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Sustainalytics Reporter May 2015

Issue 25 - May 2015


Spotlight on Key Corporate Governance Issues Across Markets

Annual general meeting season is underway, when shareholders exercise their fundamental rights as owners: to elect their representatives to boards of directors, to approve executive compensation programmes, to ratify the work of auditors, and to put forward their own proposals regarding companies’ governance practices. As in seasons past, much attention is focused on the competence and independence of director nominees and the scale and effectiveness of executive remuneration. Events in France and the U.S. highlight an additional task for investors: to establish and maintain basic rights as shareholders.

High on this year’s agenda in the U.S. is proxy access – the ability of shareholders not only to nominate directors, but to have their nomination available for all investors to consider and vote on by appearing on the company’s AGM materials. This right is a standard practice in many global markets, but not in the U.S., where it has been long resisted by companies and their advisors. Proxy access in the U.S. is implemented company-by-company – and this year a major campaign puts proxy access proposals before shareholders at 75 companies. The campaign has shown strong results: so far about half of proposals that have come to a vote have won majority support and at least 12 companies have agreed to adopt access without a vote.

In France, the focus is on another shareholder rights issue – the potential emergence of “loyalty shares” under the Florange Law, intended to promote long term share ownership. The law prescribes that long-term owners are rewarded with double voting rights and potentially higher dividend payments. Rather than promoting long-termism, however, these differential voting rights are more likely to favour dominant shareholders and leave minority shareholders unprotected. Companies may opt out of these double voting provisions, making it a company-by-company battle for shareholders to preserve the one share/one vote right.

Sustainalytics monitors these and other corporate governance issues year-round, providing investors with in-depth and timely insights related to governance-related investment risks.


Analysts' Insights

U.S. Auto Loan Market: Balancing Credit and Risk 
by Sophia Burress

Sophia Burress, Junior Analyst, Research Products

The rise of subprime auto lending is causing concern in the U.S. With worries ranging from asset bubbles to unscrupulous lending practices, lenders are exposed to reputational damage and regulatory scrutiny.

Read "U.S. Auto Loan Market... "

Wal-Mart Stores Inc.: Wage Hike Signals Potential Improved Labour Relations
by Joshua Zakkai

Joshua Zakkai, Analyst, Research Products

Wal-Mart Inc. recently announced it will raise the minimum wage for its 50,000 U.S. employees to $10 per hour by February 2016. Read about the implications of this positive move by the world’s largest retailer.

Read "Wage Hike at Wal-Mart... "

Product Spotlight

Sustainalytics Launches New Corporate Governance Research and Ratings Products

Corporate Goverance In March, Sustainalytics launched the first products within its new corporate governance research and ratings product suite. By tying a company’s corporate governance practices and boardroom decisions to its ability to execute on its business strategy, Sustainalytics’ new corporate governance research suite is intended to support global asset owners and asset managers with investment decision-making, portfolio analytics, policy formulation, engagement activities, proxy voting and other investment processes. To learn more about our approach to corporate governance and our new products, visit our website:  
http://www.sustainalytics.com/corporategovernance.

Sustainalytics' Perspective

New Sector Reports

Utilities: The Great Transformation Begins

Sector Report: Utilities - The Great Transformation Begins

Sustainalytics’ new sector research report,Utilities - The Great Transformation Begins,examines the investment risks and opportunities of 234 public and non-public utilities companies. Our research shows greenhouse gas (GHG) emissions and effluents and waste, community relations and product sustainability are the most material ESG issues for the utilities sector.

On April 16, Sustainalytics hosted a webinar to present the findings from the report. Download the executive summaryand listen to the replay .

 Banks sector report shortlisted for Farsight Award

Sector Report: Banks - Like a phoenix from the ashes

Sustainalytics is proud to announce that our sector report Banks – Like a Phoenix from the Ashes? has been shortlisted for the Farsight Award 2014/2015. Of the 57 publications submitted for consideration, seven were shortlisted. The Farsight Award recognizes the best individual piece of analysis done by an investment research institution that integrates traditional financial analysis with longer-term environmental, social and governance issues. The winner will be announced during the Sustainable City Awards ceremony taking place on Monday, March 23, 2015 in London, England. Download the executive summary.

Focus on India: Corporate Access Trip and Upcoming Asia Insight Report

On April 12 – 17, we hosted our second Corporate Access Trip. Focused on key industries in India, we travelled with a small group of clients and prospects over six days to Mumbai, Delhi and Calcutta. We met with companies and conducted site visits to gain a better understanding of the ESG issues facing industries and companies in the country.

