Weekly News Round-Up: October 27th, 2017

Upcoming Events

The SRI Conference l November 1-3, 2017, San Diego, CA
 
Sustainable Investing Seminar l CFA Society Boston, November 13th, Boston, MA

Investing for Impact Symposium l High Water Women, November 30, 2017, New York, NY

2018 Higher Education Climate Leadership Summit l Second Nature & The Intentional Endowments Network, February 4-6, 2018, Phoenix, AZ
 

IEN in the News
 
The Intentionally Designed Endowment l AGB Trusteeship Magazine
  • Written by IEN Executive Committee member, David Dinerman (Hampshire College), Tony Cortese (Green Mountain College, IEN), and Georges Dyer (IEN), this piece highlights the importance and trends of aligning endowment investing with the mission and goals of higher education institutions and considering material ESG factors. It explores some of the challenges and opportunities of doing so, provides some evidence of the benefits and ideas on how to institutionalize such investing, and helps trustees learn about the peer learning opportunities through IEN.
In Depth: ESG Investing Is Here to Stay l Chief Investment Officer
  • As asset owners’ fervor surrounding ESG and impact investing intensifies, sustainable investing has emerged as an integral part of investment frameworks. While the motivation behind the integration of ESG within the investment decision process varies, investors are nevertheless formalizing their commitment through policy and/or increasing their allocation of assets to sustainable investing. And asset managers are paying attention.
Sustainable Investing at Endowments
 
Smith Trustees Approve Recommendations on Climate Change, Endowment l Greycourt Gate
  • At its October 21 meeting, the Smith College Board of Trustees approved a comprehensive, holistic set of recommendations designed to support the college’s commitment to environmental sustainability while also ensuring the continued health of the endowment. The strategies were announced in an email and an FAQ to the community from President Kathleen McCartney and Board of Trustees Chair Deborah L. Duncan ’77 and were to increase impact investing,  favor managers and funds adhering to environmental, social and governance (ESG) principles, avoid future direct holdings in coal, and report regularly on socially responsible investment progress.
New Initiatives
 
  • The recent launch of the Interfaith Center on Corporate Responsibility’s new Investor Alliance for Human Rights indicates positive progress on addressing human rights abuse in supply chains. And also the clear need for companies to work harder to bolster efforts to look after people working throughout their entire value chains, spurred on by the investment community.

Sustainable, Responsible, Impact & ESG Investing
 
Reflections from a Field Builder: The Next 25 Years of Sustainable, Responsible and Impact Investing l Green Money
  • In this article, Lisa Woll, CEO of US SIF, offers some predictions for, and reflections about, the future of sustainable and impact investing.
  • This article describes how  Stephen Liberatore, lead portfolio manager for TIAA-CREF Social Choice Bond fund, is making money as well as social impact.
Systemic Risk Factors Next Focus of RI l Investment Executive
  • The Responsible Investment Association (RIA) organized the week's events in an effort to bring education and awareness to RI, particularly as it relates to environmental, social and governance (ESG) issues. "Systemic risk is the next frontier for ESG," said Michael Jantzi, CEO of Amsterdam-based Sustainalytics during the panel discussion, which was led by the RIA's incoming CEO, Dustyn Lanz. Although climate change is one of the largest systemic risk factors, less than half of the largest companies acknowledge it in their annual reports.
How Funds Are Positioned For a Low-Carbon Future l MSCI
  • As the world moves toward a low-carbon future, companies of many stripes are adopting renewable and clean-energy technologies. That, of course, has implications for stocks and the portfolios that hold them. How can asset owners understand the carbon-transition risks in their portfolios? One way is to categorize funds by different types of exposure to carbon-transition risk. Using a matrix approach, asset owners may be able to better understand what long-term bets — intended or not — are embedded in their portfolios. This approach may also help investors develop more resilient investment and risk management strategies as the global energy mix evolves. This article summarizes the findings from MSCI’s Low Carbon Transition Matrix.
Female-Friendly Work Environment Crucial in Sustainable Society, Pension Fund Executive Says l Korea BizWire
  • Japanese pension fund executive Hiromichi Mizuno has said investment directed by ESGe issues is necessary to encourage women to participate in the labor force and build a sustainable society. Mizuno, who is the chief investment officer of Japan’s Government Pension Investment Fund (GPIF), among the world’s biggest pension funds, called for South Korea to make investment decisions for the future generations, instead of short-sighted ones that focus on quick sales results, during a breakfast forum held in celebration of the first anniversary of the Korean unit of Women Corporate Directors (WCD) on Tuesday in Seoul.
  • Investors have ploughed more than $1.6 billion into socially responsible ETFs over the last year, prompting industry commentators to predict that SRI and ESG (environmental, social and governance) ETFs will become the mainstream. Data from TrackInsight shows that global ETF investors allocated $1.69 billion over the last 12 months and around $1.14 billion year to date to these funds.
Companies Taking ESG Seriously are Long-Term Winners l Financial Times Adviser
  • Inequality and climate change have created a challenging backdrop for companies, meaning a failure to incorporate these principles will provide a poor return for investors. This claim was made by Jessica Ground, global head of stewardship for Schroders, who said it was vital to think about environmental, sustainable and governance (ESG) investing in terms of "risk and return".  "We see it as the third dimension of investing. If you are going to be successful in allocating capital on a forward-looking way, then you are going to need to take ESG into account, and to hold these companies to account."  According to data from the S&P 500, the average tenure of a company has fallen from 50 years to 15. This means that companies operating with a view to long-term sustainability will be those who last the course.
  • When a Bank of America Merrill Lynch analyst downgraded Chipotle stock last week–claiming the company spends too much to pay workers and that it would have trouble cutting labor costs–it was the latest of many examples of Wall Street pressure on retailers to keep wages low. Of course, that response ignores the long-term benefits that come from fairer wages. “Wall Street’s time horizon for company earnings is very short–often one or two quarters,” says Michael Reich, a professor of economics at the University of California-Berkeley and chair of the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment. “This short-termism often penalizes companies that raise their workers’ wages or invest in their employees’ skills. Wall Street thus ignores or is unaware of how higher pay reduces employee turnover and boosts worker productivity.”
Canada, Europe Lead List of Most Responsible Asset Allocators l Chief Investment Officer
  • Canadian and European funds lead the way among the most responsible asset allocators, according to a new report from non-partisan think tank New America. The recently released Bretton Woods II Leaders list of the 25 “most responsible” asset allocators was culled from among hundreds of sovereign wealth funds (SWFs) and government pension funds (GPFs) representing more than $20 trillion in assets under management. The top funds were chosen for their “high conviction in responsible investing,” and their belief that “ESG is material to long-term returns,” according to New America.
Investment Manager News
 
