Founded in 1997, Domini Impact Investments is a women-led investment adviser that specializes exclusively in impact investing. Amy Domini, the founder of the organization, has been a leading figure of the Responsible Investing movement for decades. She helped create the Domini 400 Social Index, now the MSCI KLD 400 Social Index, one of the first Socially Responsible Investing indexes that provide exposure to US securities with outstanding ESG ratings. Domini actively manages more than $2 billion across three mutual funds: the Domini Impact Equity Fund, the Domini Impact International Equity fund and the Domini Impact Bond Fund.
To create positive change Domini employs three strategies:
Further, the firm applies the following strict exclusionary screens across their funds: military weapons and firearms, nuclear, oil and gas exploration and production, coal mining, tobacco, alcohol and gambling.
Top 1000 Funds: It is possible to unlock significant positive alpha using a combination of big data and traditional ESG ratings. By combining big data and analyst-driven ESG information, investors can identify value opportunities in ESG and construct a strategy that delivers alpha while investing in companies with superior ESG performance scores. The combination yields significant positive alpha of about 4-5 per cent annually.
George Serafeim's paper “Public sentiment and the price of corporate sustainability” analyses data for the years 2009-18 provided by MSCI and TruValue Labs, the pioneer in artificial intelligence-driven ESG data.
Barron's: A foolish consistency is the hobgoblin of little minds, but the big thinkers of sustainable investing have long argued for what they say is much-needed consistency in defining what exactly sustainable means. Now, the Sustainability Accounting Standards Board has unveiled its first set of industry-specific accounting standards, outlining which issues are financially material for 77 industries.
ETF Trends: In September, Vanguard, the second-largest U.S. issuer of exchange traded funds, launched its first ETFs aimed at environmental, social and governance (ESG) investing principles.
The Vanguard ESG U.S. Stock ETF (NYSEArca: ESGV) and the Vanguard ESG International Stock ETF (NYSEArca: VSGX) are low-cost entrants to the growing ESG ETF arena and cover more than 80% of the U.S. equity market capitalization and nearly 70% of the international equity market capitalization, with a focus on those companies that adhere to ESG principles.
IPE: The coverage ratios of pension funds could drop by up to 80% if global temperatures rise by 4°C, a new model for asset-liability management has suggested.
The model – developed by Ortec Finance in co-operation with the €19.4bn Philips Pensioenfonds and the €47bn metal scheme PME – assumed that funding levels could still drop by 20% if global average temperatures only rise by 1.5°C above pre-industrial levels.
Cision: Sustainalytics, a leading provider of ESG and corporate governance research, ratings and analysis, today launched its Sustainable Products Research, designed to identify companies that derive revenue from sustainable products and services. Investors can use this research for sustainability-themed product creation, portfolio construction and capital allocation strategies, integration of product involvement data into ESG analysis and for client portfolio reporting.
Institutional Asset Asset Manager: Record Currency Management (Record) has developed a method of improving the environmental, social and governance (ESG) credentials of its Multi-Strategy currency product whilst preserving the return profile, enabled by one of the largest sets of country-specific ESG data built to date.
IPE: Members of the European Parliament have decided to allow delegated acts under IORP II in a vote on one of the Commission’s sustainable finance proposals, despite pension fund opposition.
The decision was taken as part of the vote in the parliament’s economic and monetary affairs committee (ECON) on its version of the Commission’s proposal on “disclosures relating to sustainability investments and sustainability risks”.
IPE: Dutch pension funds are using feedback from members to fine-tune their sustainable investment policies, according to research by IPE’s Dutch sister publication Pensioen Pro.
Schemes including the multi-sector fund PGB, the pension fund for the retail sector (Detailhandel) and the fund for the hospitality industry (Horeca & Catering) had all made divestments and impact investments after surveying their members, Pensioen Pro found.
Ethical Corporation: It is now commonplace in business circles to hear dire warnings about how artificial intelligence will disrupt today’s business models, how the contract between business and society is breaking down, and how climate change adaptation will strand not simply fossil fuel assets, but whole swathes of industries dependent upon them.
Of course, there is no single answer to these challenges. But the global coalition of leaders from business, investment and regulation who came together at the start of the decade to form the International Integrated Reporting Council (IIRC) did so believing it was possible to enable businesses to move to a longer-term and inter-connected approach, which would ultimately sustain the continuing role of business to create value.
Founded in 1976, Calvert Research and Management is one of the largest responsible investing firms in the US with over $13 billion of assets under management as at December 2017. Calvert has been at the forefront of integrating societal issues into their investment decisions. In 1982, the firm launched a mutual fund avoiding investments in companies doing business in apartheid-era South Africa. Further, in 2004, Calvert collaborated with UN Women to develop the first global corporate code of conduct focused on empowering and investing in women worldwide. The principles are a tool for investors to assess corporate performance on gender equality issues.
Calvert's investment approach relies on seeking strong portfolio returns, researching material ESG issues, engaging with issuers to help drive performance and social value, and creating material and measurable impact. To consistently operate responsibly, Calvert developed a framework for the evaluation of its investments and to guide its engagement with issuers. Their Principles for Responsible Investment consist in objectives to achieve Environmental Sustainability and Resource Efficiency, Equitable Societies and Respect for Human Rights, and Accountable Governance and Transparency. As well as criteria that may lead to the exclusion of firms linked to controversial activities such as tobacco, weapons and others.
Forbes: Investors are increasingly aware of the system-level effects of their investments. In a previous post I have written about how the very large asset owners and asset managers have to consider whether their investments are making a positive or negative contribution to the financial, environmental, and social systems that support human life on Earth. Sudden shocks (e.g., the financial crisis of 2008) and steady and persistent degradations (e.g., from climate change) in these systems will make it impossible for investors to earn the returns expected by their ultimate beneficiaries—all of us.
Barron's: Sustainable investing is growing—fast. U.S.-domiciled assets invested sustainably rose 44% in the past two years to $12 trillion, surpassing growth seen in the previous period, according to the latest biannual trends report from the US SIF Foundation. In 1995, when US SIF first measured the size of the U.S. sustainable investment universe, that figure was just $639 billion. More mainstream money managers are picking up the environmental, social, and governance (ESG) mantle.
Devex: To achieve the ambitious Sustainable Development Goals, the United Nations has been widening calls for support from the private sector — and some believe stock markets could play an important role.
Partners of the Sustainable Stock Exchanges initiative met in Geneva, Switzerland, for annual talks. The group aims to promote responsible investment in development by stock exchanges and their listed companies. Launched in 2009, it is coordinated by the U.N. Conference on Trade and Development, together with several other U.N. or related bodies.
European Pensions: EU investment professionals are engaging more with ESG factors but oppose a European Commission mandate, a CFA Institute survey has found.
The Evolving Future of ESG Integration in Investment Analysis report, based on a survey of CFA Institute members in the EU, was published as a response to the launch of the European Commission’s Action Plan on Sustainable Finance.
IPE: The Dutch state is to issue green bonds as of 2019, Wopke Hoekstra, the finance minister has announced.
This would make the Netherlands the first AAA-rated country to issue government bonds aimed at financing sustainable investments.
In a letter to parliament, Hoekstra said the country could spend between €3.5bn and €5bn annually on green investments, such as railway infrastructure, energy saving projects, and the development of sustainable energy.
IPE: One of the UK’s biggest defined contribution (DC) master trusts is to migrate part of its default investment option to environmental, social and corporate governance (ESG) focused strategies by the end of the year.
The £2bn (€2.3bn) LifeSight scheme, run by Willis Towers Watson, will reallocate roughly half of its equity holdings in its default fund to track the MSCI Adaptive Capped ESG Universal index and the Robeco Global Sustainable Multi-Factor Equities index.
CPPIB: CPPIB is taking action to ensure their investing strategies keep pace with global change, their President and CEO Mark Machin tells the October 15 Fortune Global Forum.
“[CPPIB] created a dedicated group called Thematic Investing, which identifies sources of structural growth or disruption – including innovations in technology, business models and demographics,” he says.
OPTrust: OPTrust, one of Canada’s largest defined benefit pension plans, has invested alongside UK-based private equity firm Three Hills Capital Partners collectively over €60.0 million into ACT Commodities. This is a Netherlands based firm that specializes in trading environmental commodities related to incentive schemes focused on reducing the use of fossil fuels and emission of greenhouse gasses.
IPE: Profond/BlackRock – Mirjam Staub-Bisang, chair of the Swiss CHF7.8bn (€6.8bn) multi-employer pension scheme Profond, will become head of BlackRock in Switzerland and senior adviser for sustainable investment. According to Profond, she has resigned from all its committees with immediate effect, except the management committee. She remains chair of the scheme’s board.
Founded in 1929, Robeco is a research-driven international asset manager that use quantitative, sustainable and fundamental strategies. As at June 2018, the firm had EUR 167 billion assets under management, of which EUR 102 billion integrate ESG.
In the 1990s, the firm started integrating sustainability into their strategy as they recognized that it was vital in creating value for their clients. In 2007, sustainability became a mainstream investment theme when Robeco acquired SAM, an asset manager recognized for developing the Corporate Sustainability Assessment used by the Dow Jones Sustainability Index. The Robeco group was an early UNPRI signatory and they were given an A+ for all of their strategies in the 2018 assessment. Further, the group frequently promotes Responsible Investing by publishing white papers, research and case studies.
RIA: The 2018 Canadian Responsible Investment Trends Report reveals that responsible investment (RI) is continuing to experience rapid growth in Canada. Survey data collected from more than 100 asset managers, asset owners, and publicly-available sources indicates that Canadian investors increasingly view environmental, social and governance (ESG) factors as important components of their investment decisions. This report describes how RI is growing and developing in Canada. All figures are stated in Canadian dollars as at December 31st, 2017.
Aodproject: The Asset Owners Disclosure Project (AODP) today reveals that only 13% of savings collectively managed by the world’s 100 largest public pension funds have undergone formal assessment for exposure to climate-related risks, leaving $9.8 trillion (£7.5 trillion) unprotected from the economic shocks of global warming.
Considering the financial relevance of climate-related risks and opportunities, as clearly outlined in the recent climate warning by UN scientists, this exposes almost 90% of assets managed on behalf millions of savers worldwide to potential losses in the long term.
IPE: Two major European pension funds have challenged large companies over lobbying positions that are inconsistent with the goals of the Paris climate deal.
Sweden’s SEK608bn (€62bn) AP7 and the £2.3bn (€2.6bn) Church of England Pensions Board (CEPB) have today written to the chairs of 55 European companies to push them to review the lobbying practices being adopted by their trade associations and lobbying organisations.
Forbes: Peter Kellner founded his family office, Richmond Global, in 1995, and designed it to invest in emerging and global technology platforms with superior returns, as well as the enablement of healthy societies powered by entrepreneurship. Since 1995, Richmond Global has seeded and provided growth equity to some of the largest platforms in technology, from the U.S. to the emerging world.
FT: Adoption of environmental, social and governance criteria in private equity is on the rise. At the beginning of this year, a Preqin survey of more than 300 fund managers globally showed that 53 per cent of respondents had established an ESG policy or had one pending. As well as a tool to mitigate risk and provide downside protection, managers are increasingly embracing the upside potential of investing in sustainable businesses.
International Adviser: Corporate disclosures of environmental, social and governance (ESG) factors affecting their business are backward-looking, argues Maarten Bloemen, Toronto-based portfolio manager and research analyst for global equities at Franklin Templeton Investments.
“When you are looking at [company] disclosures for ESG, it is a bit lacking,” Bloemen told our sister publication Fund Selector Asia during a recent visit in Hong Kong.
The Asset: High net worth (HNW) and ultra high net worth (UHNW) investors are now investing in structured products that can capture outperformance from environmental, social and governance (ESG) investments, disproving traditional perceptions that ESG investing compromises returns.
