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Industry News: ESG5

Spotlight on Investors: Pax World

Pax World was founded in 1971 to enable investors to align their investments with their values. The investment management company was the first to launch a socially responsible mutual fund using social as well as financial criteria in the decision-making process. As of 2017, Pax World manages over US$ 4.7 billion.

Today, the firm is still committed to sustainable investing – ESG factors are fully integrated in the investment analysis and portfolio construction. Further, the management company excludes firms involved in weapons, tobacco, oil sands, and coal. Pax World seeks to impact company behaviour regarding climate change and gender diversity by filing shareholder proposals and engaging with portfolio companies. Finally, the investment company reports on their approach to climate change using the TCFD recommendations.

Impact Report - 2017

Task Force on Climate-related Financial Disclosure Report

Spotlight on Engagement - Gender Diversity

Five Key Issues That BMO’s Responsible Investors will Watch this Year

2019-02-20

Trust Net: Gender equality, climate change and the overuse of antibiotics are some of the issues which will dominate the conversations that BMO Global Asset Management’s responsible investing team have with investee companies this year.

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TCFD-based Reporting to Become Mandatory for PRI Signatories in 2020

2019-02-18

PRI: As part of the programme on championing climate action, in 2018, the PRI introduced TCFD-aligned indicators to its Reporting Framework. Despite the indicators being voluntary, over 480 investors representing US$42 trillion opted to complete the indicators and submit responses. In 2019 the climate indicators will again be voluntary.

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The 100 Most Overpaid CEOs of 2019

2019-02-20

As You Sow: This 2019 study is the fifth report of our research results. During these five years, what has changed? Quite a bit, and not enough. Significantly, more large shareholders are voting against more CEO pay packages. Those who are not are more isolated and defensive.

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Companies Must Focus on Fair Pay, Decent Work Throughout Workforce: Report

2019-02-15

Benefits Canada: While shareholders are focusing on executive compensation, they aren’t promoting fair pay and decent work throughout their companies, according to a new report by the Shareholder Association for Research and Education.

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Ocean Finance: In Search of Blue Returns

2019-02

IPE: Salt marshes around the Taw and Torridge river estuaries in North Devon, south-west UK, disappeared long ago due to land reclamation. However, a pilot programme considering conservation in the area has indicated they have potential to be restored as “blue carbon” (marine-based carbon offsets). 

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Responsible Investment and Sustainable Development Growing Priority for Private Equity Finds PwC Survey

2019-02-19

The News Market: The 2019 survey has found that nearly 81% of respondents are reporting ESG matters to their boards at least once a year, with a third (35%) doing so more often. Almost all (91%) report having a policy in place or in development, compared to 80% in 2013. Of these, 78% are using or developing KPIs to track, measure and report on progress of their responsible investment or ESG policy.

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Pension Dashboard Should Display Impact Information, Says Taskforce

2019-02-15

IPE: Information about investments’ impact on society and the environment should be included in UK pension dashboards, a government-commissioned impact investing group has said.

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Vale: Swedish Funds Cut Mining Giant from Portfolios After Dam Collapse

2019-02-21

IPE: Swedish state pension buffer fund AP1 has begun selling SEK407m (€38.6m) worth of equities and bonds of Brazilian mining company Vale, after the AP Funds’ Council on Ethics recommended the exclusion the company from the AP funds’ portfolios.

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TMX Joins UN Sustainable Stock Exchanges Initiative

2019-02-019

TMX: TMX Group announced that Canada's premier equities exchanges Toronto Stock Exchange and TSX Venture Exchange have joined the United Nations Sustainable Stock Exchanges (SSE) initiative to promote sustainability performance and transparency in capital markets.

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Spotlight on Investors: Public Investment Corporation

Established in 1911, the Public Investment Corporation (PIC) is a state-owned asset management company that manages the funds of the Government Employees Pension Fund and the Unemployment Insurance Fund among others. With over USD 147 billion of assets under management as of March 2018, PIC is one the largest asset managers in Africa.

PIC's overall investment strategy seeks to align the portfolio to the UN Sustainable Development Goals through sound risk management and a focus on ESG issues. PIC's approach to ESG allows them to identify engagement topics to improve the corporate governance of their portfolio companies. The fund's investments in unlisted assets enable them to drive a more sustainable and inclusive society by investing in Energy, Healthcare, Affordable Housing, Student Accommodation and Education Support, and SMEs.

Public Investment Corporation Integrated Annual Report 2018

Corporate Governance and Proxy Voting

Climate Change Related Regulation

2019-02-13

Colonial First State: In response to increasing legislation and policy, major economies have started regulating carbon and energy using a variety of approaches which will have differing implications for investors. 

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Corporate Directors Downplay ESG Issues, Defying Investors

2019-02-13

Greenbiz: Close to 39 percent of directors responding to advisory firm PwC’s annual survey of this community said that climate change shouldn’t be taken into account when forming corporate strategy, and roughly 30 percent think shareholders pay too much attention to this topic.

