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Industry News: ESG

 

Spotlight on Investors: Ontario Teachers' Pension Plan: Principled Approach

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.

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The Task Force on Climate-related Financial Disclosures (TCFD) Launches Knowledge Hub

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.

The TCFD Knowledge Hub is accessible at tcfdhub.org and The Task Force released its final Recommendations report on June 29, 2017, available here.

Environmental, Social and Governance Factors in Global Macro Investing

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.

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IPE RE Awards: Sustainability Data Urgently Needed to Make Progress

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.

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PwC: Asset & Wealth Management Revolution: Embracing Exponential Change

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. 

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DWS issues four new ESG ETFs

Index-linked funds’ filters will avoid companies exposed to nuclear power, weapons and tobacco as asset manager seeks to cash in on trend for socially-conscious investing.

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AQR: Assessing Risk through Environmental, Social and Governance Exposures

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.

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CEOs Say Investors Are Demanding More Diversity, Social Impact

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.

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Spotlight on Investors: AIMCo Responsible Investment Report 2016 - 2017

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.

Responsible Investment Report

Guns Won't Be a Quiet Governance Issue for California Pension

The California State Teachers’ Retirement System will use its clout and money to pressure companies that it owns to stop producing and selling firearms that are illegal in the state.

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Mercer Touts ESG Integration, SDGs

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.

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Fiera Capital: Placements verts…Réflexions sur les placements visant les titres de créance liés aux infrastructures

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. 

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Alecta Anchors First Close of Emerging Markets Impact Fund

Sweden’s largest pension fund has provided the anchor investment for an impact fund co-investing in emerging markets loans.

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Sustainalytics Launches Carbon Risk Ratings

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.

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Companies Have an Aha! Moment: Bullies Don’t Make the Best Managers

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.

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iA Financial Group Social Responsibility Report  

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.

Social Responsibility Report

Industry Urges Caution as UK Government Mulls ESG Rules for Trustees

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.

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Gore Spruiks Sustainable Investment

Climate change is the number one threat to the global economy but sustainability is the “single largest opportunity in all of history”, former US vice-president Al Gore told delegates at the Milken Institute Global Conference.

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Spotlight on Investors: CPPIB - Sustainable Investing  

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.”

Report

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Follow Up Spotlight on Investors: La Caisse Publishes its First Stewardship Investing Report

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.

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The ‘Slippery Slope’ of ESG Demands

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.

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Institutional Investors Release Declaration on Financial Risks Related to Climate Change

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.

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Barclays: Sustainable Investing and Bond Returns

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.

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TCFD Advances Carbon Disclosure Project

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.

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PRI: Statement on ESG in Credit Ratings 

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).

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Goldman Sachs Sustain ESG Series A Revolution Rising - From Low Chatter to Loud Roar

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.

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RIA Conference 2018

Alison Schneiderdirector of responsible investment at AIMCoJane 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. 

RIA Conference

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ESG’s Popularity Brings New Forms of Risk Management

Australians now expect fund managers to take an ethical approach to their investment portfolios and throughout their organisation, Brightlight Impact Advisory chief strategy officer Sam Richards says.

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Spotlight on Investors: CDPQ   

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.

CDPQ provides access to three links on Responsible Investment, Investment Strategy to Address Climate Change and Policy on Responsible Investment.

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Avenue Capital to Launch 'Impact' Investment Fund, Source Says

(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.

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Pulling away: Inequality as an ESG risk

Fidelity International: Wealth distribution, emerging threats to the status quo, and why inequality is turning into an important sustainability risk - both at a macro and company level.

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Materiality matters: Targeting the ESG issues that can impact performance

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.

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GIIN: The Financial Performance of Impact Investing Through Private Debt

The Global Impact Investing Network (GIIN) and Symbiotics present the first comprehensive analysis of the financial performance of private debt impact investment funds.

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CFA: Handbook on Sustainable Investments

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.

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The Catalyst for Reformed Fiduciary Thinking

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.

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World Bank Group: Incorporating ESG Factors into Fixed Income Investment

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.

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BlackRock: Regulators Should Set Corporate Governance Rules

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.

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Pension Funds Urge Companies to Set Ambitious Emission Targets

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.

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Spotlight on Investors: Implementing ESG 

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.

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KPMG: Realizing the Return on Gender

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. 

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Is it Possible to Enhance Performance While Reducing Carbon Impact? HSBC White Paper

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.

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Renewables Gain Energetic Support

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.

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Doing our Duty: 
Preventing Sexual Harassment in the Workplace

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.

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Asia's ESG Leadership

For investors interested in environmental, social and governance (ESG) strategies, a regionally diversified approach can help capture global growth.

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First State Super Combats Workforce, Franchisee Risk

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.

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Investing With a Purpose: Looking Beyond 
"Social Responsible Investing (SRI)"

Wells Fargo: While the roots of Socially Responsible Investing ("SRI") date back centuries, this movement has only recently developed a widespread, global following among investors, which is accelerating.

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Loomis Sayles Joins ESG Wave 
With Dedicated Senior Role

Loomis Sayles & Co has named Kathleen Bochman as its new director of environment, societal and governance, in a move intended to step up the US group’s efforts across its investment processes.

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Impact Assessment Model Finds ESG Funds
‘Low on Sustainability’

Investment funds aren’t what they say they are when it comes to sustainability or environmental, social and governance (ESG) criteria, according to the company behind a new impact measurement model.

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ESG roundup: Danish pension funds sharpen climate focus

Pension funds in Denmark are working harder on the issue of climate change, spurred on since the signing of the Paris Agreement, according to a new report by WWF Denmark.

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French central bank formalises responsible investment stance

The French central bank has adopted a responsible investment charter that will govern the management of some €20bn of assets.

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Norway’s SWF: no to private equity, yes to green infrastructure

Norway’s giant sovereign wealth fund has been denied permission to invest in private equity – but the country’s government has opened the door to an allocation to green energy infrastructure.

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Cbus, DIF co-invest in renewable energy alongside Australian Government 

Cbus Super and the Dutch Infrastructure Fund (DIF) have jointly bought an 80.1% equity interest in a Western Australian renewable energy producer for around AUD198m (€124.3m).

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GPIF Japan Seeks Better Beta Through ESG

The $1.4 trillion Government Pension Investment Fund of Japan is using ESG as a better beta strategy, to improve the market as a whole, rather than to seek excess returns.

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Is ESG inherently multi-factor?

Multi-factor ESG is probably more successful as a marketing term than it is at providing a coherent approach to mixing ESG and other factors in a portfolio-construction methodology

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HESTA probes deeper on gender diversity

In Australia, industry super fund HESTA is surveying its 70 external fund managers to uncover exactly how many women are instrumental in investing its $43 billion under management.

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