"The issue we face, and this is common among all investors in Asia, is the perception that if they invest based on ESG principles, they are actually compromising or giving up returns. But there's a lot of theory which supports why companies which are focused on ESG principles will actually outperform others in terms of their financial performance," says Rohit Jaisingh, executive director and head of Equity Products Advisory – Wealth for DBS Private Bank.
Investment Week: In the firm's Q4 note, published on Monday (29 October), Nusseibeh highlighted media interest in the recent Intergovernmental Panel on Climate Change (IPCC) report, which warned a 1.5 degree celsius increase in global temperatures could result in catastrophic climate change, as evidence consumers and government attitudes are changing. He said: "The UK government has now realised it needs to not only get in line with society on this issue, but incorporate it into regular policy discussions and legislation.
IPE: BlackRock has launched a suite of “sustainable” exchange-traded funds (ETFs) that track new MSCI indices that exclude companies on up to six different grounds. The asset manager said it expected assets under management in ESG ETFs would rise “dramatically” in the next 10 years as a result of increased interest from retail investors as well as continued strong demand from institutions.
NEI Investments is the result of a strategic partnership between the Desjardins Group and the Canadian Credit Union System who each hold equal parts of the firm. As of January 2016, the firm's Responsible Investment assets under management totaled $7.7B, managing over 50% of total Responsible Investment assets within the Canadian retail mutual funds series.
The firm is fully committed to Responsible Investing, it has formalized proxy voting and corporate engagement policies that dictate their ownership practices. NEI Investments uses a focus list to prioritize and document its engagements on the following key issues: Global Energy Transition, Sustainable Food Production, Making Pharma Better, Corporate Board Diversity, Governance Matters and Executive Compensation. Further, it is active in the promotion of better practices by engaging with policy makers, and promoting responsible investment events in Canada.
Robeco: In The Big Book of SI, Robeco analyzes sustainability investing today and examines the trends that will shape our future. This new publication also gives investors guidelines on implementation, includes interviews with experts and client cases, and highlights the link between ESG integration and performance.
IPE: A group of global investor organisations has urged listed companies and ESG reporting standard setters to do more to agree an approach to the treatment and inclusion of environmental, social and corporate governance (ESG) information in company disclosure and reporting.
IPE: The UK’s financial services regulator is considering whether to require asset managers and other financial services firms to report publicly on how they manage climate risks.
Noting the work done by the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD), the regulator said there was “an opportunity for us to build on the work of the TCFD to help organisations, including firms, manage the transition to a low-carbon economy and encourage the financial services industry to consider the impact of climate change”.
Top 1000 Funds: Investors can integrate risks from climate change into their portfolios, a panel of experts said at the Fiduciary Investors Symposium at Stanford University.
Delegates heard that the impact of climate change on their portfolios could span a drought hitting hydro power assets, major crop failures, the growing scarcity of agricultural land and the coal exposure sitting on Indian banks’ balance sheets.
IPE: A trio of Local Government Pension Schemes (LGPS) have pledged to align their investment portfolios with the goals of the Paris Climate agreement.
The pension funds for Merseyside, Islington, and the Environment Agency – which run more than £13.5bn (€15.4bn) between them – were joined by the Brunel Pension Partnership, one of the LGPS asset pools.
The funds said they would work to increase their allocations to low-carbon investments such as sustainable infrastructure, and reduce their exposure to carbon-intensive assets.
Citywire Selector: Instead of focusing on companies with favourable ESG ratings, investors should consider looking at companies with poor environmental, social and governance (ESG) ratings but with a clear commitment to mend their ways.
‘Just as value investors target undervalued stocks with a turnaround potential, we think investors should look for companies with poor ESG records that are likely to redeem themselves with more responsible practices,’ AllianceBernstein wrote in an investment note.
IPE: Aberdeen Standard Investments has backed Anglian Water’s green bond programme with £65m (€74.1m).
The manager said the debt finance provided to Anglian Water was made on behalf of the firm’s strategic clients, including Phoenix Group, and its private credit fund, the Secure Income & Cashflow Fund.
The bonds, which are a part of Anglian’ s green bond programme, will be used to finance new and existing projects focused on climate change.
Reuters: The HSBC UK Pension Scheme will invest 250 million pounds ($328 million) in renewable energy infrastructure in Britain, namely solar plants and wind farms, the firm said on Tuesday.
HSBC UK Pension Scheme is one of Britain’s largest, with 190,000 members. It made the announcement during the government’s “Green GB Week”, which aims to raise awareness of the benefits of low-carbon growth.
Citywire Selector: Pimco has launched the GIS Global Investment Grade Credit ESG fund as part of its plans to further strengthen its dedicated platform.
The new strategy will combine top down and bottom-up analysis, driven by cyclical as well as secular trends, and emphasise diversification, while maintaining a focus on delivering positive impact.
Amundi Asset Management, the largest asset manager in Europe with €1,426 billion of AUM, has unveiled a three-year plan that will require all actively managed funds to offer ESG performance over the ESG rating of their benchmark universes. This announcement is aligned with one the founding pillars of the firm: the inclusion of sustainable development and social utility criteria. As of 2017, the firm manages €168.4 billion in SRI assets and it was the first asset manager to obtain the SRI label for several of its funds, a certification created by the French Ministry of Finance and Public Accounts.
As a PRI signatory since 2006, Amundi promotes the advancement of the Asset Management industry by participating to working groups conducted by market bodies to move responsible finance forward such as Sustainable Investment Forums in Europe, Japan, Australia and Canada. Further, it succeeds in its sustainability related objectives by implementing strict policies, and fostering greater cooperation between the SRI and investment teams.
IPE: Germany’s diverse institutional investment sector includes first and second pillar retirement funds, as well as foundations, endowments, church funds and insurers.
Traditionally, many of these groups have showed little interest in environment, social and governance (ESG) compared with their counterparts elsewhere. Correspondingly, many asset managers also lag in their expertise and offerings.
This has definitely started to change. Ingo Speich, head of sustainability at Union Investment, started to oversee ESG mandates in 2004. Although church-based institutions were relatively early adopters of ESG exclusion approaches from the 1990s, Speich says Union Investment saw little interest from other investors until after the financial crisis.
Pensions Age: Pension scheme trustees are “confused” about the best way to implement environmental, social and governance (ESG) factors into their investment strategy, according to new research.
A joint report by the Pensions Policy Institute (PPI) and Redington, found that providers, trustees, independent governance committees (IGC), asset managers and consultants had concerns over the lack of definition around ESG.
Skadden: The question whether a public for-profit company can “do good” and make money at the same time has never been more relevant. Public companies are being bombarded with messages, requests and demands around “ESG” — environmental, social and governance — matters. These come from shareholders, asset managers, special interest groups, activist investors, private equity funds, ESG rating firms, trade groups, politicians, regulators, academics and others. They take a variety of forms, including shareholder proposals, surveys and questionnaires, letter writing campaigns, proxy voting policies, investor stewardship reports, speeches, white papers, academic studies, and legislation.
The New York Times: Private equity firms and public pension funds have long had a symbiotic relationship: The funds supply the firms with billions of dollars to invest, and the firms deliver double-digit returns that help the funds support retired public servants.
Now, pension leaders are showing a new willingness to confront private equity over the human impact of its investments.
Private Equity International: The Carlyle Group has hired a former BlackRock executive as their chief diversity officer, who will lead the effort to create a more diverse and inclusionary workplace.
Kara Helander joined the firm for the newly created position, and Carlyle said she will focus on attracting and retaining top talent as well as increasing board diversity at Carlyle's portfolio companies. Before Carlyle, Helander was a managing director and global head of diversity and inclusion at BlackRock for 10 years.
Private Equity International: What starts as a talking point can become a fundraising deal-breaker.
We saw it with ESG. The idea that non-financial impact should be a considered a documented part of investment decision-making has taken a long time to take root.
"In the early days [...] investors wanted the highest rate of return and didn't put any pressure on the firms in terms of environmental issues [and] jobs offshoring," as Caryle's David Rubenstein told PEI back in 2016.
IPE: Research Affiliates has created a new fundamental investment strategy based on an index that takes companies’ gender diversity into account.
Announcing the launch of its RAFI Diversity & Governance strategy, the California-based investment management firm – a pioneer in smart beta investing – said the product combined gender diversity data with governance and financial discipline metrics “to seek positive investment outcomes”.
All About Alpha: In a new report on the condition of women-owned businesses, part of an annual ongoing examination of business trends by American Express, researchers first take a big picture view (1972 to the present) and then do a swoop-down into the details of 2018.
The conclusion of the study is that the top-ranked women-owned businesses, those in the million-dollar plus category, are powerful economic engines. Investors who can help smaller such businesses get into that million-plus category, get over that threshold, can help produce “big economic gains,” and can presumably capture some of them as alpha.
Established in 1980, Triodos Bank has always aimed to be commercially successful while valuing people, the planet and profits. Its subsidiary, Triodos Investment Management, is globally recognized as a leader in impact investing. The firm focuses on 5 different strategies: Energy and Climate, Inclusive Finance, Sustainable Food and Agriculture, Socially Responsible Investing, and Sustainable Real Estate. In 2017, Triodos Investment Management had €3.5 billion total assets under management and managed 17 different funds that directly invested in Europe and Emerging Markets.
Sustainability is fully embedded in their investment processes – from the initial screening to the reporting phase. The firm has created a Sustainability Management System that includes practices, tools, and indicators such as their Triodos Sustainability Banking Assessment Scorecard, which helps analyze, monitor, and report on the non-financial performance of their portfolio companies. Further, Triodos Investment Management focuses their engagement activities on issues such as basic labor rights, climate change, animal testing, nuclear power, and conflict minerals.
Pensions & Investments: The Task Force on Climate-related Financial Disclosures published its status report Wednesday on the extent to which companies in their 2017 reports included information that aligned with task force recommendations made in June 2017.
The Financial Stability Board task force compares disclosures of more than 1,700 firms from diverse sectors and with broad geographical representation against its recommendations. The four guidelines relate to the effective disclosure of climate-related financial risks and cover the themes on governance, strategy, risk management, and metrics and targets.
Asset Owners Disclosure Project: AODP launched their second survey in 2018, shining their spotlight on the largest global public pension funds. AODP assessed pension funds representing over $11 trillion in assets under management (AUM), holding immense power, influence and responsibility over corporate behaviour. As with any survey there are leaders – namely AP4, Fonds de Réserve pour les Retraites, New York State Common Retirement Fund, and ABP – and laggards. But the survey did more than just provide a ranking of how these influential but often low-profile organisations were responding to climate change. It also provided detail of how these asset owners’ governance systems, risk management processes, and asset allocation decisions were responding and adapting to the challenges posed by climate change and its implications.
OTPP: The Pledge was initiated by not-for-profit Tobacco Free Portfolios, with CEO and Radiation Oncologist Dr. Bronwyn King and her team developing The Pledge in collaboration with UN agencies and finance sector leaders AXA, BNP Paribas, AMP Capital and Natixis.
The Pledge was launched with over 120 Founding Signatories and Supporters. They include financial institutions from around the world collectively representing trillions of dollars of capital, including assets under management of over USD 6.4 trillion, corporate loan books of over USD 1.8 trillion and insurance premiums of over USD 179 billion. Ontario Teachers' Pension Plan, with C$193.9 billion in net assets at June 30, 2018, also signed The Pledge today, and announced its adoption of a tobacco-free position.
Tory's: Canada's securities regulators have published their fourth study showing key trends relating to gender diversity on public company boards of directors and in executive officer positions. The "Report on Fourth Staff Review of Disclosure Regarding Women on Boards and in Executive Officer Positions" tracks changes in gender diversity metrics between 2014 (when new disclosure rules were adopted) and 2018 for TSX-listed companies whose fiscal years ended between December 31, 2017 and March 31, 2018. As Canada's largest banks have fiscal year ends of October 31 they were excluded from the study, which skews the data somewhat as the banks have above-average numbers of women in leadership positions.
