The Road to Paris - Global Companies Speak Out Calling for Action on Climate Change

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October 2015

The Road to Paris – Global Companies Speak Out

Calling for Action on Climate Change

Compiled by Trudy Pham & Timothy Smith – Walden Asset Management

 

Introduction –

Discussions about the importance of the Conference of the Parties (COP) and the decisions to be made in Paris on climate change have reached a new level of intensity.

Investors, governments, environmental organizations, NGOs and companies are all part of the global buzz about COP.  Recently, the Governor of Bank of England, Mark Carney, in a major address, asserted that the warming climate presents major risks to the global economy and global financial stability.  He called climate change “the Tragedy of the Horizon” (think Tragedy of the Commons), and urged more disclosure of carbon emissions.  Quotes from his speech included “recommending to the G20 summit that more be done to develop consistent, comparable, reliable and clear disclosure around the carbon intensity of different assets.”

“Companies would disclose not only what they are emitting today, but how they plan their transition to the net-zero world of the future.  The G20 – whose member states account for around 85% of global emissions – has a unique ability to make this possible,” said Carney.

A significant portion of expanding discussions over the urgency of climate policy is coming from banks, food giants, and utilities companies, among others.

Individual companies, companies working together in associations, and specifically crafted coalitions have issued statements with different messages but all focused on the urgency of addressing climate change with specific plans.

We believe that these business voices play a very vital role in demonstrating to our economy and markets the importance of dealing urgently with climate change.

Currently, some business organizations such as the U.S. Chamber of Commerce are actively campaigning against the EPA’s “Clean Power Plan”. They argue the “business case” against the Plan while implying this is the voice of the business community at large. More than ever, it is critical that diverse businesses acknowledge the reality of climate change, and volunteer to take their own leadership to tackle this phenomenon.

Some of these actions occurred with the leadership of Ceres, the White House, or other business climate coalitions; others are self-initiated. 

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Recent News for the Intentional Endowments Network

Each week, the IEN posts relevant news and reports. Below you will find some news articles related to endowments and/or sustainable investing that we wish to highlight. For more, please visit the IEN news feed!

Warren Wilson College trustees vote to divest from fossil fuels l Mountain Express, By Able Allen, October 12, 2015

  • The $55 million dollar endowment of Warren Wilson College is being pulled out of the fossil fuel industry.

BlackRock Launches Impact Equity Funds l Business Wire, October 13, 2015

  • BlackRock launched the BlackRock Impact U.S. Equity Fund (‘the Fund’), a mutual fund for investors that aims to invest in measurable social and environmental outcomes while seeking to generate competitive financial returns.

SFU students launch divestment campaign l The Peak, By Emma Warner Chee, October 13, 2015

  • Divest SFU campaigns for divestment from the fossil fuel industry. 

Bloomberg Brief -- Sustainable Finance l October 15, 2015

  • This weeks Bloomberg Brief highlights BlackRock's do-good investing fund.
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Recent News for the Intentional Endowments Network

Each week, the IEN posts relevant news and reports. Below you will find some news articles related to endowments and/or sustainable investing that we wish to highlight. For more, please visit the IEN news feed!

ESG Still Not a Priority for CIOs l Chief Investment Officer, October 5, 2014

  • In this article, the Author expresses concern that despite the fact that investors are increasingly aware of environmental, social, and governance (ESG) issues, they may not be changing their investment practices anytime soon. 

Large managers increasingly using ESG factors in investment processes l Pensions & Investments, By Barry B. Burr, October 6, 2015

  • To read article in full, please subscribe to Pensions & Investments. 

Many 'ESG' Managers Fail To Explain How They Screen Investments, Report Says l Financial Advisory, By Karen Demasters, October 7, 2015

  • More money managers are considering environmental, social and governance factors when selecting investments, but the largest ones are not providing enough disclosure on how they apply the standards, says US SIF: The Forum for Sustainable and Responsible Investment. 

UM Foundation opts against divestment from fossil fuels l Missoula Independent, By Alex Sakarianssen, October 7, 2015

  • Despite a mounting student movement on the University of Montana campus, the UM Foundation's board of trustees voted late last mouth not to divest from fossil fuels. Their fundamental argument revolved around their duty to serve as fiduciaries. 
  • This weeks Bloomberg Brief highlights Julie Gorte, one of the IEN's steering committee members!
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Recent news from the Intentional Endowments Network

Each week, the IEN posts relevant news and reports to our news feed. Below you will find some news articles related to endowments and/or sustainable investing that we wish to highlight. For more, please visit the IEN news feed!

Addressing Climate Change and the Investment Implications l Morgan Stanley, August 2015

Morningstar to Launch First Environmental, Social, and Governance (ESG) Scores for Funds Globally l Sustainalytics, August 13, 2015

Bloomberg Brief -- Sustainable Finance, August 20, 2015

Bloomberg Brief -- Sustainable Finance, August 27, 2015

Olso Principles on Global Climate Change Obligations l Olso, March 1, 2015

Higher ed endowments see strong returns on responsible investing l Education Dive, By Tara Garcia Mathewson, August 26, 2015

Northern Trust flags surge in ESG funds l Financial Times, September 1, 2015

Navigating Sustainability and Your Fiduciary Duty l Huffington Post Business, September 2, 2015

Fossil fuel-free indices launched l InvestorDaily, By Tim Stewart, September 2, 2015

Why University Endowments are Large and Risky l Harvard Law School Forum on Corporate Governance and Financial Regulation, Posted by Thomas Gilbert, September, 2, 2015

Bloomberg Brief -- Sustainable Finance, September 3, 2015

"Hoarding" and Endowment Outliers l AGB, By David Bass, September 3, 2015

David Blood and Al Gore Want to Reach the Next Generation l Institutional Investor, By Imogen Rose-Smith, September 8, 2015