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Index Providers Respond to Controversial Weapons Campaign

2019-02-14

IPE: More than 140 asset owners, asset managers, wealth managers and other finance groups have asked major index providers to exclude manufacturers of controversial weapons from their mainstream indices. Will they get what they want?

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Diversifying Investments: A Study of Ownership Diversity and Performance in the Asset Management Industry

2019-01-28

Knight Foundation: Research across a multitude of fields and industries has identified the potential economic and social benefits of diversity. Yet the asset management industry continues to struggle with a lack of diversity. Research studies and articles have consistently documented the low level of representation by women and racial/ethnic minorities among asset managers. Analyzing and exploring diversity in the asset management industry is vital given its sheer enormity and the wealth it generates ($69.1 trillion in assets under management and $99 billion in profits in 2016).

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SEC Staff Issues Interpretive Guidance on Board Diversity Disclosures

2019-02-13

JDSUPRA: On February 6, 2019, the Division of Corporation Finance (Staff) of the Securities and Exchange Commission published new interpretive guidance regarding board diversity disclosures, which should be considered when preparing proxy statements for upcoming annual shareholder meetings.

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EU Shareholder Rights Directive ‘Could Fail’: Hermes

2019-02-13

IPE: EU legislation aiming to increase the stability and sustainability of European companies “could fail” because of a lack of awareness and readiness on the part of investors, governments and regulators, Hermes Investment Management has suggested.

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Why Credit Ratings Need to Reflect ESG

2019-02-11

Top 1000 Funds: Credit ratings agencies are increasingly meeting demands from fixed income investors to better reflect ESG factors in their credit-risk analysis and bond pricing.

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IHS Markit Brings ESG Reporting to Private Capital Markets

2019-02-12

Market Watch: IHS Markit INFO, +0.81% a world leader in critical information, analytics and solutions, today announced the launch of an environmental, social and governance (ESG) data collection and reporting solution for private equity (PE) firms, venture capital (VC) firms, their portfolio companies and investors. The solution is part of iLEVEL, a sophisticated platform connecting participants in private capital markets.

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Firms Use Artificial Intelligence for ESG Index

2019-02-12

Expert Investor: German sustainable index constructor Solactive has announced a partnership with American data research group Truvalue.

Working in collaboration, the two companies are planning to create a new range of environmental, social and governance indices that use machine learning and artificial intelligence to score companies in their ESG credentials.

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Spotlight on Investors: The Environment Agency Pension Fund

The Environment Agency Pension Fund (EAPF) is a defined benefit Local Government Pension Scheme with 39,500 beneficiaries and assets of £3.6 billion as of September 30th. EAPF has a strong focus on sustainable investing, accordingly they integrate ESG issues into all of their investment, engagement, and voting decisions.

As long term investors, EAPF recognizes Climate Change as a systemic and long-term material financial risk. To manage climate-related risks in their portfolio, the fund applies scenario analysis, carbon footprints 75% of their assets under management, and are compliant with the TCFD recommendations. Finally, EAPF works collaboratively with other investors through Climate Action 100+ and the Transition Pathway Initiative – a tool that ranks companies on their effectiveness to manage Climate risk, and reduce their carbon emissions – to engage with companies to mitigate and adapt to Climate Change.

Responsible Investment Report for 2017-2018

Climate Change Policy

Stewardship Code

Fear Mounts that ESG Funds are in Danger of Mis-Selling Investors

2019-01-22

MoneyObserver: Almost all (97%) of advisers surveyed said they were either ‘very concerned’ or ‘fairly concerned’ about the potential for clients becoming aggrieved that their money is invested in a firm deemed unethical, despite being labelled as an ESG investment. In recent years, environmental, social and governance (ESG) investment products have exploded in popularity. The problem, however…

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Asset Owners’ Climate-Change Advice

 2019-02-06

Top1000funds: A comprehensive guide to climate change, written by asset owners for asset owners, gives practical steps for trustees and pension fund managers who are framing their activities on climate change...

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Guide - Climate Change for Asset Owners

Green Finance: Financing Environmental Benefits

2019-02 

IPE: Today, it is often about climate finance, for climate change mitigation or adaptation measures. The financing can come from both private and public sources. It is not only about discrete asset classes, but about cross-cutting activities such as risk analysis. One of the best-known facets of green finance are green bonds...

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China: The Greening of China

2019-02

IPE: Green finance has become central to China’s attempts to green its economy and to clean up its heavily-degraded environment – for both public health and economic reasons. It is also looking to green finance to build its Belt-and-Road projects...

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Why India is Turning into ESG Funding Hotspot

2019-02-11

EconomicTimes: Amid the spate of corporate governance issues cropping up with rising frequency, Indian markets will see two entities launch the earliest funds based on Environment, Social and Governance (ESG) investing...

