RI round up: June 2

RI’s regular round-up of the most important responsible investment news.

The Dubai-based Hawkamah Institute for Corporate Governance has become the first institution from the Middle East and North Africa (Mena) to sign up to the UN Principles for Responsible Investment (UNPRI).
Hawkamah has also announced it is developing an ESG index covering 11 markets in the Mena region in cooperation with the IFC and Standard & Poor’s. Abraaj Capital, the largest private equity firm outside Europe and the US, has also become the first private sector business in the region to sign up to the PRI.

The International Finance Corporation (IFC), part of the World Bank group, has revealed plans to launch a new unit, IFC Asset Management, which will manage third-party funds for the first time. It has hired Gavin Wilson, an investment banker at Goldman Sachs, as its chief executive, and is likely to hire further staff. Jyrki Koskelo, IFC vice-president for Europe, Central Asia, Latin America and the Caribbean, said: “Studies consistently show that development impact and internal rates of return are highly correlated.”
US venture capital investment in clean-tech dropped dramatically in the first quarter of 2009 reaching $277m, down 63% compared to the same period last year, according to Ernst & Young. Based on data from Dow Jones Venture Source, E&Y said the number of clean tech deals had fallen by 48% year-on-year to 24 deals. Energy storage firms attracted the most capital, with $114m raised, compared to $50m in the first quarter of 2008.
A $50m (€35m) microfinance fund set up by the Co-operative Bank and Deutsche Bank will directly target credit unions and co-operatives. The Global Co-operative Development Fund, managed by Deutsche and targeting global institutional investors, will pay a fixed rate of 5.5-6% on senior Class A and B notes.The United Nations Environment Programme Finance Initiative Climate Change Working Group has issued a report on energy efficiency financing based on a survey of eight bi- and multi-lateral development banks as well as 8 private sector lenders. The survey looked at how financial institutions are dealing with the energy efficiency concept and reasons are for a lack of dynamism in the field.
Link to report
Citigroup is reportedly in the early stages of negotiating with the SEC to settle an investigation into whether it misled investors by not properly disclosing the amount of troubled mortgage assets it held as the market began to implode in 2007, according to the Wall Street Journal.
Several big US public pension funds from California, New York and Philadelphia supported a resolution last week asking Chevron to assess whether it is complying with host country laws relating to environmental protection. Chevron is embroiled in a long-running lawsuit over accusations that Texaco, which it bought in 2001, operated below the environmental standards demanded at the time, leaving an environmental disaster on its withdrawal from Ecuador in 1992. In its defence, the company has written to shareholders and Congress and accused plaintiffs of misleading media, politicians and the public. As part of its annual Share Power campaign, Amnesty International also supported a resolution urging Chevron to address investor concerns regarding its operations at the Yadana gas field and pipeline in Burma. Amnesty’s Ian Heide said. “Human rights organizations have documented egregious human rights abuses by Burmese troops employed to secure the pipeline area, including forcible relocation of villagers and use of forced labour on infrastructure related to the pipeline project.” Chevron is the last major American

