UNEP FI Asset Management Working Group report · INTEGRATED GOVERNANCE .... The AMWG reached out to major proxy voting service providers to seek their reactions to this report, .... The Investor Network on Climate Risk (Ceres/INCR),.
A report by the Asset Management Working Group of the United Nations Environment Programme Finance Initiative June 2014
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TABLE OF CONTENTS Message from the UNEP FI Asset Management Working Group
4
1
Executive Summary
6
2
The Large Corporation Today 2.1 Concentration of economic activity 2.2 The socioeconomic ecosystem 2.3 The role of governance 2.4 The value creation process
8 8 8 10 10
3
Enabling a Sustainable Strategy 3.1 Integration of ESG issues in the business strategy. Does it pay off? 3.2 Effectively implementing a sustainable strategy 3.3 Board committees and their link to sustainability 3.4 Promoting effective corporate governance practices
13 13 14 15 23
4
Current State of Governance 4.1 Are current governance practices adequate?
25 25
5 Integrated Governance 5.1 The Integrated Governance Framework 5.2 Board independence at the individual level 5.2.1 Expertise 5.2.2 Time spent governing 5.2.3 Business ethics 5.2.4 No affiliation 5.3 Board independence at the group level 5.3.1 Size of the Board 5.3.2 Diversity 5.4 Aligning interests 5.4.1 Compensation Structure 5.4.2 Long-term compensation structure 5.4.3 Ratcheting and the use of compensation consultants 5.5 Investor Activism in Executive Compensation 5.6 Long term Active Ownership 5.7 Conclusions
Responses from Proxy Voting Agencies 6.1 Glass Lewis 6.2 ISS 6.3 Proxinvest
References
61
Endnotes
62
Acknowledgments
63
INTEGRATED GOVERNANCE · A NEW MODEL OF GOVERNANCE FOR SUSTAINABILITY · UNEP FI Asset Management Working Group report 3
MESSAGE FROM THE UNEP FI ASSET MANAGEMENT WORKING GROUP There once was a debate over whether sustainability could be considered financially material. That debate has been fading from view as evidence becomes clear that the parameters of sustainability have a significant role to play in the financial performance of companies. There are now well over 200 academic reports establishing positive an
Integration of ESG issues in the business strategy. .... the responsibility of any sustainability projects lies with small isolated teams. ..... around energy efficiency programs and reduction of carbon emissions, this .... Accountants (ACCA) has rec
Products and services are not the only output generated by a company. .... (although both sets did better than the market as a whole) and accounting measures.
pollution caused by improper mining activities, wetland degradation and ... As Brazil continues to develop economically and mining activities increase, water-.
May 11, 2015 - We would particularly like to acknowledge Swiss Re for hosting the ..... tensions remain between access to affordable insurance and risk-.
the innovative capability and capacity to produce the solutions to many of the challenges ... are better structured to incentivise sustainable business behaviour. ..... For example, between the management of a company and its shareholders in.
Initiative (UNEP FI), a group of over 100 banks from across the globe, believes ... To this effect the Working Group calls on its peers, on its clients, on its service.
Declaration. A commitment by financial institutions to mainstream natural capital in financial products and in accounting, disclosure and reporting frameworks.
traditionally included significant amounts of printed marketing material. The firm ..... Email: [email protected] ... marks, remain the property of UNEP FI or its affiliates.