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"We want gender diversity": Institutional Investors Tell Alternative Investment Firms

2019-02-07

Opalesque: Institutional investors in the alternative investments industry are driving efforts to improve gender diversity at the funds and portfolios they invest in. However, recruiting, retaining and advancing women is still the biggest challenge, finds KPMG's sixth Women in Alternative Investment's report…

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Women Awarded Tiny Fraction of UK Venture Capital Funds

2019-02-03 

Financial Times: Less than one per cent of venture capital funds in the UK go to start-ups run entirely by women, government-commissioned research has found, revealing another yawning gender gap in the business world. The UK VC & Female Founders report for the Treasury discovered that for every £1 of VC investment, all-female founder teams get less than 1p. All-male founder teams get 89p and mixed-gender teams get 10p...

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The Challenge of Putting ESG Into Practice

2019-02

IPE: During a climate-change debate at the IPE Real Estate Global Conference in Milan last year, fund managers and investors effectively called on the real estate industry to provide better data on the energy efficiency of buildings. A number of certifications, such as BREEAM and LEED, already exist, but they tend to gauge how efficient a building could potentially be, rather than how efficient they are in practice...

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Hedge Fund Founder Jeff Tannenbaum’s Next Act Will Be Green

2019-02-08

Bloomberg: Jeff Tannenbaum made his fortune through investing; now he’s investing that fortune. He’s chairman emeritus at New York-based Fir Tree Capital Management LP, the hedge fund he founded in 1994, though he began handing over investment responsibilities in the early 2000s and had ceased day-to-day portfolio management by the middle of the decade...

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Spotlight on Investors: United Nations Joint Staff Pension Fund

The United Nations Joint Staff Pension Fund is a defined-benefit fund established by the General Assembly of the United Nations in 1948, entrusted to provide retirement and related benefits to more than 205,000 staff and retirees of the United Nations and 23 other member organisations. The Office of Investment Management (OIM) manages a US$63 billion multi-asset class, global investment portfolio, 85 per cent of which is actively managed in-house. The fund invests globally in more than 100 countries and 27 currencies, and in multiple asset classes: global equities, global fixed income, private equity, real estate, infrastructure, timber, and commodities.

OIM began the journey towards sustainable investing decades ago by restricting investments in tobacco and armaments, reflecting the values of the United Nations. The office became a signatory to the Principles for Responsible Investment (PRI) in 2006. This was followed in 2008 by investing in the first green bonds, issued by the World Bank, and being the catalyst investor in low carbon exchange-traded funds in 2014.

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2017 Annual Report

BP Board Will Back Shareholder Push to Align Goals with Paris Climate Agreement

2019-02-03

MarketWatch: Oil major BP PLC’s board said Friday it will back a shareholder resolution at its annual meeting this year that would force the company to align its business strategy with the goals of the Paris Agreement on climate change.

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Climate-Concerned Investors Turn Heat up on Global Food Giants

2019-01-29

BusinessGreen: In some quarters 2019 has already been labelled the 'year of the vegan'. From vegan sausage rolls to climate-friendly diets, barely a day has gone by without some news of how meat-light meals are better for consumer health and the planet.

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CPPIB to Raise €1bn Via First Euro-Denominated Green Bond

2019-01-30

IPE: CPPIB is selling €1bn in 10-year fixed-rate notes to enable it to invest further in eligible assets such as renewables, water and real estate projects, as well as diversify the fund’s investor base.

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Danish SDG Investment Fund Reaches DKK 5BN

2019-01-28

IFU: In June 2018, IFU signed an agreement with PKA, PensionDanmark, PFA, ATP, JØP/DIP, PenSam and Navest to establish the Danish SDG Investment Fund, which will support the UN Sustainable Development Goals through commercial investments. The total capital commitment in the first closing was DKK 4.1bn. In a second and final closing, commitments have been obtained from three additional investors: SEB Life & Pension, Secure SDG Fund and Chr. Augustinus Fabrikker Akts. With these three investors, the total commitment reached DKK 4.85bn, which is very close to the original target of DKK 5bn.

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Bondholders Must Start Playing Hardball with Climate Offenders

2019-01-31

ShareAction: ShareAction’s new report, titled “Sleeping Giants – Are bond investors ready to act on climate change?” is based on 22 in-depth interviews with asset managers, asset owners and other corporate bond market professionals to explore their attitudes to engaging with issuers about climate change.

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Impact Investing: Feeling the Effects

2019-01

IPE: At the beginning of 2019, CBRE Global Investors announced it had held a first close for its debut social and affordable housing fund in the UK. The CBRE UK Affordable Housing Fund raised about £250m (€220m) from 13 UK institutional investors, The Big Society Capital.

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Morningstar Launches New Low Carbon Risk Index Family

2019-01-30

Guru Focus: Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today announced the Morningstar Low Carbon Risk Index Family, a new group of indexes that provides diversified exposure to equities across regions and emphasizes companies aligned with the transition to a low-carbon economy. Powered by Sustainalytics' Carbon Risk Ratings, the indexes are created through an optimization process that targets low portfolio-level carbon risk and fossil fuel exposure.

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Thematic Boutique Partners with Non-Profit Group for Climate Fund

2019-01-31

CityWire Selector: The new strategy will have an investment universe of 700 stocks across all geographies and sectors, made of global equities that best manage climate-related risks.

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