green infrastructure initiatives. Japan has set a 2020 target to create a green business sector worth $1 trillion employing 2.2m people. UK prime minister Gordon Brown announced plans last week to create 100,000 jobsthrough new green infrastructure projects, while US president-elect Barack Obama has pledged to create five million jobs by investing $150bn in clean tech as one of the centrepieces of his planned economic stimulus package.
Venture capital investment in clean tech firms across the US, Europe, China and India set new records last year as the value of investments soared 38% year-on-year to $8.4bn, despite the economic turmoil that dominated the second half of the year. It marks the seventh consecutive year that clean tech investment levels have risen, according to figures from the Cleantech Group. Despite growth tailing off in the fourth quarter, US cleantech companies raised $5.8bn over the year, up 56% from 2007. Europe enjoyed growth of 43% on 2007 with $1.8bn invested. China recorded a 22%increase in investment levels to $430 million. Israel and Germany that recorded the most impressive growth with disclosed venture capital investment in each of their burgeoning clean tech sectors more than trebling year-on-year to $247m and $383m respectively. Solar firms accounted for four out of every ten venture capital dollars invested in clean tech. Investors also continued to migrate from first-generation ethanol and biodiesel technologies to next-generation biofuels technologies, led by algae and synthetic biology companies, said the Cleantech Group. Other sectors with healthy investor interest, it said, included smart grid companies, small-scale wind turbines, plastics recycling, green buildings and agriculture technologies.
The UK’s Financial Services Authority has made the biggest financial crime-related fine in its history, charging the main UK subsidiary of America’s Aon Corporation more than £5m (€5.5m) for weak anti-bribery and corruption systems regarding 66 “suspicious payments” to overseas third parties between 2005-2007. The FSA has vowed to crack down harder on financial misdeeds.
Henderson Global Investors, has shut the activist fund it set up two years ago following the departure of its manager, John Havranek, to rival Hermes, reports Financial News. Havranek founded Henderson’s fund in February 2007 in a joint venture with accountants PwC. A spokeswoman for Henderson confimed the closure of the fund.
Deminor, the Benelux corporate governance and activist group, has reportedly said it is to file a legal complaint against UBS , HSBC, Hyposwiss and others by the end of January for allegedly neglecting clients who invested in Madoff-related products, according to Reuters. Deminor claims that the banks involved acted as depository banks for the funds but did not verify the true nature of the investments.
HRH Charles, Prince of Wales led a meeting last week of the UK Corporate Leaders Group on Climate Change with Prime Minister Gordon Brown to discuss how action on climate change will help stimulate economic activity and job creation. Alain Grisay, chief executive of F&C Asset Management represented the fund manager alongside companies including John Lewis Partnership, Lloyds TSB, Shell, Tesco, Unilever and Vodafone.
The €320m Ampère Equity Fund, a sustainable energy investment fund set up by Dutch pension funds ABP and PFZW, has taken a 49% stake in a new solar energy project in Italy, reports ipe.com. The project, based in Apulia region of Southern Italy, is a construction of seven solar-energy parks, expected to be operational by 2010. The Ampère Equity Fund was launched in late 2007 with the aim of investing up to €500m in sustainable energy projects, to include onshore and offshore wind farms and biomass power stations in various Western European countries.
UK-based asset manager Impax is reportedly starting fundraising for a new renewable energy private equityfund, writes Environmental Finance Magazine. The fund would be a second renewables infrastructure fund after the €125 million ($165 million) Impax New Energy Investors LP, launched in 2005, which invests in European renewable energy projects. It is understood the new fund could also look to invest in North America. US president Barack Obama has pledged to double US renewable energy generation over three years.
Two of the UK’s biggest customer-owned banks are merging to create an ethical “super-mutual”. The merger of Co-operative Financial Services and Britannia building society will create a business with £70bn in assets, nine million customers and more than 300 branches. The groups said the new business would provide a “unique, ethical alternative to shareholder – and government – owned banks.”
SHARE, the Canadian shareholder research group has published the results of a joint research project on the ‘Impacts of Good Labour Practices on Property Performance’ carried out in association with the Carleton Center for Community Innovation, and the Responsible Property Investing Center. www.share.ca/property.
UNI Property Services, the global union, has signed an agreement with G4S, the world’s largest security solutions group, to ensure that G4S’s 570,000 employees across more than 110 countries have the right to organise unions in a free and fair atmosphere and that the company will follow international and national labour law in its relations with workers.
Lord Browne, managing director at Riverstone, the private equity firm, and former group chief executive of BP, Bill Emmott, former editor of The Economist, and Professor Paul Collier, professor of economics and director of the Centre for the Study of African Economies at Oxford University, have joined a senior advisory board at Critical Resource, the London-based advisory firm on sustainability and socio-economic issues for energy and mining projects.