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The news that shaped the week in responsible investing
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Dear SRI reader,

The need for more transparency has once again reigned over the EU scene this week!
One of the functional metrics for an increase in shareholder value is the right level of senior remuneration for corporates. This was the message given by the vice president for Danish equity at ATP, as he explained how strongly he feels about fighting against the pressure for higher remuneration coming from countries such as the US and Switzerland. The issue of high levels of corporate remuneration as a detriment to the reputation of British business was also touched upon in the UK last January.
 
Meanwhile, concerns over BEPS adoption continue to arise. Last week,
EY Tax Insight highlighted how an uneven BEPS adoption risks further complicating the tax picture. The report points out the difficulty of grasping a clear vision of the different time frame of adoption of the OECD recommendations by different countries. This is clearly a point of attention for companies, also in view of some separate independent initiatives, for instance the UK’s diverted profits tax. Going forward, increased alignment on controversies and a firmer grasp of the resources, processes and systems would help board and audit companies better understand the corporate policies for tax risks and related management.
 
On Thursday, we witnessed another plot twist in the PRIIPs saga. The Commission decided to maintain the initially proposed methodology of its three performance stress scenarios that was initially rejected, but this time adding an additional mandatory scenario to reflect stressed market conditions. In this way, the benefits and costs of insurance products will be fully disclosed as part of the KID. Silverfinch’s MD, John Dowdall, approved this move, which should allow transfer of UCITS KID data in the same format as PRIIPs.
We would like to remind our readers that
a PRIIPs consultation on environmental and social objectives is currently ongoing until the 23rd of March.

Happy reading,

Flavia Micilotta
- Eurosif's Executive Director
 





 
ESG
Chinese regulator publishes green bond guidelines (Environmental Finance): China's securities regulator has published guidelines to further boost the country's booming green bond market. China Securities Regulatory Commission (CSRC) said the measures will cut red tape while helping supervise use of proceeds.

FRC under more pressure over climate-related disclosure rules (Investment & Pensions Europe): A group of environment law campaigners has accused the UK Financial Reporting Council (FRC) of failing to grasp the magnitude of the financial risks investors and businesses face from climate change.

Social Investment first! A precondition for a modern Social Europe (European Policy Centre): In this Issue Paper, Claire Dhéret and Lieve Fransen present their vision for the future; they advocate a push towards a strong, modern and sustainable Social Europe and argue that the best way to achieve this and address Europe’s current challenges is to put social investment at the heart of the EU policy agenda. 


NGO calls for more accountable euro bailout fund (EUobserver): The €80 billion bailout fund for the euro area should become more accountable and transparent, according to Transparency International (TI). In a report published on Monday (6 March), the NGO said that the European Stability Mechanism, (ESM) "performs well on financial auditing and integrity, but falls short on accountability".

ATP to oppose pay rises for top management at Danish companies (Investment & Pensions Europe): Denmark’s DKK759bn (€102bn) statutory pension fund ATP is using its clout as a shareholder to keep a lid on rising pay for top executives at Danish companies, saying the right level of remuneration for corporate leaders increases shareholder value.

Dark Clouds Hang Over The Capital Markets Union (The Market Mogul) At the beginning of 2015, the European Commission launched an ambitious initiative aimed at integrating the EU’s capital markets: the Capital Markets Union (CMU). Introduced in order to remove barriers to investment and boost growth and jobs in Europe, the CMU has been a flagship project of the EC’s Investment Plan for Europe.
 
INVESTORS
Credit Agricole assigns $2 billion to range of green projects following securitisation (Environmental Finance): Credit Agricole plans to deploy $2 billion of new lending to a range of ‘green’ projects as a result of a novel securitisation deal. The transaction, known as Premium Green 2017-2, is described as a synthetic securitisation of a portfolio of project finance and object finance loans. The portfolio comprises $3 billion of loans to about 200 organisations, across a range of industries including power, oil & gas, real estate, infrastructure, aviation, shipping and railways.

China's Finance Minister Announces US$50.7 billion in Corporate Tax Breaks (CFO Innovation): To stimulate the economy and lighten the burden of enterprises, especially manufacturers and small businesses, Chinese Finance Minister Xiao Jie has announced 350 billion yuan ($50.7 billion) in corporate tax breaks this year. Small and micro firms with an annual taxable income of less than CNY500,000 are all eligible to pay just half of their income taxes assessed.


EU demands prediction of fund performance in crisis (Financial Times) Asset managers will be forced to provide investors with predictions of fund performance in the event of another financial crisis under new European rules aimed at strengthening consumer protection.

UK should create €1.7 trillion pension superfund, says pensions group (Modern Investor) The government should create a £1.5 trillion (€1.73 trillion) pension superfund, a taskforce set up to to address concerns about the future of defined benefit (DB) pensions will say.
 
ASSET MANAGERS
FCA flags industry shortcomings on dealing commission and best execution (Fund Strategy): Asset managers are still falling short of FCA expectations over their use of client money to pay for research and brokerage services. Between 2012 and 2015, the FCA visited 31 investment managers, including wealth managers and asset managers, to look into how they spend dealing commission.

Dutch regulator to survey costs of asset management (Investment & Pensions Europe): Dutch supervisor DNB is to scrutinise the costs of asset management and mortgage investments through on-site visits at pension funds and their asset managers. In a newsletter, it said that it would also assess the robustness of pensions administration and schemes’ cyber security measures.

Uneven BEPS adoption complicates tax picture (EY Tax Insights): It’s unclear when some countries will incorporate the OECD recommendations, contributing to increased controversy and prolonged uncertainty for companies.



HMRC targets SMEs to close tax gap (ICAEW Economia): The Revenue has raised an extra £450m through corporation tax investigations into small businesses in the past year. Over the same period the yield from probes into big businesses’ corporation tax affairs has fallen. Overall, HMRC collected £2.6bn in extra corporation tax last year, down 25% from the £3.5bn collected the year before, according to research from UHY Hacker Young.
 
Quote of the week
"What we need now are the good ideas that can help change our linear business models into circular ones."
 
Jyrki Katainen, Vice President of the European Commission, on next week's call for expression of interest in the new Circular Economy finance support platform expert group at the Circular Economy Stakeholder Conference on Thursday.
 
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