Institutional Investors: State Street Global Advisors said Thursday that it will adopt additional measures to punish companies with all-male leadership.
The asset management firm, which in 2017 began using its heft as the world’s third-largest asset manager to pressure companies on gender diversity at the board level, said it will update new proxy voting guidelines in 2020 for firms that have no women on their boards and have failed to engage in “successful dialogue on State Street Global Advisor’s board diversity program for three consecutive years.”
Financial News: Allianz Global Investors is considering introducing quotas for the promotion of top female talent, as its current voluntary approach to encouraging women’s advancement is not working quickly enough.
Allianz is “promoting more women”, he said, but “still promoting even more men” and so is not resolving its gender diversity problem. To tackle this, Utermann said the firm would now consider the introduction of quotas — although he cautioned this is “not fully agreed yet” among the firm’s leaders.
M&G Investments: Far more attention is being paid by investors to ESG matters. For the private European loan market, this raises certain challenges given that companies are typically unlisted and so are less exposed to the expectations of the exchange-traded equity and debt worlds. However, Fiona Hagdrup, leveraged loans fund manager, finds that lenders are not without influence – particularly those that remain ‘private-side’.
IPE: ESG products are too expensive and their targets are too vague, according to a poll of Swiss pension funds.
In addition, investors often had to pay extra fees for specialist expertise for environmental, social and corporate governance (ESG) investing, consultancy group Complementa found.
The company’s latest risk “check up” survey of Swiss Pensionskassen reported that, regardless of whether respondents had exposure to sustainable investments, 60% agreed that the costs of specialised products had put them off investing in the sector.
Wealth Professional: Most of the world’s largest investors are confident in the returns from environmental, social and governance (ESG) investment portfolios.
A survey by RBC Global Asset Managers published, finds that 90% of institutional investors say that ESG integrated portfolios are likely to perform at least as well as non-ESGs.
Created in 2017 from the merger of Standard Life PLC and Aberdeen Asset Management PLC, Standard Life Aberdeen PLC is one of the world's largest investment companies. The investment arm manages $735.5bn of assets, making it the largest active manager in the UK.
Standard Life Aberdeen is a signatory to the UN Principles for Responsible Investing and integrates ESG factors into all of its investment decisions across all asset classes. Their investing approach is complemented by proactive engagements with portfolio companies on ESG related issues. Further, Standard Life Aberdeen promotes Responsible Investing by organizing webinars addressing modern slavery issues in global supply chains, speaking at conferences and panel discussions on how the UN Sustainable Development Goals inform their ESG research and Corporate Governance issues in private-equity firms.
You can read their Q2 Report on ESG related activities here.
Cision: Hugh O'Reilly, President and CEO of OPTrust, one of Canada's largest defined benefit pension plans, delivered a call for action to investors in a keynote address during a Climate Week NYC seminar. The seminar, Accelerating the Path to Climate Action, was organized by MSCI in partnership with the UN supported Principles for Responsible Investing (PRI).
"Whether we take action or not, climate change is already having profound impacts, and markets are responding accordingly," said O'Reilly. "Integrating climate risk is not only necessary, but it is in the best interests of all our Plan members, both today and over the long term."
Schroders: The potential costs to some companies of insuring their assets against the impact of climate change could equate to more than 4% of their market values, according to Schroder's new physical risk assessment.
This new analysis – the latest addition to Schroders’ climate change investment capabilities – focuses on the often-overlooked risks posed to bricks and mortar.
It is based on the premise that – in theory – companies could insure themselves against the physical damage they may sustain from climate change-induced environmental changes, such as extreme weather events.
The Hedge Fund Journal: This 2018 report includes 44 women making their first appearance on the list. The report highlights women leading all verticals in hedge funds, allocators to hedge funds and associated service providers. It features portfolio managers as well as a wide range of C-suite roles – CIOs, CROs, CEOs, CFOs and COOs – along with general counsel, HR professionals, sales, marketing and business development professionals, and investor relations professionals. Some of the women in this report wear multiple hats. The majority have studied one or more of: finance, economics, MBAs, accountancy or law; some are also CFA and/or CAIA charterholders. Asset managers in this report run between $1 billion and $40 billion in alternatives.
The Wall Street Journal: As the #MeToo movement continues to sweep through U.S. corporations, some venture capitalists are pushing a proposal that would make it easier for big investors to extract fines from companies embroiled in such scandals.
News.com.au: AMP Capital has refused to reveal how much worse off clients will be after its move to ditch nearly half a billion dollars in tobacco-related investments.
The beleaguered fund manager, which earlier this year revealed some of its customers were actually seeing negative returns on their cash investments, said on Thursday it had completed its $440 million divestment of tobacco manufacturing securities.
The move, described as the largest such divestment by a fund manager in Australia, was made under a new “ethical framework” announced in March last year that included the decision to divest from tobacco securities across all equity and fixed income holdings.
MFS: Fixed income investors are increasingly incorporating material ESG factors into the assessment of credit risk. ESG is now also more likely to be integrated into the mainstream investment process, as opposed to being a specialist, segregated activity, confined to green bonds or serving as an add-on to the investment process.
Markets Media: Green bond volumes have broken through $100bn (€85bn) more quickly than in 2017 as a global partnership to accelerate issuance was launched last week.
The Climate Bonds Initiative said in a blog that the $100bn annual benchmark was broken last year for the first time and took place in November. Green bond issuance has grown from just $3.4bn in 2012 to $161bn last year.
Aviva: Aviva, Index Initiative, and the United Nations Foundation announce the launch of the World Benchmarking Alliance (WBA), with the aim of helping businesses do more to achieve the Sustainable Development Goals (SDGs). The WBA, launched in New York on the eve of the General Debate of the 73rd session of the United Nations General Assembly, will develop free, publicly available benchmarks which rank companies on their contributions to achieving the SDGs.
IPE: The benchmark has assessed 903 real estate companies, funds and developers on their sustainability, covering a record 79,000 assets. Chris Pyke analyses the results.
GRESB is a global environmental, social and governance (ESG) benchmark for real assets. Working with the industry, GRESB defines the standard for sustainability performance in real assets, providing standardised and validated ESG data to 75 institutional investors, representing over US$18trn (€15.5trn) in institutional capital. The 2018 results highlight three key trends for real asset investors:
• More transparent ESG performance;
• More progress on global sustainability goals;
• More focus on resilience.
Last week, Hanaa Helmy was recognized as a SDG Pioneer for Investing in Social Development by the United Nations Global Compact. As the CEO of the EFG Hermes Foundation, she has overseen a US$ 3.7 million partnership with civil society organizations, local and central government agencies, and private sector entities to fund infrastructure development, educational opportunities, economic empowerment and providing basic human rights for underprivileged areas, a project aligned with many SDG goals.
EFG Hermes Foundation was created by EFG Hermes, a financial institution in Cairo, Egypt that provides investment banking, asset management, securities brokerage and other financial services. As EFG Hermes' Head of Corporate Social Responsibility, Hanaa Helmy has lead its firm into becoming more sustainable. First, by training the employees on responsible business conduct and second, by developing an ESG policy that covers all of their business lines. As a result, EFG Hermes became the first Egyptian of the UN Principles for Responsible Investing in 2018.
UBS: For its latest Investor Watch, UBS surveyed over 5,300 investors in 10 markets on sustainable investing.
They have found that 65% of wealthy investors believe it is important to help create a better planet however only 39% actually have sustainable investments in their portfolio. This disconnect between purpose and action can be explained by the incapacity to assess the impact of sustainable investments, the lack of access to them, and the belief that investing sustainably will lower the investors’ return.
Most investors are interested in addressing environmental issues in their portfolios such as Pollution and waste, Climate Change, and Water. Interestingly, China and Hong Kong are the two markets that focus the most on mitigating Pollution and waste.
Forbes: 60% of corporate plan sponsors that participated in a recent NEPC survey indicated that they were not interested in incorporating ESG investing, which means considering ESG factors in both investment decisions and ownership policies and practices.
Of plan sponsors that incorporated ESG investing, 70% were defined contribution plans, or plans in which benefit payments to retirees depend on investment returns. Nevertheless, fewer than 10% of 401(k) plans—a type of defined contribution plan—offer ESG investing options.
IISD: A coalition of investors managing over US$5.6 trillion in assets joined a coalition of more than 70 large food companies in calling for zero deforestation in Brazil’s Cerrado region. In a statement at the Global Climate Action Summit (GCAS), the coalition urged action to halt deforestation in the Cerrado, adopt sustainable land management practices, and mitigate financial risks associated with deforestation and climate change.
In advance of the GCAS, the Farm Animal Investment Risk and Return (FAIRR) Initiative, a London-based investor network, galvanized support for the Statement of Support for the Cerrado Manifesto. In July 2018, FAIRR launched the Coller FAIRR Protein Producer Index, which assesses how 60 global livestock and aquaculture companies disclose and manage key environmental, social and governance (ESG) risks, including biodiversity loss and deforestation.
The Asset ESG forum: BOND issuers and investors are increasingly basing ESG (environment, social and governance) investment decisions on commercial returns, indicating a developing maturity within the sustainable investment landscape, a new report shows.
Hong Kong's issuers see that tax incentives are by far the greatest driver of ESG decision making, followed by stakeholder and shareholder pressure, with 51% and 29% of issuers noting these respectively.
Financial News: London-based private equity firm BC Partners has hired a female deal maker from Blackstone Group as part of a diversity push.
Tania Daguere Lindbäck will join the firm’s London office at the beginning of next year, according to an internal memo seen by Financial News's sister publication Private Equity News.
Bloomberg: According to a new study, the employee and founder stock that can make tech workers silly rich is disproportionately concentrated among men. In July, equity management platform Carta crunched data from almost 180,000 employees at more than 6,000 companies. The findings, released on Sept. 18: Women hold only 47¢ for every dollar of equity men do.
It’s not simply that there are more men than women working at and founding these companies. Women make up 35 percent of equity-holding employees, but hold only 20 percent of the employee equity, the Carta survey found.
Investment Week: The Investment Association (IA) has appointed four directors to its board, including Brooks Macdonald CEO Caroline Connellan and Columbia Threadneedle Investments CEO, EMEA, Michelle Scrimgeour.
CPA Canada: Every department and system — from HR to finance — can contribute to an organization’s sustainability. It’s no longer just about recycling and reusing. In today’s world, being sustainable means being nimble enough to embrace rapid-fire change, on multiple fronts. This is a core requirement for an organization’s long-term success, and one that CPAs can help instill.
At The ONE National Conference in Halifax, our speakers will unpack several sustainability rubrics.
Since its foundation 30 years ago, EdenTree has been delivering profit with principles. The investment management firm was created by Allchurches Trust, a charity based in the UK, to fund all of its programs.
EdenTree has £2.7bn under management, offering “Amity” funds that apply principles of Responsible Investment. In addition to being a PRI signatory since 2013, EdenTree actively promotes Responsible Investment practices by publishing white papers and by collaborating with organizations like The 30% Club, FAIRR, UKSIF and many others.
IPE: The UK government has rowed back on a proposal that trustees of occupational pension schemes be required to set out the extent to which they take account of members’ views on non-financial matters when developing their investment strategy.
The Department for Work and Pensions (DWP) had proposed this requirement in a June consultation on changes to the investment regulations for occupational trust-based pension schemes, which had the overall aim of “clarifying and strengthening” trustees’ investment duties in relation to environmental, social and corporate governance (ESG) matters.
IPE: More than 60% of the world’s largest public pension funds have “little or no strategy” on climate change, according to new research.
According to the Asset Owners Disclosure Project (AODP), part of responsible investment campaign group ShareAction, 63 of the world’s 100 largest public pension funds provide very little to no information on the financial implications of climate change for their portfolios.
