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Workers’ Capital News - April 2013

In this issue:

Governance and Disclosure

Long-term investing: G20/OECD, EU

The G20 has mandated the OECD to develop a set of High-Level Principles of Long-Term Investment Financing by Institutional Investors. A draft version of the Principles is expected in early May. TUAC's submission to the OECD consultation emphasized the need for defining LTI, reporting on ESG risks and returns and other important considerations. For further information on the initiative, see the OECD webpage on Institutional investors and long-term investment.

On the same topic, the European Union released a Green Paper on Long-Term Investing last month which advises that European regulations or directives aimed at institutional investors should not inhibit their ability to channel funds to long-term investments such as infrastructure financing, as reported by IPE.

Integrated reporting: GRI, EC, IIRC

The Global Reporting Initiatives’s latest guidelines – G4 – have been approved by the Board of Directors and will be shared at the GRI conference in Amsterdam on May 22. G4 places more emphasis on the inclusion of material ESG factors for integrated corporate reporting. The guidelines have also been harmonized with other frameworks such as the OECD Guidelines for Multinational Enterprises and UN Guiding Principles on Business and Human Rights. The G4 development process included working groups with labour representatives to update content on areas including governance and remuneration, supply chain, and management approach disclosures.

In related news, the European Commission recently adopted a proposal mandating that large companies disclose ESG information in their annual business reporting cycle.

Additionally, the International Integrated Reporting Council (IIRC) has released a consultation draft of the International Integrated Reporting (IR) Framework to create a new corporate reporting model focused on transparency and value creation over time, as reported in IPE.

Pensions and Investments

First audited RI report: PGGM

PGGM’s 2012 Responsible Investment Annual Report has been externally audited, making the Dutch pension fund one of the first globally to take such measures, reports Responsible Investor. PGGM has also developed an internal ESG index based on 70 environmental, social and corporate governance criteria to assess companies’ performance to be applied in combination with active engagement and exclusion policy, according to IPE.  

New funds to meet RI objective: GEPF

As reported in Responsible Investor, South Africa’s Government Employees Pension Fund (GEPF) will launch two new investment funds in May – a renewable energy fund and a Priorities Sectors Fund – to be managed by the Public Investment Corporation. The funds are part of GEPF’s commitment to invest of 5% of its assets in accordance with its Developmental Investment Policy (13.3.4) with the objective "to earn good returns for the members and pensioners of the Fund while supporting positive, long-term economic, social and environmental outcomes for South Africa.”

Shareholder Activism

Executive compensation & proxy voting: AFL-CIO, Trade Union Share Owners, Ethos

The AFL-CIO launched the 2013 Executive PayWatch, which reveals that the pay gap between US CEOs and the average worker (354 times) is the widest compared to the rest of the world. With some associated votes against executive compensation, a key votes listing from the AFL-CIO for the 2013 proxy season has also been released.

Excessive remuneration is one of the issues that the new Trade Union Share Owners group will target, as reported in FT, with a detailed position on director remuneration issues (section three) in the Trade Union Voting and Engagement Guidelines, among other corporate governance considerations.

Ethos Foundation has recommended voting against executive pay votes at UBS (May 2) and Credit Suisse (which passed with 88% approval), while two other say on pay votes (Julius Bar and Actelion) have seen executive compensation packages rejected in Switzerland, as reported by Responsible Investor. Ethos has developed a historical listing for the results of the Swiss Say on Pay Votes, which can be found on their homepage.

*Please note that viewing linked articles requires registering for free in the case of the Financial Times and IPE online sites, and a subscription in the case of Responsible Investor.

Disclaimer: The CWC News Digest is a compilation of news items covered in industry publications. The content does not necessarily reflect the views of the Committee on Workers Capital or its members. Comments and reflections on news items may be sent to acard@share.ca.

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