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

This week has been marked by a very important landmark in anti-tax rulings. The European Council has reached
an agreement to stop MNCs from lowering their overall tax liability by taking advantage of differences in tax laws, called hybrid mismatches, involving non-EU countries aka ATAD II.
As part of a package of Corporate Taxation proposals presented last October, this directive aims to counteract hybrid mismatch arrangements in a holistic and comprehensive way at an EU level, thus  avoiding inefficiencies and distortions in a way that could not have done by individual Member States. The directive must now be adopted and published by the end of 2019.

The spotlight remains on the corporate sector this week as France approved by a large majority a law on duty of care which has been under negotiations since Hollande's early mandate days. In the aftermath of Rana Plaza, the world became increasingly aware  of the responsibility MNCs have towards their supply chains. In the hope that this French move will have a positive butterfly effect throughout Europe, Eurosif acknowledges the importance of corporate risks in supply chain management and urges Member States to take as brave a stand as France has today.
 
Happy reading,

Flavia Micilotta
- Eurosif's Executive Director
ESG

Fair Taxation: Commission welcomes new rules to prevent tax avoidance through non-EU countries: The Commission welcomes the agreement reached on new rules to help prevent tax avoidance via non-EU countries. The aim is to prohibit multinational companies from escaping corporate tax by exploiting differences between the tax systems of Member States and those of non-EU countries (so-called 'hybrid mismatches').

Green Bond market hits record $200bn: The green bond market has raised more than $200 billion, according to data from Environmental Finance’s Green Bond Database.

European Commission calls for experts to join its Financial Services User Group: The Commission has launched a call for expression of interest for new members of the Financial Services User Group (FSUG). The Group will advise the Commission on its ongoing work on the Capital Markets Union, with a particular focus on the distribution of retail investment products.


Corporate Governance Reform must account for long-term sustainability, says IEMA: Attempts to enhance the competitiveness of UK businesses through the Corporate Governance Reform should account for long-term financial performances covering environmental and social factors, the Institute of Environmental Management and Assessment (IEMA) has claimed.

UK pensions face biggest ESG risk from climate change: Physical climate change risks caused by energy use and greenhouse gas emissions have an effect on more industries than any other environmental, social and governance (ESG) issue in a typical UK pension scheme's defined-contribution (DC) default fund portfolio, according to a new report.

France leads EU on duty of care requirements for multinationals: After four years of debate, France has finally adopted a law on duty of care by multinational companies. This paves the way for similar laws in Belgium and Spain, although the project is stalled at European level.

CDP and French Government to assess low-carbon transition readiness: CDP – formerly known as the Carbon Disclosure Project – and the French government have partnered in a new initiative to assess company readiness for the transition to a low-carbon economy. Using a future-oriented, sector specific methodology the Assessing Low-Carbon Transition (ACT) pilot project will measure how in line with a 2°C global warming scenario companies in the utilities, automotive and retail sectors are.

Businesses' responsibilities for human rights in a changing world: A small group of leading companies comprehensively commit to the respect of human rights, while one company out of five is subject to human rights allegations. Looking at more than 3,000 companies listed in 35 countries, the latest Vigeo Eiris survey on corporate behaviour regarding the respect of human rights reveals striking findings.

IIGCC urges TCFD to do more for comparable climate data: The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) should strengthen its recommendations relating to the standardisation and comparability of data, according to the Institutional Investors Group on Climate Change (IIGCC).
 
INVESTORS

Legal challenges for sovereign green bonds: Issues from France and Poland have highlighted the potential for countries to tap the market. But a lack of common definition and legal framework are potential obstacles, argues Robert Follie.
European Semester Winter Package: review of Member States' progress towards economic and social priorities: The European Commission today publishes its annual analysis of the economic and social situation in the Member States, including an assessment of remaining imbalances. It also publishes a report on the implementation of the Fiscal Compact, a report analysing the debt situation in Italy and a report, together with a proposal to the Council for a fine, on a case of misrepresentation of statistics in Austria.

PLSA & Sustainalytics Publish Report Examining ESG Risk In Default Funds: On Tuesday, the Pensions and Lifetime Savings Association (PLSA) released its newly commissioned study into the environmental, social and governance (ESG) risks facing members of default funds offered by defined contribution (DC) pension schemes in the UK.


Investors with $3trn sign up to defend SEC conflict minerals rule: The group of investors campaigning to support the implementation of Section 1502 of the Dodd Frank Act have so far gathered the support of over 100 peers representing more than $3.75trn in assets under management, including international names such as Legal & General, HSBC Global Asset Management and Robeco.

Socially conscious investors are increasing their financial backing since Trump's presidency: More Americans, especially millennials, are interested in investing in sustainably minded companies that hold a tangible connection with their social values. Robert Johnson, president and CEO of American College of Financial Services in Bryn Mawr, Pennsylvania, predicts the election of President Donald Trump will be a "boon for impact and socially responsible investing."

Investors with $3trn sign up to defend SEC conflict minerals rule: The group of investors campaigning to support the implementation of Section 1502 of the Dodd Frank Act have so far gathered the support of over 100 peers representing more than $3.75trn in assets under management, including international names such as Legal & General, HSBC Global Asset Management and Robeco.

UN climate chief calls on finance sector to show sustainability leadership: The finance industry should adopt a leading role in promoting sustainable development, according to the head of the UN’s office on climate change. “We need clear leadership on sustainability by the financial industry,” Patricia Espinosa, executive secretary of the UN Framework Convention on Climate Change (UNFCCC), told a seminar at the London School of Economics. “Those who control capital must develop a firm grasp of the connection between sustainability and long-term economic growth potential”.

Government pension scheme begins ditching oil and gas investments: A giant pension scheme with more than 4 million members is shifting almost 10% of its investments into a new climate change fund designed to move people’s money out of fossil fuels and into renewable energy.
 
ASSET MANAGERS

‘Simplistic’ portfolio decarbonisation risks failure on climate change: Commonly used carbon metrics may not help institutional investors reduce global carbon emissions, a UK ESG investment manager has argued. Metrics such as carbon emissions and carbon intensity, when applied to sectors such as utilities, might reduce the capital available for the development of cleaner energy, Ecofin said.

UK's Legal & General working on developing French-style ‘social pensions’: Legal & General Investment Management (LGIM) is working on developing UK ‘social pensions’ that would adopt a similar model to the French ‘fonds solidaires’ (solidarity funds) savings schemes where up to 10% of assets allocated to employee savings funds are invested in social projects.

AXA IM launches gender diversity equity fund: AXA Investment Management has launched a new fund designed to capitalise on companies promoting gender diversity, the asset manager has announced.


NN Investment Partners creates responsible investment team: NN Investment Partners appointed three executives to its new responsible investment team, said Jeroen Bos, head of equity specialties at the firm.
 
Quote of the week
"'Les obstacles n'ont pas manqué: pressions du patronat. Et c'est donc un texte épuré mais historique."

- Philippe Noguès, Député du Morbihan et Président du groupe d’étude sur la Responsabilité Sociale et Environnementale à l’Assemblée Nationale, sur l'adoption de la loi sur le devoir de vigilance en France. Le texte a été voté à l’Assemblée mardi 21 février, après un marathon législatif de plus de quatre ans.
Copyright © 2017 Eurosif, All rights reserved.


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