World Bank Press Release: The World Bank (International Bank for Reconstruction and Development or IBRD), rated Aaa/AAA, will for the first time, issue US dollar-denominated sustainable development notes that provide investors return exposure to the environmental, social and governance (“ESG”) performance of UN Global Compact signatories through the Global Sustainability Signatories Index 7.5% VC ER.
UBS is the exclusive underwriter of this equity index-linked 7-year note and will distribute it to its investment banking and wealth management clients. The index was created by Sustainalytics and is composed of up to 100 companies who demonstrate strong ESG performance, according to Sustainalytics ratings. The index is administered by Solactive.
IISD: The European Investment Bank (EIB) has announced an instrument to finance achievement of the SDGs. The ‘Sustainability Awareness Bonds,’ launched with €500 million to start, will fund social and environmental projects around the world.
According to EIB, the bonds will focus on “big-impact projects” that achieve multiple SDGs simultaneously. Patricia Castellarnau, EIB, notes that the Bank’s mission already commits 25% of its financing to climate and the environment, while the new bonds will give added incentive to identify projects with significant sustainability impacts. The term “awareness bonds” is intended to stimulate demand and remind investors that they tackle humanity’s major environmental and social challenges.
Benefits Canada: Aon has developed a ratings system to more closely scrutinize how fund managers integrate environmental, social and governance issues into their investment strategies.
The system begins with a proprietary questionnaire, followed by an examination of the manager’s responsible investing policy, should one exist, as well as its active ownership actions, stewardship policies and its ability to demonstrate how it’s previously applied the policies in practice.
Portfolio Adviser: Environmental, social and governance (ESG) investors are increasingly excluding the kind of government debt that is the mainstay of most retail and institutional and even national portfolios worldwide. Both US treasuries and UK gilts can, for example, fall foul of the criteria governing many such strategies.
Hawksmoor Investment Management has made it clear that when it comes to ESG it rejects US treasuries and does not believe funds that include US government paper meet the criteria for an ESG portfolio due to human rights and climate change concerns.
APG provides management consulting, asset management, pension administration, communication and employer services for pension funds in the group pension market. They provide the pension for one in five families in the Netherlands, amounting to approximately 4.5 million people. APG operates globally with offices in Heerlen, Amsterdam, Brussels, New York and Hong Kong.
APG strives for a careful balance between people, planet and profit. They believe that concern for people and the environment can go hand in hand with good financial performance. APG utilizes its scale to exert influence on companies to comply with international guidelines for corporate responsibility and corporate governance.
Since 2016, they have been using the United Nations Sustainable Development Goals as a guideline for these sustainable investments. At the end of 2017, APG had invested 12% of their total AUM (€55.3 billion) in Impact Investing contributing to 13 out of 17 Sustainable Development Goals.
Click below for more information about APG's steps towards Responsible Investment.
Opalesque Asia: Swedish asset manager East Capital has launched a UCITS China A-Shares fund that incorporates environmental, social and governance (ESG) investing.
The asset manager specialised in emerging and frontier markets announced the launch of a UCITS version of its successful China A-Shares strategy, providing investors with easier access to investment opportunities on the Chinese onshore equity markets, facilitated in recent years by capital market reforms and the stock connect programme.
IPE: Sustainable investing is a low priority issue for most institutional investors, according to a survey by Schroders.
The UK-listed asset manager polled 650 investors around the world running $24trn (€20.6trn) and found that, although they expected sustainable investing to become a bigger issue in the next few years, it was not currently a high priority for most.
Almost a third (32%) of those questioned by Schroders said that how sustainable an investment was had “little to no influence” on the decision to buy.
Institutional Asset Manager: Aberdeen Standard Investments is to manage a new Australian Fixed Income strategy with an emphasis on ESG on behalf of the The Australian National University (ANU).
ANU Endowment Fund has selected Aberdeen Standard Investments to manage a strategy that invests in active Australian Fixed Income with an ESG overlay - facilitating the negative screening of securities issued by any company that derives in excess of twenty per cent of its revenue directly from tobacco, coal, gambling, or adult entertainment.
IPE: The €24bn multi-sector scheme PGB has become the first Dutch pension fund to exclude companies selling firearms to civilians.
As a result of the decision, the scheme said on its website that it would divest its stakes in US supermarket chains Walmart and Kroger. The decision followed a survey of its members conducted in 2017, which indicated that they didn’t want the scheme to invest in controversial weapons.
Investment Europe: Financial groups are failing to beat companies operating in the professional services, pharmaceutical, drinks making, retail, telecoms, cosmetics and other industries, when it comes to the top decile and top quartile rankings in the latest Thomson Reuters Diversity & Inclusion index.
The index is based on relative performance measures covering some 7,000 companies. Each company is scored on diversity, inclusion, people development and news controversy factors. Only those with scores across all four areas are assigned an overall score.
IPE: Several European pension funds, including Sweden’s AP1, are launching a project on climate change risks they say could help inform portfolio decisions in the future.
Dutch pension funds PME, the €46.7bn metals scheme, and Philips Pensioenfonds, are also involved. Alongside Dutch insurer a.s.r., Canadian pensions manager OPTrust and financial technology firm Ortec Finance the three pension funds – which have nearly €100bn in assets between them – described the work as a “cutting-edge research project to integrate climate change into strategic investment decisions”.
BusinessWire: DWS Group today announced the launch of DWS ESG Liquidity Fund (ESGXX), the first money market fund available in the U.S. to apply ESG (Environmental, Social and Governance) criteria1. The fund will invest in high-quality, short-term, U.S. dollar-denominated money market instruments paying a fixed, variable or floating interest rate while also filtering for various ESG factors using DWS’s proprietary software – the ESG Engine.
Ilmarinen is as old as Finland’ earnings-related pension system. Ilmarinen was established in 1961 by Finland’s largest insurance companies and six smaller insurers.
Ilmarinen's responsibility is exhibited in how they take care of a key component of Finnish social security: pension cover. The pension’s earnings directly impacts the wellbeing of Finns. Ilmarinen also promotes good daily workplace practices. They invest pension assets so that the return on them also secures the pensions of future generations. In addition, Ilmarinen supports business in Finland by being a major and active owner of Finnish companies.
To read more on Ilmarinen's Corporate Responsibility, click here.
IPE: Investors have not been paying enough attention to physical climate risks, as opposed to the risks posed by steps to combat climate change, according to Schroders.
With temperature rises lagging increases in greenhouse gas concentrations in the atmosphere by around 40 years, further disruption from the effects of changing weather patterns looked unavoidable, the asset manager said in a new report. This meant bigger risks to physical assets and infrastructure.
With the exception of the energy sector, companies generally showed an appreciation of the risks posed by the disruptive impacts of physical climate change, wrote authors Andy Howard and Marc Hassler.
BBC: Politicians in California want listed companies based in the state to have at least one woman on their boards. The state's assembly voted in favour of the idea and the bill is expected to pass California's senate, which has backed an earlier version. It would then go to the Governor, Jerry Brown, who is yet to state his position. If the bill becomes law, the state would be the first to impose such a quota.
California would join countries such as Norway and Germany, which have also set rules to increase the number of women on corporate boards
Institutional Asset Manager: Pictet-SmartCity is a global thematic equities strategy that aims to exploit the powerful trends driving urbanisation. Its objective is long-term capital growth by investing in companies around the world that are helping to develop the cities of tomorrow.
These companies will be active mainly, but not exclusively, in the following areas: mobility and transportation, infrastructure, real estate, sustainable resources management, as well as enabling technologies and services supporting the development of better urban environments.
Bloomberg: It’s an age-old investing question. Can you do good and do well at the same time? Ethan Powell is on a mission to prove that you can.
The 43-year-old former hedge funder is using his non-profit finance firm, Impact Shares Corp., to create a new way of doing socially responsible investing. From his office in Frisco, Texas, he’s setting up funds that eschew popular one-size-fits-all ESG models for ones that not only are built hand-in-hand with specific charities, but also fork over the bulk of their fees to those organizations.
Top 1000 Funds: OPTrust recently issued their Climate Change Action Plan. Among other things, the action plan commits them to: determine their exposure to industries, geographies and companies that are most exposed; engage with companies on improved performance on ESG factors; and demand better disclosure of the information investors need to properly price climate change-related risk.
Top 1000 Funds: Sweden’s AP7, the SEK490 billion ($53.8 billion) pension fund that manages the default option within Sweden’s premium pension system, will increasingly call out corporations on opaque climate lobbying.
Thwarting the practice – whereby companies publicly support the Paris agreement on climate change but also back trade associations that lobby against it – has become one of the most important strands of the pension fund’s active ownership strategy within its SEK454.3 billion ($50 billion) equity allocation.
Bloomberg: Yale’s advisory committee on investor responsibility recommended the ban to a committee of the board of trustees, which adopted the policy recently. The New Haven, Connecticut-based school, the second-richest in the U.S., announced the change in a statement.
The California State Teachers’ Retirement System (CalSTRS) was established by law in 1913 to provide retirement benefits to California’s public school educators from prekindergarten through community college. CalSTRS is now the largest educator-only pension fund in the world, and the second largest pension fund in the U.S. The market value of the CalSTRS Investment Portfolio was approximately $228 billion as of July 31, 2018.
CalSTRS business decisions consider environmental, social and governance implications, also referred to as ESG issues. From investment strategy to member services, CalSTRS' sustainable practices seek to create long-term value, promote stewardship of their natural resources and sustain the financial integrity of the fund for the benefit of their members and community. CalSTRS believes that establishing a corporate environment with sustainable values is a blueprint for better governance and increased profitability. Read CalSTRS' 8 guiding beliefs.
IPE: German pensions association aba has strongly rejected the European Commission’s proposal to introduce new rules regarding pension funds’ integration of environmental, social and corporate governance (ESG) criteria in investment decision-making.
The Berlin-based industry body said the Commission’s proposal misunderstood or ignored the nature of the EU’s law on workplace pension funds – the IORP II Directive – and apparently also misunderstood the directive’s existing ESG requirements.
Top 1000 Funds: The International Organization of Pension Supervisors (IOPS) is an independent international body representing entities involved in the supervision of private pension systems all over the world. IOPS has 86 members and observers from 75 jurisdictions and territories worldwide. Their main goal is to improve the quality and effectiveness of the supervision of private pension systems throughout the world. This includes enhancing their development and operational efficiency and allowing for the provision of a secure source of retirement income in as many countries as possible.
A recent survey of IOPS members found ESG one of the issues where IOPS should set standards. Considering this, the IOPS is now developing draft guidelines on the application of ESG factors in the supervision of pension fund investment. The use of these guidelines is not be mandatory but they believe they will encourage pension funds in IOPS countries to incorporate these factors in their decision-making process in some way.
Financial Post: Callan, a leading institutional investment consulting firm, announced the results of its sixth annual ESG Survey, noting that 43% of U.S. institutional investors have incorporated environmental, social, and governance (ESG) factors into their investment decision-making process in 2018. The percentage is the highest recorded in the survey’s history—and nearly doubled since its launch in 2013 (22%).
IPE: The International Organization of Securities Commissions (IOSCO) was “ideally placed” to accelerate progress on climate risk reporting, according to Meryam Omi, head of sustainability and responsible investment strategy at €1.1trn Legal & General Investment Management (LGIM).
Despite “undeniable” momentum behind support for the work of the Taskforce on Climate-related Financial Disclosures (TCFD), the usefulness of climate reporting depended on expanding harmonisation and standardisation across different jurisdictions, she said.
“As a major global investor, we would like to call on IOSCO to acknowledge the TCFD recommendations and encourage their incorporation into international listing standards,” added Omi.
IPE: Sustainable finance proposals tabled by the European Commission could sideline many popular ESG strategies or approaches, investors have warned.
