Industry News: ESG5

Spotlight on Investors: Wespath

Founded in 1908, Wespath is a non-profit agency serving the United Methodist Church. It supervises and administers retirement plans, investment funds and health and welfare benefit plans for active and retired clergy and lay employees of the Church. As a faith-based organization, Wespath seeks to promote the values of the United Methodist Church as expressed in the Social Principle by integrating environmental, social and governance factors in the selection of investments across asset classes and into the selection of external managers. The organization had over $ 21.9 billion of assets under management as of December 31st, 2018.

Wespath is actively involved in shareholder and public policy advocacy, proxy voting, portfolio screening and community investing (notably through their Positive Social Purpose Lending Program that has cumulatively invested over $2 billion in affordable housing, and community development in underserved communities of the United States). Wespath's exclusion policy is guided by ethical considerations, as such, the organization avoids investments in companies whose activity involves the production, distribution, and marketing of alcoholic beverages, tobacco products, adult entertainment, weapons, gambling, and privately-operated correctional facilities. Additionally, Wespath has adopted a Human Rights Guideline which excludes the sovereign debt of any country demonstrating prolonged and systematic pattern of human rights abuses according to Freedom House's annual survey: Freedom in the World. Finally, Wespath is a founding signatory to the UN PRI and an active member of the Interfaith Center on Corporate Responsibility.

Investment Policy

Spotlight on Investors: The J.W. McConnell Family Foundation

John Wilson McConnell, a Canadian businessman and philanthropist, founded the McConnell Foundation in 1937. The Montreal-based organization seeks to address social, cultural and environmental challenges through the use of impact investing and philanthropic grants. As of December 31st 2017, the Foundation had CA $650 million of assets under management. 

The Foundation focuses on the following areas: Sustainable Food, Health, Arts and Culture, Entrepreneurship, Environment, Affordable Housing, Civic Assets, Energy, Water and Indigenous Communities. By 2020, the McConnell Foundation seeks to invest 10% of its assets in impact investments. The organization invests for impact in two ways: Mission-Related Investments (investments aligned with the Foundation's mission and expected to have market or above-market returns) and Program-Related Investments (investments that further specific program objectives and that have a tolerance for below-market returns).

Impact Investing: Due Diligence Guide Part 1

Spotlight on Investors: OPTrust

Founded in 1994, OPTrust manages the OPSEU Pension Plan, one of the largest defined benefit plans in Canada. The plan is jointly sponsored by the Province of Ontario and Ontario's Public Service Employees Union. As of December 31st, 2018, the Fund had close to CA$ 20 billion of assets under management.

As long-term investors, OPTrust recognizes that ESG factors impact investment risk and return, and its reputation. As such, its Statement of Investment Policies and Proceduresmentions that all investment teams are accountable for all taken ESG-related risks. OPTrust's Responsible Investing Strategy includes the consideration of ESG risks, Active Ownership, and Stakeholder Engagement. Furthermore, the Fund does not invest in companies involved in manufacturing tobacco products, cluster munitions and anti-personnel landmines (in accordance to international conventions signed by Canada).

Statement of Responsible Investing Principles

Spotlight on Investors: Aegon Asset Management

Aegon Asset Management is a subsidiary of Aegon, a Dutch insurer headquartered in The Hague. The firm had US$ 361 billion of assets under management as of December 31, 2017, of which $14.2 billion are managed under an Impact or Socially Responsible mandate.

Aegon Asset Management's approach to responsible investments includes ESG integration, Impact investments, Exclusions, Engagement and Voting. The management company believes that collaboration is necessary to advance responsible investment practices. As such, Aegon Asset Management is part of the University of Cambridge's Institute for Sustainability Leadership, ShareAction, GIIN, Climate Action 100+ and many others to engage with companies and contribute to research.

Aegon N.V. Responsible Investment Policy 2018

Responsible Investment Report 2017

Spotlight on Investors: Walden Asset Management

Founded in 1975, Walden Asset Management is a division of Boston Trust & Investment Management Company which solely focuses on responsible and impact investing. Firm-wide assets under management were $7.9 billion as of year-end 2018.

Since its inception, Walden Asset Management has been integrating environmental, social and governance factors into investment decisions. The firm is a proponent of corporate responsibility and influences their portfolio companies through active engagements, and shareholder resolutions. In 2018, 77 out of 171 companies engaged implemented positive changes regarding Climate Change, Equality and Governance. Further, Walden Asset Management collaborates with their peers, NGOs and Stakeholders to improve ESG incorporation and advocate for effective public policy on pertinent ESG issues.

Annual Impact Report - 2018

Task Force on Climate-related Financial Disclosure Response – 2019

Spotlight on Investors: Fonds de Réserve pour les Retraités

Founded in 2001, the Fonds de Réserve pour les Retraités (FRR) is a French public administrative establishment responsible for investing assets entrusted by public authorities to finance the pension system. As of December 29, 2017, FRR had €36.4 billion of assets under management.

The Reserve Fund's responsible investing approach rests on four principles: incorporating ESG factors into asset management, managing social responsibility with regard to the UN Global Compact, exercising their voting rights, and contributing to research and supporting international initiatives such as the Carbon Disclosure Project and the Extractive Industries Transparency Initiative. As a public entity, the organization abides by the Ottawa and Oslo Conventions ratified by France, and excludes controversial weapon manufacturers. Further, to successfully manage carbon risk, FRR has been calculating the carbon intensity of their equity and bond portfolios since 2013.

Annual Report 2017

Responsible Investment Strategy 2013 - 2017

Spotlight on Investors: The Government Pension Fund of Norway

The Government Pension Fund of Norway, often referred to as the Norwegian oil fund, was founded in 1990. It is one of the largest sovereign wealth funds in the world with over US$ 980 billion of assets, as of December 2018. Norges Bank Investment Management (NBIM) is responsible for the management of the fund. The firm seeks to safeguard the long-term financial interests of future generations by investing responsibly in equities, fixed income, and real estate.

NBIM's investing approach is based on three core pillars: setting standards of principles and expectations to help improve corporate governance, exercising their ownership rights, and monitoring and managing the ESG risks of their investments. The firm sets high expectations for portfolio companies on topics related to the UN SDGs such as children's rights, climate change, water management and others. Finally, the Sovereign Wealth Fund has a publicly available company exclusion list based on recommendations from the Council on Ethics appointed by the Ministry of Finance.

Responsible Investment Report 2018

Council on Ethics Annual Report 2017

Company Exclusion List

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

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

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

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