ESG roundup: Eurosif media report, Emissions Trading Scheme, Google
GLOBAL - Trust, freedom of expression issues, privacy and intellectual property, and environmental and content diversity are the biggest environmental, social and governance (ESG) issues in the media, according to a report on the sector by the European Sustainable Investment Forum (Eurosif).
The report, based on research by Ethix SRI Advisors, describes the importance of those factors on investment decisions.
François Passant, executive director at Eurosif, said: "Investors are aware the media sector faces specific risks particularly relating to trust and ethics that can have very significant financial impacts, as seen in the UK's phone hacking case.
"In our report, we recommend that publishers are more transparent about the reliability of their sources, adhere to accepted ethical standards and distinguish more clearly fact and opinion.
"By enhancing trust, publications grow their audience and advertising revenue, which appeals to investors."
Alma Media, a new case study in the report, is experimenting with several imaginative techniques to build trust with its readers.
Ulrika Hasselgren, chief executive at Ethix SRI Advisors, said: "The media sector is going through huge changes driven by new technologies, the convergence of the media sector with the technology and communications sectors, and the need for companies to radically transform their business models as a growing number of consumers expect to access content anywhere anytime, without charge.
"What this means is that companies need to be acutely aware that their business risk profile may be changing dramatically: software companies may be sued for breaches of copyright law, telecommunications companies may find that their overall footprint increases as they partner with traditional print media companies, all companies will be under pressure to properly manage personal data and information."
In other news, the Institutional Investors Group on Climate Change (IIGCC) has urged EU ministers meeting today to consider changes that would ensure the continued viability of the EU's Emissions Trading Scheme (ETS).
The IIGCC makes three recommendations EU ministers should consider to support an improved ETS.
• A change in the overall level of ambition of the EU's 2020 emissions target, with a commensurate change in the EU ETS carbon credit allocations
• An immediate action to define and implement, as soon as possible, a one-off set-aside of carbon credits to remove oversupply from the system
• Pre-agreed review processes to cope with unforeseen economic circumstances in future
Stephanie Pfeifer, executive director at the IIGCC, said: "The EU's Emissions Trading Scheme is not producing the outcomes originally envisaged and needs fixing.
"It was expected to support emission reductions by catalysing innovation and driving investment in low carbon solutions. This is not happening."
Pfeifer pointed out that carbon credit prices had fallen dramatically as a result of oversupply in the system.
"At under €7 per tonne, the carbon price is not even high enough to support a switch from coal to gas," she said.
"As long-term investors, IIGCC members are concerned that current exceptionally low carbon prices fail to create strong enough conditions for private investors to allocate capital to low-carbon energy sources.
"With the potential for climate change to have major negative impacts on the economic systems in which they operate and on the assets in which they invest, investors are calling for decisive action."
Lastly, in the UK, Simon Wong, partner at Governance for Owners, a provider of stewardship services for shareowners and activist fund manager, commented on Google's plan to issue non-voting stock.
"This move has alarmed many people, particularly in light of the weakening of corporate governance requirements in the US via the JOBS Act and the trend among Silicon Valley companies to go public using dual-class share structures," he said.