The comments were made in feedback on the sustainable finance legislative proposals announced by the Commission in May. The window for feedback closes this week, and submissions have been coming in thick and fast in recent days.
The Commission proposed a regulation on reporting requirements related to “sustainable investments and sustainability risks”, but the European Fund and Asset Management Association (EFAMA) said that, as currently drafted, the proposal seemed to equate sustainable investments with impact and thematic investing.
Portfolio Adviser: The European Commission has been accused of sidelining social and governance considerations in its proposed action plan for sustainable finance as it focuses on reducing carbon emissions in line with the Paris Agreement.
A narrow definition of ESG focussed around environmental factors would have worrying implications for advisers, the Investment Association has said in its submission to the European Commission’s Sustainable Finance Action Plan proposals. Its concerns were specifically in response to the part of the plan focussed on taxonomy, which aims to define what is sustainable and identify areas where sustainable investment can make the biggest impact.
The IA has called for the Commission to spell out its focus on the environment or risk narrowing the definition of ESG
The New York State Common Retirement Fund is the third largest public pension plan in the nation with an audited value of $207.4 billion in assets (as of March 31, 2018) held in trust for the retirement security of the more than one million members of the New York State and Local Retirement Systems (NYSLRS). As a long-term investor, the Fund has an investment approach which capitalizes on market opportunities and weathers market ups and downs.
Annually, the Fund reviews corporate governance practices including how a company is directed, administered and operated, recognizing that firms that adopt good governance practices have greater potential for corporate success and sustainable economic growth.
With an emphasis on environmental, social and governance (ESG) issues, the Fund helps shape corporate policies and practices in ways that safeguard the Fund’s investments and promote corporate responsibility.
Investment Week: BlackRock has unveiled a suite of four open-ended ESG-focused emerging market debt funds, using specialist benchmark indices created in collaboration with J.P.Morgan.
Opalesque: Investor interest in ESG is driving change in Luxembourg, according to delegates at the latest Opalesque Luxembourg Roundtable. Delegates say investors are already asking for enhanced disclosures that address ESG issues - a trend which is only likely to get more pronounced as millennials take over positions of power.
"By the year 2025, a whole different generation of people will be making investment and business decisions," says Mike Hornsby of EY. "They will be looking for more ESG information, data and processes. I see this trend in my own client base today where sustainability data on real estate assets, governance considerations, benchmarks, social considerations, and such things are all becoming more mainstream. ESG factors will become a part of the core business and not a niche product anymore."
Financial Times: The group, owned by US financial giant Ameriprise, has put in place a policy by which it refuses to support the re-election of committee chairs, who are charged with hiring new directors, where women account for less than 15 per cent of board members. The move is a strong signal that investor concern about diversity is spreading to the US from Europe, where shareholders have been pushing for a greater mix on boards for several years.
According to data from State Street Global Advisors, one in four of the 3,000 largest listed US companies did not have a woman on their board in 2017. Research from Deloitte in 2017 found that women held just 14.2 per cent of board seats in the US, compared with 21.2 per cent in Nigeria, 27.5 per cent in New Zealand, 40 per cent in France and 42 per cent in Norway.
Investment Week: St. James's Place has appointed Impax Asset Management to run its £286m Ethical fund, replacing Standard Life Aberdeen, as part of its constant review process. The Ethical fund will no longer be managed by SLA's senior investment manager Jamie Cumming.
Impax's Kirsteen Morrison and David Winborne will take control of the fund, with SJP investing £286m into Impax's Global Opportunities strategy, subject to regulatory approval.
Hedge Connection: One of the more important institutional factors driving adoption of ESG principles is the need for a new “lens” of risk management. Consumer trends point toward greater return for sustainable companies and millennials are more than twice as likely as other generations to purchase products from companies they view as sustainable. Institutional asset owners are taking the view that a more quantitative recognition of ESG factors will provide unique insights into long-term risks and opportunities that might not be captured by traditional financial analysis. Summarized by analyst; Stephanie Ellis, BS of Economics at Babson College, 12/2018
Adviser Voice: The 17th annual Australian Responsible Investment Benchmark Report 2018 (KPMG), the most comprehensive review of the responsible investment sector in Australia, reveals the industry hitting new heights with $866 billion now managed as responsible investments, representing 55 per cent of all professionally managed assets in Australia, up from $622 billion in 2016 (growth of 39% year on year).
Kommunal Landspensjonskasse (KLP) is Norway's largest life insurance company and has conducted ethical filtering of its investments in securities since 2002. Transparency has been fundamental to this strategy since the beginning. KLP is responsible for creating returns for the pension assets of more than 550,000 Norwegians. In total KLP manages over NOK 300 billion (USD 35.922 billion).
The UN’s Global Compact and its 10 principles are an important source of inspiration for KLP's strategy and further work on exercising good corporate governance and active ownership.
IPE: The European Commission has asked two of the EU’s financial supervisory bodies for technical advice on potential amendments to EU rules to require the integration of sustainability risks in investment decision-making.
The advice is being sought in relation to so-called delegated acts that would amend or introduce new rules under EU legislation addressing asset managers, insurers, insurance distributors and investment advisers.
If accepted these rule changes would “explicitly require the integration of sustainability risks, i.e environmental, social and governance risks in the investment decision or advisory processes”.
Top 1000 Funds: The NZ$33 billion ($22 billion) New Zealand Super is looking to increase its exposure to equity factors while also implementing the next phase of its climate strategy, which includes decarbonising its existing equity factor mandates.
About three-quarters of the fund’s portfolio is passively managed and the use of factor strategies is aimed at getting more out of the passive portfolio.
Specifically, NZ Super is looking to appoint an additional manager this year with a focus on multi-factor strategies.
CNBC: UBS Asset Management's head of investments Suni Harford said she's changed her mind on environmental, social and governance (ESG) governance when it comes to managing money.
"I will say, a couple years ago, I was a skeptic. It was hard to find an investor to pay up for a green bond, for example," Harford said from the Delivering Alpha Conference in New York. "But I'm in a different seat now and it's a very different world. We now have data and technology that facilitates a really robust change to the investment process."
Investment Week: Mitchell, who was previously a sustainability strategist, will take up the role with Steven Desmyter, who will focus on the firm's client service and corporate level responsible investment activities.
Mitchell will also be responsible for directing the development of impact, thematic and norms-based investment strategies as well as the broader integration of ESG criteria across asset classes and multi-asset solutions.
IPE: Green bond issuance in 2018 is expected to hit $185bn (€160bn), according to a forecast from Nordic bank SEB.
However, the bank also warned that macroeconomic concerns such as Brexit and international trade tensions could stall new issuance in the short term.
SEB reported in a July market update that $47bn was raised through green bonds in the second quarter of 2018, the second-highest quarterly figure on record. This followed a weaker first quarter figure of $36bn.
As part of the State Board of Administration's (SBA) mission to invest, manage and safeguard the assets of its various mandates, the SBA plays a vital role in supporting initiatives to ensure that public companies meet high standards of independent and ethical corporate governance. The SBA acts as a strong advocate on behalf of FRS members and beneficiaries, retirees and other clients to strengthen shareowner rights and promote leading corporate governance practices at U.S. and international companies in which the SBA holds stock. The SBA’s corporate governance activities are focused on enhancing share value and ensuring that public companies are accountable to their shareowners, with independent boards of directors, transparent disclosure, accurate financial reporting, ethical business practices and policies that protect and enhance the value of SBA investments.
Read the 2017 Corporate Governance Principles: Proxy Voting Guidelines, here.
Bloomberg: On Wall Street, it’s known as “the Weinstein clause.”
Reuters: Goldman Sachs Group Inc has hired Erika Irish Brown to head the Wall Street bank’s efforts to recruit, retain and advance diverse professionals, according to an internal memo.
Given the title of chief diversity officer, Brown’s hiring comes as the multinational investment bank steps up efforts to diversify senior ranks and investments.
IPE: BNP Paribas Asset Management has hired Mercer’s Jane Ambachtsheer as its new global head of sustainability.
She will join the group on 27 August, BNP said in a statement, and will be based in its Paris office.
Ambachtsheer will oversee the company’s approach to sustainability for the €568bn worth of assets it manages and advises on, alongside deputy head of sustainability Helena Viñes-Fiestas.
Top 1000 Funds: The One Planet Sovereign Wealth Fund Working Group has published its framework for integrating climate-change risks and investing in the smooth transition to a low-emission economy. Now the group is encouraging other large institutional investors to adopt the plan.
Bloomberg: Sasja Beslik, the head of sustainable investing at Nordea Bank AB’s $357 billion asset management unit, is making sure everyone knows that his decision to dump Facebook Inc. last month just paid off.
In a tweet that included a graphic showing the 19 percent slump in Facebook shares on Thursday after it published disappointing revenue and user-growth numbers, Beslik wrote “This is why [Nordea] divested Facebook last month, ESG pays off!”
IPE: The UK government should work with the pensions and investment sectors to establish an “agreed responsible investing framework”, a consultancy has suggested.
Aon made the recommendation in its response to a consultation by the Department for Work and Pensions (DWP) on regulatory changes aimed at “clarifying and strengthening” trustees’ investment duties, in particular with respect to environmental, social and corporate governance (ESG) matters.
Investment Magazine: Fixed income investors could use an environmental, social and governance approach to add another layer of risk management and do no harm to portfolio returns, an Australian ESG bond pioneer says.
Altius Asset Management chief investment officer Bill Bovingdon, who launched Australia’s first ESG bond fund in 2014, has seen momentum in the process alongside a growing number of competitors.
Universities Superannuation Scheme (USS) is the corporate trustee responsible for the management and administration of the scheme. Established in 1974, the trustee has its head office in Liverpool. The scheme is supervised in terms of its conduct of operations and financial reporting by the Pensions Regulator.
USS is an active and responsible long-term investor and steward of the assets and markets in which they invest. This means they need to consider all long-term risks to the performance of their investments, including material environmental, ethical, social and corporate governance (ESG) factors where these have a financial bearing.
USS' Responsible Investment strategy covers all asset classes in all markets in which they invest including equities, fixed income, property and private markets. It applies to assets managed internally and to their external asset managers.
People putting their money into environmental, social and governance (ESG) investments might be in for disappointment, Greenchip Financial’s John Cook said.
ESG funds, which select companies for their broader environmental and social impact on top of performance, include a lot of big names whose business has little to do with reducing pollution, Greenchip president Cook said.
Environmental, social, and governance factors carry little weight among American private-sector plan sponsors, according to a new poll by consulting firm NEPC.
Just 12 percent of U.S. corporate and health care retirement plan representatives said they had incorporated ESG criteria into their manager selection processes. When defined contribution plans were excluded, only 6 percent considered ESG.
An investor coalition pushing companies for better data on labour standards has higher ambitions after a successful pilot year, according to an announcement.
Since being launched in July last year, the Workforce Disclosure Initiative (WDI) has attracted more than 20 additional investor signatories, including Aviva, BMO Global Asset Management, and PGGM, which manages the €197bn Dutch healthcare pension scheme PFZW. More than $12trn (€10trn) in assets under management back the initiative.
The UK’s pension fund trade body has rejected changes proposed by the government in relation to trustees taking members’ views into account, saying they were “neither practical nor purposeful”.
Last month the Department for Work and Pensions (DWP) launched a consultation on proposed changes to the investment regulations for occupational pension schemes, which aimed to clear up confusion – stemming from the wording of the current rules – about trustees’ duties to consider environmental, social and corporate governance (ESG) matters in investment.
J.P. Morgan Alternative Asset Management ("JPMAAM") is strengthening its efforts to assist hedge fund managers who are interested in increased adoption of environmental, social and governance factors into their underlying strategies and businesses.
