December 3, 2014

Ontario pension plans will soon be required to account for ESG factors

Proposed amendments to the Ontario Pension Benefits Act passed by Premier Wynne’s cabinet last night will require pension plans to disclose information about environmental, social and governance (ESG) issues. “The statement of investment policies and procedures shall include information as to whether [ESG] factors are incorporated into the plan’s investment policies and procedures and, if so, how those factors are incorporated.” This regulation will come into effect beginning in January 2016.

Responsible investment advocates were strongly in favour of the rule change. “A supportive legislative environment that creates transparency about how fiduciaries incorporate ESG considerations into investment decision-making and risk management processes is an important contributor to responsible pension fund management,” said Peter Chapman, executive director of the Shareholder Association for Research and Education, in the public comment period last month.


2014 Corruption Perceptions Index released

Anti-corruption NGO Transparency International unveiled its latest corruption ranking on Wednesday. Denmark, New Zealand and Finland were named the least-corrupt countries in the world, while Sudan, North Korea and Somalia rounded out the bottom of the list. Canada held steady at 10th place. “Countries at the bottom need to adopt radical anti-corruption measures in favour of their people,” said José Ugaz, the chair of Transparency International in a statement. “Countries at the top of the index should make sure they don’t export corrupt practices to underdeveloped countries.” The ranking results are compiled using surveys filled out by a small number of experts in each country. This methodology has been criticized as embedding “a powerful and misleading elite bias in popular perceptions of corruption,” but remains the most popular public tool for measuring corruption around the world.


American lobby group ALEC readies anti-environmental push

Buoyed by widespread Republican gains at both the federal and state level in the mid-term election, the American Legislative Exchange Council (ALEC) is planning an anti-environmental onslaught in 2015. The nonprofit organization of conservative state legislators and private sector representatives has gained notoriety for writing model legislation in the past that is then copied by Republican lawmakers in statehouses around the country. Documents posted on its website outline plans to draft model bills that reduce the Environmental Protection Agency’s (EPA) budget, gut its regulatory authority, expand offshore oil exploration and weaken endangered species protections, among other priorities. Corporate Knights wrote about ongoing Republican efforts to cut EPA funding back in October.


Germany takes steps to meet 2020 climate goals

Amid the backdrop of ongoing climate negotiations in Lima, Angela Merkel’s cabinet agreed to a broad package of energy reforms on Wednesday that will help Germany meet its goal of reducing emissions by 40 per cent by 2020. The package will pressure coal plant operators to reduce emissions by at least 22 million tons, as well as adopt a comprehensive national energy efficiency plan that focuses on building retrofits. Incentives for electric cars are also part of the plan, which will be packaged into several different pieces of legislation in the following months. Further limits on fertilizer use and waste have also been added to the reform plan.


Evidence continues to mount regarding stranded assets

Businessweek is the latest publication to sound the alarm over the threat presented by stranded carbon assets. In the last week, Germany’s biggest power company has declared its intention to spin off its fossil fuel holdings, and the Bank of England has opened an investigation into the risk of an economic crash due to the carbon bubble. A growing minority of investors and regulators are probing the possibility that untapped deposits of oil, gas and coal could become stranded assets as governments adopt stricter climate change policies. “Investors who haven’t yet come to grips with the stranding problem are like the classic scene in the Road Runner cartoons where the coyote runs off the edge of the cliff, and his legs keep moving for quite a long time before gravity takes hold,” said former Vice-President Al Gore in a phone interview with Businessweek.


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