company with active operations in Burma, according to the Canadian Shareholder Association for Research in Education (SHARE).
Some companies in the S&P500 could face emissions costs under a carbon cap and trade system that could more than offset all their earnings, according to a report by the Investor Responsibility Research Center Institute and Trucost. While the report notes that the earnings of most companies would be relatively unaffected, it says there is a huge discrepancy between some major polluters. The report, “Carbon Risks and Opportunities in the S&P 500” analyzes the potential financial implications of applying a carbon price to global emissions and compares companies and sectors on absolute emissions and carbon intensity, as well the potential carbon costs relative to revenue and earnings before interest, tax, depreciation and amortization (EBITDA).
Link to report
ArcelorMittal, the global steel group faces allegations of environmental pollution, endangering people’s lives and displacing local communities, in a report by the Global Action on ArcelorMittal coalition, issued to coincide with the company’s annual shareholder meeting in Luxembourg on May 12.
Link to report
The CFA Institute Centre for Financial Market Integrity has launched a Shareowner Rights Manual to help investment professionals and investors better understand their rights in 22 of the world’s largest capital markets including France, UK, Germany, Japan, and USA.
Link to site
Pension funds are likely to come under growing pressure to be more engaged shareholders as a result of greater scrutiny by governments on corporate governance failures and their role in the collapse of the financial system, according to Watson Wyatt. A new research paper entitled: ‘No action no option’, examines how pension funds trustees are challenged by activeshare ownership and potential actions they can take. It also looks at how trustees need to evaluate the extent to which managers are exercising their shareholder rights.
Link to report
Fortis Investments, now owned by French bank BNP Paribas, has launched a blog covering the social and environmental aspects of the G20 stimulus packages:
Link to blog The British Private Equity and Venture Capital Association has created a Responsible Investment board and will shortly launch a research initiative to help gauge the RI activity level of its members. Mike Powell of the Universities Superannuation Scheme and Susan Flynn of Hermes, who sit on the board, said: “As limited partners (LPs) we expect that environmental, social and governance issues are appropriately managed by our genera partners (GPs). The BVCA’s Responsible Investment Board will provide guidance to PE and VC firms on how to incorporate these issues into both their investment decisions and management of assets, helping both to manage risks and improve long term returns.” Wol Kolade, chairman of the BVCA Responsible Investment board, said: “Private equity and venture capital firms invest in companies across a range of sectors, employing many thousands of people. As an important part of the economic mainstream it is therefore critical we deepen the engagement of private equity and venture capital companies towards sustainability and responsible investing. We recognise that responsible ownership and business success go hand in hand.”
Roderick Munsters is leaving his role as CIO at APG, the asset management arm of public employees’ pension scheme ABP to become chief executive at Robeco, the asset management division of Rabobank Group. Munsters will replace George Möller, who is leaving Robeco for retirement.
The number of fund managers making their voting records public increased from two in 2003 to 24 in 2008, according to the UK’s Investment Management Association (IMA) Its fifth Fund Managers’ Engagement

Survey said all of the respondents had policy statements on engagement, with 28 of these publishing them on their websites and the remainder making them available to clients on request. Richard Saunders, chief executive of the IMA, said the survey demonstrated a “widespread commitment among fund managers to engagement and transparency”. However, he added: “It is also very apparent that corporate governance failings in banks, and the unwillingness of bank boards to engage with investors in scrutiny and challenge of strategy, were factors that contributed to the crisis. There are lessons for both boards and investors from this experience, which is why we are now engaged with our Institutional Shareholders’ Committee (ISC) colleagues in a review of the framework.”
Link to report
Just under 60% of Shell shareholders at simultaneous meetings in The Hague and London voted down the company’s plans to award millions of pounds of shares to executives despite missing performance targets that should have reduced the payout to zero. Jorma Ollila, Shell’s chairman, said: “We take the outcome of this vote very seriously and we will reflect carefully upon it.”
NYSE Euronext and ASSET4 are to collaborate on providing tools to help NYSE-listed companies benchmark their extra-financial policies and practices. NYSE Euronext will provide the ASSET4 assetmasterExecutive solution to a number of NYSE-listed companies,
TD Asset Management (TDAM) is to apply a sustainable investing policy across all its operations in Canada and the United States. Barbara Palk, president of TD Asset Management, said: “Where environmental, social and corporate governance (ESG) factors are key drivers of financial value, they should be part of our analysis for all our investment mandates.” TDAM manages over $169bn in assets for pension, insurance, foundation andcorporate and HNW clients, as well as retail mutual funds.
Hermes Fund Managers has appointed Saker Nusseibeh in a new role as head of investments and he will also sit on the company’s main board. He joins from Fortis Investments where he was global head of equities and CIO, global equities.
The United Nations has issued the first draft of a climate treaty as a starting point for negotiations for a successor to the Kyoto Protocol to be agreed in Copenhagen in December.
Jon Moulton, chief executive of Alchemy Partners, the UK private equity firm has reportedly attacked the ethics of the private equity industry, saying the boom years provided “a fertile background for the not-so scrupulous”, in an article in Private Equity News. He listed several practices adopted by the industry that could be seen as questionable. These included adjustments to earnings before interest, tax, depreciation and amortisation of potential investments that only ever seemed to be upwards (to justify the debt used to lever acquisitions), which he said ranged from “totally reasonable to nearing fraudulent – and sometimes amusing”. Moulton said, however, that integrity was coming back into fashion: “Private equity needs to be seen as clean. Even if it hurts.”
Osmosis Capital, the specialist asset manager focused on the development of low carbon investment solutions for institutional investors, has appointed Jim Totty as partner and senior investment manager from Citi Alternative Investments. Osmosis, founded by Jon Bailie, formerly global head of alternative investments at Russell Investments and Ian Wilson, a former senior derivatives sales executive at JP Morgan, is reportedly hoping to raise €200 million ($279 million) into a low-carbon technology private equity fund of funds, according to Environmental Finance magazine.