Our next Asia Insight report  ESG Implications in a “Modi"fied India will include key takeaways from our recent Corporate Access Trip as it examines the ESG challenges and opportunities facing Indian companies under the new Narendra Modi government. 

Incident and Controversy Assessments

Incident and Controversy Assessments

This month, Sustainalytics’ Incidents Team assessed the implications of the growing privacy issues challenging Facebook in Europe. The team also looked at a historic settlement which saw Assicurazioni Generali’s wholly owned subsidiary admit to facilitating tax evasion for its clients. Finally, the team provides an assessment of Schlumberger’s admitted violation of the U.S. sanctions regime against Iran and Sudan.

Read “Incidents and controversy assessment... "

Inside Sustainalytics

Sustainalytics welcomes...

Columbia Threadneedle Investments, BNY Mellon Depositary Receipts, City of London Investment Management and the Netherlands Development Finance Company (FMO).

Columbia Threadneedle recently launched its Columbia U.S. Social Bond Fund, and chose Sustainalytics to collaborate with the fund’s managers to develop a proprietary social assessment framework and produce an independent social impact report for the fund annually. Sustainalytics has also been retained by FMO to evaluate its Sustainability Bond framework to ensure alignment with the Green Bond Principles and industry best practices.

BNY Mellon is providing Sustainalytics’ ESG data and insights to its depositary receipts clients, and City of London Investment Management is sharing our analytical ESG reports with their investment companies.

Visit our press room to learn more.

Jantzi Social Index Annual Review

Jantzi Social Index

In March 2015, following an annual review process, we announced changes to the Jantzi Social Index, Sustainalytics' market capitalization-weighted common stock index of 60 Canadian companies. The following four companies were added to the index. Read our press announcement to learn more. 

  • Air Canada (TSX:AC)
  • George Weston Limited (TSX:WN)
  • IGM Financial Inc. (TSX:IGM)
  • Metro Inc. (TSX:MRU)

IN THIS ISSUE

Analysts' Insights

Product Spotlight

Sustainalytics' Perspective

Inside Sustainalytics

Research at Work

Events

Sustainalytics in the Media


RESEARCH AT WORK

Sustainalytics Selected to Develop Access to Seeds Index 
The Access to Seeds Foundation has chosen Sustainalytics to help develop its index. Sustainalytics’ ESG Research will help to determine companies’ performance in addressing food security challenges. The Access to Seeds Index is scheduled for release later this year. Stay tuned for more information!

Sustainalytics Contributes to the Mirova Study, Food Security—Closing the Food Gap: Opportunities for Investment?

Sustainalytics recently contributed to the Mirova study, Food Security-Closing the Food Gap: Opportunities for Investment? The report examines the issue of global food security and looks at the emerging “food gap”—the difference between current production and future need—and the challenges and opportunities around closing the gap. On June 16, the Principles for Responsible Investment will host a webinar, Feeding the world-can investors help close the food gap, for all PRI Signatories which will explore ways to improve food availability. Learn more here.


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EVENTS

4-6 May, 2015 | Chicago, Illinois, USA 
US SIF Conference

31 May - 2 June, 2015 | Banff, Alberta Canada   
RIA Conference

2-3 June, 2015 | London, UK 
RI Europe

15-16 June, 2015 | Copenhagen, Denmark 
TBLI Nordic 2015

16 June, 2015 | Webinar
PRI webinar: Feeding the world-can investors help close the food gap 

Visit our website for a full listing of events


IN THE MEDIA

A Range of Options Environmental Finance

Order book reaches 1bn on FMO's latest sustainability bond Environmental Finance

Beyond Green: Public Sector Pioneers Explore New SRI Ideas Global Capital


ABOUT SUSTAINALYTICS

Sustainalytics | Your responsible investment partner

Sustainalytics supports investors around the world with the development and implementation of responsible investment strategies. The firm partners with institutional investors, pension plans, and asset managers that integrate environmental, social and governance information and assessments into their investment decisions.

Headquartered in Amsterdam, Sustainalytics has offices in Boston, Bucharest, Frankfurt, London, New York, Paris, Singapore, Timisoara and Toronto, and representatives in Bogotá, Brussels, Copenhagen and Washington, D.C. The firm has over 200 staff members, including more than 100 analysts with varied multidisciplinary expertise and thorough understanding of more than 40 industries.