JPMAAM hosted its first ESG Forum at its New York headquarters, bringing together a diverse range of hedge fund managers interested in learning more about institutional client interest in ESG, enhancing alpha with ESG, and best practices for incorporating ESG factors into their businesses
Kempen Capital Management has decided to stop investing in tobacco.
The €60bn Dutch asset manager will exclude all investments in the tobacco industry from its funds, although the policy does not apply to mandates, bespoke investment portfolios and multi-manager funds.
Harassment and sexual violence of any kind are unacceptable – period. The Government of Canada made a commitment to Canadians to help ensure that federally regulated workplaces, including Parliament Hill, are free from harassment and sexual violence. The government is taking the next step toward a strengthened federal framework to protect workers and support employers.
The managers of the six sovereign wealth funds were present at the Elysée: Yngve Slyngstad, head of the Norwegian fund, who is worth 1,000 Billion dollars, Khalil Foulathi, manager of the Abu Dhabi fund (about 828 Billion), Farouk Bastak for the Kuwait fund (524 billion), Yasir Al Rumayyan for the Saudi Arabia fund (494 billion), Sheikh Abdulla bin Mohammed bin Saud Al-Thani for the Qatar fund (320 billion) and Matt Whineray for the New Zealand fund (20 billion).
"Commercially, these investments make sense for the funds, which was not the case ten or twenty years ago. For example, Saudi Arabia will invest to create 200 GW of solar energy by 2030. This is huge" said Yasir Al Rumayyan.
Their joint commitment is part of the "One Planet Summit" of December 12, which aimed to mobilize the private sector for the climate, and especially the financial sector. Emmanuel Macron took the initiative to organize this summit after the withdrawal of the United States from the Paris agreement on the climate.
*Above text has been translated from the original article in French.
The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. Its five institutions share a commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development.
The World Bank Group and Japan’s Government Pension Investment Fund (GPIF) have formalized a partnership that aims to expand markets for sustainable investing. Under the partnership, the World Bank Group and GPIF will collaborate on initiatives that promote strategies for including environmental, social and governance criteria in investment decisions across different asset classes. Ultimately, the aim is to direct more capital towards sustainable investments.
The research report provides an overview on sustainable investing in fixed income. It discusses the core areas of:
The American Council for Capital Formation is questioning the ratings process used for ESG investments.
The Washington-based, business-backed think tank argued individual companies "can carry vastly divergent (ESG) ratings from different (ESG rating) agencies simultaneously, due to differences in methodology, subjective interpretation or an individual agency's agenda."
An investor coalition pushing companies for better data on labour standards has higher ambitions after a successful pilot year, according to an announcement.
Since being launched in July last year, the Workforce Disclosure Initiative (WDI) has attracted more than 20 additional investor signatories, including Aviva, BMO Global Asset Management, and PGGM, which manages the €197bn Dutch healthcare pension scheme PFZW. More than $12trn (€10trn) in assets under management back the initiative.
Morningstar: The first big thing about sustainable investing came along in January, when the head of BlackRock--the world's largest asset manager--urged CEOs to think long term, benefit all their stakeholders, and make a positive contribution to society. In so doing, Fink (CEO of BlackRock) was not urging them to make less money. Just the opposite, he was urging them to position their businesses for long-term profitability by keeping their focus on a bigger picture that includes the role of the corporation in society. Companies focused on minimizing negative environmental and social impacts and accentuating positive ones will be rewarded by increasingly aware customers, will protect their brand, and will attract top talent, enabling them to better navigate the transition to an increasingly low-carbon and digital economy.
While not a new concept, materiality is essential to efficiently integrating ESG factors into the investment process; it all boils down to being able to determine which ESG factors are likely to be linked to stronger investment performance by identifying risks that are related to certain industries.
Savills IM has participated in the GRESB survey since 2012 and eight of its funds, covering 25 per cent of its global assets under management, are now measured against the organisation’s targets and key performance indicators.
Savills IM announced last year that it had achieved green star status for one of its corporate pension funds. The award is given exclusively to real estate management companies and funds that fully integrate ESG elements into their operations. These businesses must demonstrate their ability to measure, implement, manage and develop within very strict ESG frameworks.
La Caisse de dépôt et placement du Québec ("CPDQ"), a leading global institutional investor, today announced that it provided CA$150 million (€100 million) in financing to support the acquisition by ContourGlobal Mirror 2 S.à.r.l. (“ContourGlobal”) of a portfolio of concentrated solar power (“CSP”) assets in Spain.
ContourGlobal is a growth platform for acquiring and developing energy assets with long-term contracts across many geographies. In February 2018, ContourGlobal successfully reached an agreement to acquire the CSP assets from Acciona, a Spanish conglomerate group that develops and manages infrastructure and renewable energy assets. The portfolio consists of five CSP assets in the south-west region of Spain whose operation commencement dates range from 2009 to 2012.
After weeks of rumbling inside Credit Suisse, Paul Dexter, a senior banker in the US, was let go over a complaint of inappropriate behaviour involving an intern. Rumours swirled in M&A circles.
Only this wasn't a case of sexual harassment, people familiar with the matter said. Rather, unruly workplace behaviour - which, not long ago, might have been grudgingly tolerated by management at many firms - had finally caught up with Mr Dexter.
The dismissal of a single banker at a single bank might seem inconsequential in this #MeToo era. Yet Mr Dexter's rise and fall encapsulates the new realities in an industry that has long celebrated big egos and chest-thumping bravado. It shows how a complaint about one incident is increasingly likely to set off a broader investigation and unearth others, upending a career.
Castle Hall note: in a previous ESGDiligence Newsletter, we highlighted a new initiative from Credit Suisse to create an anti-sexual harassment role.
UTAM has committed to disclose the carbon footprints of the investments they manage on behalf of the University of Toronto.
UTAM underlined that commitment in September 2017 by signing the Montréal Carbon Pledge, joining more than 120 global investors that are collectively responsible for over US$10 trillion in assets under management. UTAM's first Carbon Footprint Report has been published, which calculates greenhouse gas emissions from companies in the university’s Pension and Endowment investment portfolios as of September 30, 2017.
Approach to Sustainable Investment
A three-pronged approach guides HMC’s sustainable investment work and priorities:
1. ESG Integration — incorporate material ESG factors into manager selection, appointment, and monitoring
2. Listed Equity Active Ownership — exercise their client’s shareholder voting rights
3. Collaboration — work with global investors and endowments to develop and define sustainable investment best practices
HMC, with the support of Harvard University, is the first university endowment in the United States to become a signatory to the PRI. As a signatory, HMC is committed to implementing the PRI's six Principles in their management of the University's endowment and related financial assets. HMC reports to the PRI on an annual basis about their sustainable investment activities, and the resultingTransparency Report is published by the PRI.
With climate change an ever more prominent issue for institutional investors, it is easy to get excited about the different initiatives and announcements that hit our screens on a regular basis.
It’s important to see them for what they are, and to not conflate managing the risks and opportunities of climate change with action to mitigate it.
Financial institutions are beginning to get on board with the global fight against climate change, a movement that was until recently the territory of nonprofit organizations and environmentalists. Natixis, UBS Group and ING Groep are among lenders unveiling large-scale environmental finance and investing initiatives as central banks and regulators step up their warnings on climate risk.
Credit Suisse has carved out a new role to lead its handling of sexual harassment claims and examine group-wide policies, as Switzerland’s second-biggest bank seeks to boost equal opportunities and create a fair treatment environment.
The appointment of Antoinette Poschung to the new role of Conduct and Ethics Ombudswoman comes after Chief Executive Tidjane Thiam tasked the bank’s conduct and ethics board to review the bank’s handling of sexual harassment complaints.
The Morgan Stanley Investment Funds Global Sustain fund is a Luxembourg-domiciled Sicav and will be managed by the firm’s international equity team headed by William Lock.
The fund aims to offer a concentrated, high-quality global equity portfolio with a low carbon impact, which scores well on ESG factors as measured by third parties such as MSCI ESG, relative to broad equity indices such as the MSCI World Index.
The report highlights the existing ESG Investing landscape in Asia, and illustrates key observations and common challenges faced by early adopters. It also outlines six practical steps investors can take to initiate their journey into ESG Investing, and provides key learnings and recommendations for those aiming to embark on similar journeys.
The move is part of Guernsey’s plans to become the ‘go-to’ international finance centre for green finance, and the Guernsey Green Fund has the objective of seeking a return for investors while mitigating environmental damage.
Investor appetite for ESG is evolving rapidly and is moving towards fixed income, UBS Asset Management found in its Next Frontier paper.
Traditionally more prevalent in the equity domain, ESG integration is currently dominating many agendas and now is finding its way to the fixed income market, turning from a ‘nice to have’ to a ‘must have’, according to UBS AM.
Wall Street's activist investors, once known for pushing for extreme cost-cutting or just about anything that would boost the bottom line, are starting to use their money to promote a different kind of corporate action: social and environmental change.
Socially responsible investing is de rigeur. The well-heeled have always wanted to make their money multiply; now they want to make the world a better place while doing it. Take BlackRock, the humongous asset-management firm. In the wake of the Parkland shooting, and in response to political pressure, it rolled out new funds that wouldn’t invest money in gun manufacturers...
The European Investment Bank is a lead investor alongside Crédit Agricole Assurances and 15 other mainly French institutions in what it describes as an “innovative” 25-year, buy-and-hold green-energy equity fund structure launched by Amundi Energy Transition.
More than 60 additional investors have signed up to Climate Action 100+, an initiative aimed at reducing greenhouse gas emissions.
Climate Action 100+ launched in December 2017 with 225 investors on board and is now backed by 289 investors with nearly $30trn (€26trn) in combined assets under management, according to an update from the initiative.
In an era of complex global supply chains spanning many countries, investors must be alert to the potential use of child labour and modern forms of slavery. This requires constant vigilance and advocacy directed at regimes that do not adequately protect human rights. At the same time, the governments of investors’ home countries have a critical role to play by obliging companies operating in their jurisdictions to be accountable for potential labour abuses wherever they do business around the globe.
Incorporating ESG into investment processes now constitutes both a risk management practice and an asset-raising strategy for many investment managers. As investment managers consider ways to integrate ESG into current investment processes or launch new products around ESG best practices, they’re well served to understand their clients’ differing needs, requirements, and approaches on the topic. In this report, ISS compares U.S. and European asset owners’ approaches to ESG, with the aim of informing investment managers’ evolving strategies.
Hermes started in 1983, firstly to manage the assets of their owner, the BT Pension Scheme, and more recently to support a growing range of external customers, from institutions to advised private investors. Hermes currently reports £33.6 billion of assets under management and £330.5 billion in assets under advice.
Hermes believes that a responsible approach to investing is appropriate across all asset classes and for all investment strategies.
Eighty-four per cent of asset owners globally are pursuing or considering ESG investing, says a survey by the Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Investment Management. Among the 70 per cent of owners who already are incorporating environmental, social, and governance (ESG) factors into their investment decisions, 60 per cent began doing so in the past four years and 37 per cent within the past two years. Risk management (78 per cent) was cited as the biggest factor driving ESG adoption, followed by return potential and mission alignment at 77 per cent each. Despite many asset owners citing performance as an important factor driving their adoption of sustainable investing, respondents said proof of market-rate financial performance was the biggest challenge to ESG adoption (24 per cent), followed by quality ESG/sustainability data (23 per cent), and supply of quality managers/strategies (20 per cent).
Pension scheme trustees will have to set out the extent to which they take account of members’ views on non-financial matters in the development of their investment strategy under proposals put forward by the UK government...
The MaRS Centre for Impact Investing ‘Social Finance Forum 2018’ will attract more than 500 investors, entrepreneurs, finance professionals, charity leaders, and public service. Featured speakers include Michael Baldinger, head of sustainable and impact investing at UBS Asset Management, and Marcia Moffat, managing director of BlackRock Canada. It takes place November 7 to 9 in Toronto, ON.