"Hoarding" and the Reality of Endowment Spending l ABG, By David Bass, September 8, 2015

Industry -- Financed Study Projects Divestment Looses l Inside Higher Ed, September 8, 2015

ISS Announces Strategic Partnership with RepRisk to Offer ESG Solutions l BusinessWire, September 8, 2015

Sustainable Investing: A Defense l The Wall Street Journal, By Geeta Aiyer, September 8, 2015

Bold Moves: Warren Wilson hosts panel on environmentally conscious investing l Mountain Xpress, By Lyn May, September 9, 2015

Pay Hikes at Big Endowments Often Outstrip Returns, Survey Finds l The Chronicle of Philanthropy, September 9, 2015

'Big Vicotry': University of California Sells Off Coal, Oil Sands Investments l Huffpost College, By Dominique Mosbergen, September 10, 2015

Bloomberg Brief -- Sustainable Finance , September 10, 2015

The Results Are In: The 2015 Dow Jones Sustainability Indices l Sustainable Brands, September 10, 2015

Debate around fiduciary duty moves on l top1000funds, By Sarah Rundell, September 11, 2015

Enjoy!

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Thoughts on ESG Investing and Fossil Fuel Consumption

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Thoughts on ESG Investing and Fossil Fuel Consumption 

By Fred Rogers, Vice President and Treasurer of Carleton College

The problem of climate change is real and its resolution requires a reduction in the consumption of fossil fuels worldwide.  For this to occur, there must be a reduction in global demand, and thus both:  (1) serious investment in alternative energy sources and (2) changes in social and economic behavior.  While the UN Task Force is focused on GHG emissions and the socio-economic impacts of both climate change and the strategies of GHG reduction, much of the campus dialogue about climate change has been focused on the 350.Org initiative of divesting from the top 200 fossil fuel companies. 

There are many reasons to not love the largest fossil fuel companies.  In an effort to increase the value and market share of their companies, they have often been aligned with those who question the premise of GHG reduction goals.  Divestment is seen as a political step to diminish the influence of these companies and to enable political support for more aggressive measure.  Divestment proponents also assert that the current fossil fuel companies’ valuations are overstated because they assign unrealistically high values to their in-ground proven reserves of energy fuels, which ultimately cannot be consumed if we are to avoid drastic environmental consequences.  This, they argue, makes such companies a bad investment risk.

An alternative view is that the market is fully aware of this risk, but that the consensus view is different.  That is, whatever is the ultimate requirement for reductions, in the near term, such companies are going to find adequate demand for their products at reasonable enough prices to make it profitable to extract them.  In fact, the government views having adequate fuel reserves to be in the national interest, having created the national petroleum reserve.

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Selling Stranded Assets: Profit, Protection, and Prosperity

Bob.pngBy Bob Litterman, Chairman, Risk Committee, Kepos Capital; and Chairman, Board of Trustees, Commonfund 

Can you protect your endowment, make money, and support action to reduce carbon emissions at the same time?   Sell stranded assets.  

Many institutional investors including endowments, foundations, pensions, and even sovereign wealth funds are considering or have already divested from coal and other fossil fuel companies.   At the US based World Wildlife Fund, where I chair the investment committee, we addressed this issue a little over two years ago.  We asked ourselves what would be the impact on our portfolio holdings if appropriate incentives to reduce greenhouse gas emissions were instituted globally.   The answer was obvious – certain assets such as reserves of coal and expensive sources of oil would become less valuable and the valuations of companies holding those assets would fall.

We decided to protect our portfolio against the risk created by these “stranded assets.”  It was a decision based on managing portfolio risk in the face of our understanding of the reality of the externality created by burning fossil fuels, the likelihood that stranded assets would underperform, and the desire to position our portfolio to be aligned with our mission.

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Divest-Invest in the Pacific Northwest

 

 

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HSU Helps Lead Push for Fossil Free, Greener Investing

 

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Investing in Renewable Energy - Three Important Considerations

solarpanels.jpgBy Scott Hill, Clean Energy Advisors

As direct investing in renewable energy becomes more common, especially investments available to a wider group of investors, it's important to remember there are three specific considerations you'll want to address first before you get into the common due diligence information we're all used to (management team, track record, financials, etc.). These three considerations are technology, development, and the off-taker.

Renewable energy is advancing at an impressive rate. Universities, labs, and private companies are exploring ways to create and improve renewable and sustainable energy sources. While some of these technologies hold great promise in the future, you need to be mindful of how "proven" the technology is today. Some renewable energy technologies have enough history to provide understandable and verifiable metrics. They can be used to help determine how likely the technology will create a consistent stream of revenue and return on investment today and into the future. Some technologies, however, are very new. Like pharmaceutical drugs, that need more time to determine efficacy, new forms of renewable energy need time to determine if the energy source is both scale-able and practical.

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Tony Cortese serves as moderator of panel discussion

Screen_Shot_2015-06-17_at_1.53.19_PM.pngOn Tuesday, May 19th, 2015, WISE and BASIC, with the guidance of the Intentional Endowment Network, hosted a panel discussion in Boston focused on ESG and educational endowments in the U.S. today. Tony Cortese, Principal of the Intentional Endowment Network, moderated the panel discussion. Other panelists included Alice DonnaSelva, Consultant at Prime Buchholz & Associates, Christi Electris, Senior Associate at Croatan Institute, and Bill Jarvis, Managing Director at Commonfund Institute. In total, there were 40 participants from colleges, universities, and the investment industry. Together they explored a wide range of issues surrounding higher education endowment investments. These topics included everything from fossil fuel divestment, to ESG integration, to stakeholder action, and how to move the agenda forward in the endowment space. 

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