GLOBAL – Two of the largest asset owners in the UK – USS Investment Management and RPMI Railpen – will start to vote against proposals to reappoint audit firms whose tenure at FTSE 350 companies exceeds 15 years during the current proxy season.
The funds' representatives have issued a letter to the chairmen and company secretaries of these companies to advise them of the revisions to their voting policies.
Daniel Summerfield, co-head of responsible investment at USS, said: "The current situation is untenable, as the lengthy tenure of audit firms in many FTSE 350 companies can put at risk the objectivity and independence of the audit process.
"We're saying to these companies that there can no longer be an assumption that audit firms can stay in place in perpetuity, There needs to be a line drawn in the sand."
In other news, three-quarters of companies targeted in an investor engagement aimed at improving disclosure and understanding of companies' anti-corruption risk management have significantly improved their transparency in this area.
The results of this three-year engagement will enable investors to better assess and manage their exposure to the financial, operational and reputational impacts of corruption risks in their portfolios.
The engagement was undertaken by a coalition of 21 signatories to the UN-backed Principles for Responsible Investment (PRI) with more than $1.7trn (€1.3trn) in assets and led by F&C Asset Management and Hermes Equity Ownership Services (Hermes EOS).
An important element of the coalition's work was to encourage reporting in line with international reporting frameworks, such as the International Corporate Governance Network's Statement and Guidance on Anti-Corruption Practices and the UN Global Compact's Reporting Guidance on the 10th Principle Against Corruption.
Companies were asked to improve their disclosure of how they managed bribery and corruption risks, as well as tested on the efficacy of their risk management in this area.
Each of the 21 companies were selected due to their poor public disclosure of anti-corruption risk management and high levels of corruption risk because of the nature of their businesses.
Meanwhile, Stockholm, Oslo and Zurich were found to be the most attractive locations for real estate from a sustainability perspective, according to research by Swiss private bank Sarasin.
Sustainability ratings for 200 of Europe's biggest metropolitan areas revealed that Scandinavia, the German-speaking countries and the Netherlands consistently finish in the top third of the rankings.
The large urban centres of France, Belgium and the Anglo-Saxon countries tend to feature in the middle of the table, while large cities in the Mediterranean and former East bloc countries generally finish around the bottom due to the difficulties they typically experience with regard to unemployment and air pollution.
Sarasin's sustainability analysts included environmentally and socially relevant criteria in the usual assessment of locations.
Around 80 indicators grouped into the five main themes of quality of life, demographics, economy, infrastructure and environment by the EU statistics office Eurostat provided the information.
Elsewhere, at the Environmental Bonds conference in London yesterday, the audience heard that despite increasing demand for the asset class, the green bond market was still considered a niche market by investors.
According to Kate Brett, investment consultant at Mercer, investors wonder where green bonds sit within a typical pension fund fixed income portfolio, and they do not seem comfortable looking at green credit issuers.
She said: "There needs to be a clear and standardised definition of what constitutes green."
More awareness and understanding of the market needs to be raised, she added.
Christopher Flensborg, head of sustainable products and product development at SEB, said the main criteria for investors were to have the vision of a scalable market.
But Tanguy Claquin, head of sustainable banking at Crédit Agricole, felt there were plenty of investors around already.
He said more issuers, more liquidity and larger volumes were needed in the green bond market.
And finally, institutional investment advisor Cambridge Associates has developed a quarterly report that evaluates the company-level performance of private investments in the clean tech sector.
According to the statistics in the report based on more than 5,000 private investment funds and their underlying portfolio companies, the cleantech private investment sector produced a gross internal rate of return (IRR) of 6.6% and a gross total value to paid in capital multiple of 1.2x since 2000.
Of the 1,222 investments, 273 have been fully realised (22%).
By way of comparison, the aggregate gross company-level IRR for more than 38,000 global venture capital and private equity investments made over the same time period was 15.2%.
The cleantech company performance statistics are available here.