Daniel Michalow, who was a senior portfolio manager in the firm's discretionary macro group, plans to take legal action against his former employer next month, a person familiar with the matter said. Michalow plans to file a statement of claim in arbitration next month with the Financial Industry Regulatory Authority.
Investors that do not consider environmental, social or corporate governance (ESG) risks in their portfolios risk breaching their fiduciary duty to members, according to the investment chief of one of Switzerland’s biggest asset owners.
There had been initiatives before that. As early as 1997, Swiss pension funds established the Ethos foundation to help them monitor governance at domestic companies. The proxy-voting agency has since been instrumental in revealing and stopping excessive remuneration packages at large Swiss listed companies. It has probably also helped bring Switzerland to seventh place in this year’s governance monitor of European companies complied by Morningstar. The highest ranked were the Netherlands, the Nordic countries and Portugal.
At BMO Global Asset Management, BMO's aim is to be one of the industry’s most innovative and responsive investment managers, offering more options - more service – and more routes to investment success.
For over 30 years, BMO's responsible investment approach has driven the creation of investment solutions and funds. By considering long-term environmental, social, governance and ethical issues, BMO is responsible about investing.
Investors committed more than $35 billion to impact investment deals in 2017 and plan to increase allocations by eight per cent this year, says the Global Impact Investing Network’s ‘Annual Impact Investor Survey.’ It shows investors, including pension funds, invested $35.5 billion across 11,136 impact investment deals in 2017. That is up 58 per cent from $22.1 billion across 7,951 deals in 2016. Total impact investing assets were $228 billion, up from $114 billion in 2016. The top sectors where impact investment capital was allocated were financial services, energy, and microfinance. It also found that investors are measuring and managing the impact of their investments against social and/or environmental factors, using proprietary metrics, qualitative information, the GIIN’s own metrics, and other tools and frameworks. The survey found that 76 per cent of respondents set impact targets for some or all of their investments to track their progress versus social and environmental goals.
Wealth managers with global retail asset management arms and investment banks are perceived as the worst at serving the needs of high-net-worth women, according to research by business consulting and technology provider Orbium.
Green rating tools are an established way to assess a building’s sustainability. But, asks Philip Hirst, what is their true value, and how can investors use them more effectively?
At a time when pledges to deliver a low-carbon economy are being made by governments and businesses the world over, the real estate sector – being responsible for 40% of total global carbon emissions – has a huge role to play.
The #MeToo and Time’s Up movements have launched workplace sexual harassment issues to the forefront of employment law. All employers, including private fund advisers, must therefore take appropriate steps to address sexual harassment, regardless of whether they are specifically required by law. New York City and New York State officials are not waiting for private employers to act voluntarily, and in recent months both the city and state have passed laws that impose new anti-sexual harassment policy and training requirements on private employers based in New York.
This article is available in the Hedge Fund Law Report, which Castle Hall strongly recommends as a resource to investors in alternative assets.
Legal & General Investment Management (LGIM) has divested from six companies and plans to vote against a number of appointments at major firms because of persistent inaction on climate change.
The companies involved are China Construction Bank, Occidental Petroleum, Dominion Energy, Subaru, Loblaw, and Sysco Corporation.
Un groupe de grands investisseurs mondiaux a annoncé la mise sur pied d'un projet historique visant la progression vers les objectifs clés du G7, en collaboration avec le gouvernement du Canada. Dans le cadre de trois initiatives de développement mondial, le CFA Institute, de concert avec son réseau mondial de sociétés, a été choisi pour créer plus de possibilités dans les domaines des finances et de la gestion de portefeuille en mettant en place un programme de stages à l'intention des femmes qui suivent des études universitaires dans certains pays en voie de développement.
In September, German car manufacturer Volkswagen came under fire after admitting defective devices were installed on 11 million vehicles to cheat on emissions tests, leading to CEO Martin Winterkom’s resignation. Volkswagen’s alleged violation of the U.S. Clean Air Act raises a number of questions about the company’s product management practices. The company faces potential recall costs related to 482,000 vehicles, with up to 11 million vehicles possibly affected.
CalPERS has a long-standing commitment to sustainable investment and a proud history of leadership and innovation in the field. Acting as fiduciaries first and foremost, the goal of the CalPERS Investment Program is to achieve long-term, sustainable, risk-adjusted returns consistent with fiduciary duty. As a significant institutional investor with a long-term investment time horizon, sustainable investment means taking account of environmental, social, and governance (ESG) factors across all our day-to-day investment business.
In 2011, the CalPERS Board approved the adoption of a Total Fund process for integrating ESG issues as a strategic priority across CalPERS' portfolio. Grounded in the three forms of economic capital — financial, human, and physical — needed for long-term value creation, CalPERS developed strategic themes (Alignment of Interest, Human Capital, and Climate Change) that set the framework for the fund's ESG integration work.
Read CalPERS Sustainable Investment Practice Guidelines below:
A group of leading global institutional investors, led by Caisse de dépôt et placement du Québec (CDPQ) and Ontario Teachers' Pension Plan (Ontario Teachers'), in collaboration with the Government of Canada, are proud to announce an ambitious project to advance key G7 objectives.
Australia’s largest super funds have increased their financial interest in responsible and ethical investing by providing a greater number of investment options in these areas.
A new report from the Responsible Investment Association Australasia (RIAA) shows that nearly half of super funds offer a total of 75 responsible investment options, compared with 24 funds offering just 54 options in 2016.
The Emerging Market Private Equity Association (EMPEA) has announced its first initiative aimed at closing the gender gap, which it calls its Gender Parity Acceleration Working Group.
EMPEA has 300 member firms, including both general partners and limited parties, who are invested in more than 130 countries around the globe and who represent more than $5 trillion in AUM.
Click below to read the Preqin Special Report:
Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company, announced it has partnered with Women in Governance to support its Gender Parity Certification program. The Parity Certification was established in 2017 with the support of L’Ordre des conseillers en ressources humaines agréés (CRHA) to help Canadian businesses increase the representation of women in leadership positions.
Asset managers are under increasing pressure to take environmental, social and governance considerations into account when making investment decisions. That poses a particular challenge for hedge funds, which typically prefer to have as few limits as possible on what they can invest in. So it's no surprise that many of them are less than keen on participating in the revolution.
Third-party certification, shared principles or a code of conduct could help guard against product providers exaggerating their impact investing claims, according to a survey by the Global Impact Investing Network (GIIN).
Last year marked a significant increase in sustainable investment activity from Swiss asset owners and asset managers, according to Swiss Sustainable Finance (SSF).
The organisation – which aims to boost awareness of sustainability issues in Switzerland – reported a clear trend towards activity related to environmental, social and corporate governance (ESG) issues.
The first business operating in the insurance broking community to adopt the Principles, Aon will be supporting the UN’s goal of leveraging the insurance industry’s role across risk management, insurance and investment to help build resilient, inclusive and sustainable communities and economies.
Partners Group (PG) serve over 1,000 institutional investors worldwide who seek superior investment performance through private markets for their more than 100 million beneficiaries. PG has USD 74 billion in assets under management and more than 1,000 professionals across 19 offices worldwide.
Partners Group realizes potential in private markets by financing and developing great companies, desirable real estate and essential infrastructure. PG creates value in their investments through active and long-term responsible ownership. Since inception, PG has invested USD 83 billion in private equity, private real estate, private debt and private infrastructure on behalf of our clients.
Read Partners Group year-end ESG report below.
Fortune Magazine: 10,000 U.K. companies with at least 250 employees completed the humbling process of submitting to the British government their gender pay gaps.
Data submitted reveals a median pay gap of 9.7% across the reporting companies.
Hedge funds globally have allocated at least $59 billion to responsible investment (RI), says a survey by the Alternative Investment Management Association (AIMA) and the Cayman Alternative Investment Summit (CAIS). ‘From Niche to Mainstream: Responsible Investment and Hedge Funds’ shows around 40 per cent of the respondents said they are already investing using responsible investment principles, with total assets in such investments worth $59 billion – a little over 10 per cent of the respondents’ combined hedge fund AUM (assets under management).
The Canadian Coalition for Good Governance (CCGG) has published a practical guide for directors to assess and oversee environmental and social (E&S) matters. The ‘Directors’ E&S Guidebook’ provides practical insights and recommendations for effective board oversight and company disclosure of E&S matters. “Companies and investors around the world are realizing that there must be a greater focus on E&S management as a critical driver of long-term shareholder value. CCGG hopes the guidebook’s 29 principles-based E&S recommendations, covering eight key governance areas, will provide boards of directors with practical information that they can utilize to effectively oversee their company’s management of E&S factors,” says Stephen Erlichman, executive director of the CCGG.
Swedish national pension fund AP7 has awarded two “green impact investment” mandates totalling SEK3bn (€294m).
The SEK427bn pension fund, which manages the default option within Sweden’s premium pension system, said it had picked Ireland’s KBI Global Investors and UK-based fund manager Impax Asset Management to invest in companies that contribute to solutions for climate and environmental problems.
Last year marked a significant increase in sustainable investment activity from Swiss asset owners and asset managers, according to Swiss Sustainable Finance (SSF).
The organisation – which aims to boost awareness of sustainability issues in Switzerland – reported a clear trend towards activity related to environmental, social and corporate governance (ESG) issues.
The United Nations (UN) put out a strong call to action for the private sector to play a fundamental role in achieving the Sustainable Development Goals (SDGs) over the next 15 years. It is still early days for the SDGs, but momentum is growing. Institutional investors not only recognise that the SDGs are a key part of their fiduciary duty, but achieving them offers opportunities for global economic growth that could lead to better investment outcomes for beneficiaries over the long term.
The Healthcare of Ontario Pension Plan (HOOPP) is responsible for the pensions of more than 339,000 healthcare workers in Ontario. Assets exceed C$75 billion.
HOOPP believes that the appropriate consideration of Environmental, Social and Governance (ESG) issues is an integral part of the investment decision making process that allows it to gain a more complete view of the potential risks and opportunities in an investment.
Asset managers and other institutional investors who claim to have sustainability goals will need to show how their investments are aligned with these objectives under new rules proposed by the European Commission. The information they would have to disclose would include the sustainability or climate impact of their products and portfolios. Speaking at a press conference, Commission vice-president Valdis Dombrovskis said: “On climate change, we are running out of time. The Titanic could not turn to avoid the iceberg at the last minute and we will soon be in a very similar situation.”
Investment professionals from Danske Bank and Invesco Asset Management argue in a newly published paper (Lost in Translation) that the widespread and varied use of the term ‘ESG integration’ makes it increasingly difficult to know what that term really means.
The authors state: "when “ESG integration” is disconnected from the investment process – when it is hijacked by screening, scoring, overlaying, filtering or any other form of framework or tool – something vital is lost in translation."
Legal & General Investment Management (LGIM) has launched the first gender-oriented fund to focus exclusively on UK listed companies. The L&G Future World Gender in Leadership UK Index Fund (‘GIRL’ fund) is expected to raise gender diversity standards in companies across the UK equity market, by allocating more to companies that have achieved higher levels of gender diversity.
Harvard Law School: Institutional investors, asset managers, financial institutions and other stakeholders are increasingly relying on these reports and ratings to assess and measure company ESG performance over time and as compared to peers. This assessment and measurement often forms the basis of informal and shareholder proposal-related investor engagement with companies on ESG matters.
Mercer has been assessing portfolio managers on the extent to which they incorporate ESG issues and active ownership into their decision-making since 2008. The key aspect to the firm's approach is to understand what decision-makers are doing at the strategy level to address ESG issues. Mercer's ratings aim to capture the level of consistency with which ESG factors are assessed in the process and are a measure of intent.
Ontario Teachers' Pension Plan (OTPP) is Canada's largest single-profession pension plan with $189.5 billion in net assets. They pay pensions and invest plan assets on behalf of 323,000 working and retired teachers. Since their establishment as an independent organization in 1990, OTPP have built an international reputation for innovation and leadership in investment management and member services.
Ontario Teachers' Pension Plan thinks of responsible investing as a journey because ideas, terminology and tools are evolving, and so are practices. OTPP's ESG analysis is becoming more systematic across the pension plan and they know more about the potential impact of ESG factors on financial returns than in the past. OTPP's investment teams buy and sell assets daily in carrying out their investment strategies and they integrate ESG analysis into their decisions.
The Task Force on Climate-related Financial Disclosures (TCFD) launched its TCFD Knowledge Hub in collaboration with Climate Disclosure Standards Board (CDSB). The TCFD Knowledge Hub is a platform designed to help organizations implement the TCFD recommendations by providing over 300 relevant insights, tools and resources. Resources include existing legislation and regulations, frameworks, standards, guidance, research papers, tools and webinars. All resources either directly address the TCFD recommendations or are related to themes or specific requirements within the TCFD recommendations.
In this edition of Global Macro Shifts, Franklin Templeton Investments research-based briefing on global economies, the Templeton Global Macro team, led by Dr. Michael Hasenstab, reviews the importance of ESG factors in macroeconomic analysis and the sovereign asset class, highlighting several case studies to illustrate the team’s thoughts on ESG.
More information on energy efficiency and the environmental impact of real estate investments is urgently needed if the industry is to move forward in reducing carbon emissions, according to a panel of investors at the IPE Real Estate Conference & Awards.
Change in the asset and wealth management industry (the ‘AWM industry’) is accelerating at an exponential rate. Although the industry is set for growth, asset and wealth managers must become business revolutionaries, even disruptors, if they’re to survive and prosper.
AQR presents an empirical investigation of the potential link between ESG exposures of companies and the statistical risk of their equity. They investigate both contemporaneous risk forecasts and what ESG characteristics convey about future risks that are not captured by statistical risk models.
Shareholders want more from their companies than earnings growth.
“Investors are now paying much more attention to a company’s culture and what we’re doing from a social standpoint,” Susan Salka, chief executive officer of AMN Healthcare Services Inc., said at the Bloomberg Business of Equality summit in New York.
Alberta Investment Management Corporation (AIMCo) is one of Canada’s largest and most diversified institutional investment managers with more than $100 billion of assets under management (AUM). AIMCo was established in 2008 as a Crown Corporation to provide investment management services for specified pension, endowment and government funds in the Province of Alberta. AIMCo's 32 clients are increasingly focused on responsible investing and its impact on investment risk and return.
Sustainability has long been a focus for Mercer, who established their responsible investing practice in 2004. This article summarizes Mercer's current thoughts on the opportunity set for strategies that integrate ESG and the investment case for sustainability.
Partout dans le monde, un grand nombre de caisse de retraite et de fonds de dotation ainsi que d’autres investisseurs institutionnels relèvent le défi d’aligner leurs portefeuilles sur les principes de l’investissement responsable.
Sustainalytics, a leading provider of ESG and corporate governance research, ratings and analysis, launched its new Carbon Risk Ratings, which measure companies’ exposure to and management of material carbon risks. The Carbon Risk Rating captures a variety of carbon signals in a single, quantitative assessment designed to support investment analysis, decision-making and reporting. The Sustainalytics’ solution provides insights related to material investment risk that cannot be calculated through the traditional approach of carbon footprinting.
After Nike Inc. ousted a handful of male executives for behavior issues over the past few months, some media reports tied the departures to the #MeToo movement and its revelations of sexual harassment and assault. Interviews with more than a dozen former Nike employees, including senior executives, however, paint a picture of a workplace contaminated by a different behavior: corporate bullying. The workers say the sneaker giant could be a bruising place for both men and women, and that females did bullying, too. On May 8, Nike signaled as much when it confirmed four more exits stemming from an internal misconduct inquiry, including the departure of a woman with more than 20 years at the company.
iA Financial Group has adopted a sustainable development policy. The company introduced this policy in its ‘2017 Social Responsibility Report’. Earlier this year, its board of directors officially adopted a sustainable development policy, thus, clearly expressing the company’s commitment to creating not only economic value, but societal value as well. It has set out seven guidelines. They are to ensure the financial wellbeing of its clients; effectively manage risks; follow high standards of governance; actively contribute to its communities; manage environmental impacts; create a rewarding work environment; and practice responsible sourcing.
Industry experts have broadly welcomed the move by the UK government to consult on the legal duties of trustees with regard to environmental, social and governance (ESG) risks, but warned any prospective rules or regulations must not be overly prescriptive.
The Canada Pension Plan Investment Board (CPPIB) is Canada's largest institutional investor, with assets in excess of C$300 billion.
CCPIB have recently published their 2017 Sustainable Investing Report.
Mark Machin, President and Chief Executive Officer, states: “The fact is, sustainable investing is the right approach for an organization that aims to deliver strong returns over decades. Given CPPIB’s exceptionally long investment horizon, ESG factors can be significant drivers – or barriers – to the success of the enterprises in which we invest.”
Canada's La Caisse De Dépôt et Placement du Québec (CDPQ) was the subject of last week's investor ESG spotlight. This week, La Caisse published its first annual Stewardship Investing Report. This report provides an overview of la Caisse’s strategic directions for stewardship investing and details the concrete measures it has taken on several key issues, including climate change, corporate governance, women in business and international taxation.
State Street Global Advisors, PGIM, and other managers are making environmental, social, and governance (ESG) criteria part of their overall investment processes, but the head of Ontario Teachers' Pension Plan reminded an audience Tuesday that the real goal remains being able to pay pensions.
Thirty Canadian and international financial institutions and pension funds representing approximately CAD $1.2 trillion of assets under management on October 26, 2017, issued a joint Declaration of Institutional Investors on Climate-Related Financial Risks, calling on publicly traded companies in Canada to commit to enhanced disclosure on their exposure to climate change risks, and the measures they are taking to manage them. The Declaration is supported in principle by 13 organizations.
Across the world, individual and institutional investors seek attractive financial returns while helping to achieve a positive impact on the communities around them. With growing concerns over climate change and global warming, geopolitical instability and uncertainty in financial markets, this has become even more pressing.
Eighteen years ago, a small group of climate enthusiasts from the worlds of finance and investment formed the Carbon Disclosure Project, now known as CDP, from a windowless basement in London. Their hugely ambitious aim was to encourage every business worldwide to report climate change-related data, such as their greenhouse-gas emissions, to investors.
By signing the ESG in Credit Ratings Statement, credit rating agencies and fixed income investors commit to incorporating ESG into credit ratings and analysis in a systematic and transparent way. To date, the statement is supported by more than 130 investors (with over US$26trn in collective AUM) and 15 credit rating agencies (CRAs).
Environmental, Social and Governance (ESG) topics are permeating the lexicons of society, corporations, regulators, and the investment community alike. We gather data points and anecdotes of rising ESG focus beyond the usual suspects - including earnings transcripts, social media and asset manager initiatives - as evidence of the growing relevance for investors.
Alison Schneider, director of responsible investment at AIMCo; Jane Ambachtsheer, a partner and chair for responsible investment at Mercer; and Michael Jantzi, chief executive officer at Sustainalytics; will be among the featured speakers at the ‘2018 RIA Conference.’ Schneider will discuss engagement and the UN SDGs while Ambachtsheer will speak on ‘Global Financial Stability: Climate Disclosure to the Rescue?’ Jantzi will deliver a keynote address. Other sessions will examine ESG integration in alternative assets, managing climate risk across asset classes, and innovative disruption and responsible investment. It takes place June 4 and 5 in Toronto.
Created in 1965, La Caisse de Dépôt et Placement du Québec manages almost C$300 billion, making it one of the world's largest investors. La Caisse has been active to highlight the importance of E, S and G factors and has worked to evolve the organization's investment policies to consider ESG criteria.
We are pleased to provide links to key documents outlining CDPQ's responsible investing and climate change initiatives.
(Reuters) - Avenue Capital Group LLC, a New York-based investment firm with $9.4 billion in assets under management, plans to launch a fund this year that will focus on so-called impact credit investments, according to a person familiar with the matter.
Russell Investments has developed a new way to measure a company’s ESG (environmental, social, and governance) score. The new material score evaluates only those issues that are financially important to a company.
The CFA Institute now provides various materials to support increasing awareness of ESG criteria throughout the investment process.
The Institute's Handbook on Sustainable Investments, prepared in conjunction with the CFA Society of Switzerland and Swiss Sustainable Finance, provides examples and case studies of different approaches to sustainable investment across various asset classes.
More than 1,000 people died in Bangladesh’s worst industrial accident when the eight-storey Rana Plaza garment factory near Dhaka collapsed in 2013. Many of the workers, aware that the factory was unsafe, had gone on strike in protest but had returned to the ill-fated building because they had been given an ultimatum to come back to work or lose their jobs.
For investors, tragic events such as the Rana Plaza disaster provide a catalyst to reform the investments processes and the criteria for evaluating investment outcomes.
This research report is the result of a partnership between the World Bank Group and Government Pension Investment Fund (GPIF) of Japan, initiated by the World Bank Group’s President, Jim Yong Kim, and GPIF’s Chief Investment Officer, Hiro Mizuno. The aim is to collaborate on initiatives that promote strategies for including environmental, social and governance (ESG) criteria in investment decisions across different asset classes. Ultimately, the goal is to direct more capital towards sustainable investments and leverage the private sector to achieve the scale of investment needed to meet the Sustainable Development Goals.
BlackRock, the world’s largest asset management group, has called for regulators to be tasked with setting corporate governance standards rather than relying on index providers to screen prospective or existing members of their benchmarks.
European pension funds are among a $1trn-strong group of institutional investors calling on companies to set greenhouse gas emission targets that will help achieve the goals of the Paris agreement on climate change.
Castle Hall note: further information on the Investor Decarbonization Initiative is available here.
As our first ESG spotlight, we are pleased to highlight the University of Toronto Asset Management (“UTAM”), with combined pension and endowment assets of approximately C$10 billion.
In 2017, UTAM published their first Responsible Investing Report and published a Responsible Investing Policy. The institution also appointed BMO Asset Management to identify ESG risks in select companies worldwide, signed the Montreal Carbon Pledge, and became a participant in the Climate Action 100+ group.
It’s been so encouraging to see the progress women have been making across so many industries these past few years. There’s better female representation on corporate boards... And while some sectors are more advanced than others, even traditionally male-dominated industries, like alternative investments, are making some encouraging moves in the right direction.
Managing climate risk is imperative for all investors. For those investors who are comfortable with some exposure to carbon intensive sectors, imposing carbon constraints may be an effective approach to achieving a lower-carbon risk profile with a return profile in line with or better than the benchmark.
Fiduciary Investors Symposium: An estimated $3.4 trillion is invested in renewable energy but that is set to grow to much more. The compelling case for investing in renewable energy comprises: consumer demand, revolutionary technology such as electric cars, changing corporate behaviour, and galvanizing factors such as the sustainable development goals (SDGs), a panel of experts has argued.
A paper by the Canadian Human Resources Professionals Association (HRPA) found 40 per cent of HRPA members surveyed reported that their workplace still takes a reactive approach to sexual harassment and 17 per cent report witnessing an employee being sexually harassed or assaulted. ‘Doing our Duty: Preventing Sexual Harassment in the Workplace’ also found close to 20 per cent of members reported an increase in sexual harassment claims in recent months. Information from broader industry can inform development of sexual harassment policies in the asset management industry.
First State Super, one of Australia’s largest super funds, will delve deeper into the emerging risk of franchise models in Australia to ensure its investments don’t support rights abuses.
Castle Hall comment: an interesting initiative from a leading institutional investor to "look through" investment structures to the underlying activities of portfolio companies.