First Fossil Fuel-Free Mutual Fund Family Reaches $0.5 Billion l Green Century Capital Management
  • Green Century Capital Management today announced that its assets under management (AUM) reached a new landmark, exceeding $500 million as of October 20, 2017.   Green Century is the investment advisor to the first family of fossil fuel-free responsible and diversified mutual funds in the U.S. Green Century’s unique combination of three characteristics allows it to make an impact well beyond its size: Green Century invests in sustainable companies, leads a shareholder advocacy program and is owned by nonprofit organizations. Green Century has grown 435% from $114.9 million in AUM as of 9/30/12 to over $500 million as of 10/20/17.  Its growth has mirrored both the rise of interest in sustainable investing and the growth of global fossil fuel divestment campaigns.
With Competitors Making Cuts, BlackRock Looks to Grow in Boston l Boston Business Journal
  • The office is looking to add employees on its sales desk and to its sustainable-investing team.
David Rubenstein, Private Equity Titan, Passes the Torch l The New York Times
  • On Wednesday, David M. Rubenstein and the other two co-founders of Carlyle Group — William E. Conway Jr. and Daniel A. D’Aniello — announced they were handing over daily management of the firm to their chosen successors. The changing of the guard at Carlyle is part of a generational turnover at private equity firms, as the billionaires who pioneered the industry recognize that they must prepare their businesses for life after they have retired.
  • Frustrated with off-the-shelf ESG products, Bank of America Merrill Lynch’s U.K. retirement scheme is building its own sustainable investment strategy and seeking an asset manager to run the fund. The decision follows similar steps taken by major asset owners worldwide, including the Taiwan Bureau of Labor Funds and New Zealand Super Fund, according to index provider MSCI.
Meet 58 Venture Capital Funds That are Betting on Women Around the World l Impact Alpha
  • The rising social and economic power of women venture is global mega-trend that venture capital is beginning to notice. Suzanne Biegel, a longtime gender lens investor and advisor, and the team over at the Wharton Social Impact Initiative have pulled together one of the most comprehensive lists of private equity, venture capital and debt funds explicitly investing with a gender lens. Download their new report to view all 58 funds.
Climate Risk, Science & Regulation
 
Congressional Auditor Urges Action to Address Climate Change l The New Tork Times
  • Fires, floods and hurricanes are already costing the federal government tens of billions of dollars a year and climate change will drive those costs ever higher in coming years, a new federal study warns. The report by the Government Accountability Office, Congress’s auditing arm, urges the Trump administration to take climate change risks seriously and begin formulating a response. The study, scheduled to be released Tuesday, says that different sectors of the economy and different parts of the country will be harmed in ways that are difficult to predict. But one estimate projects that rising temperatures could cause losses in labor productivity of as much as $150 billion by 2099, while changes in some crop yields could cost as much as $53 billion.
 
 
 
General Higher Education Endowment News
 
Net Price Keeps Creeping Up l Inside Higher Ed
  • In what has become a familiar pattern in the last several years, published tuition and fee prices increased at a relatively low, steady rate this year -- but financial aid again failed to keep up, resulting in students paying more to attend college. Tuition and fees increased by less than 2 percent between 2016-17 and 2017-18 after adjusting for inflation, according to new College Board report released Wednesday. The reports, “Trends in Student Aid” and “Trends in College Pricing,” are released annually, showing both short-term changes and trends over longer periods of time.
Harvard Endowment Hit by $1 Billion Natural Resources Writedown l Bloomberg
  • Harvard University wrote down the value of its natural resources investments by $1.1 billion in the last fiscal year, contributing significantly to its poor endowment performance. The university revalued the portfolio to $2.9 billion from $4 billion in the year through June 30, according to an annual report released Thursday. The writedown is part of an ambitious attempt to overhaul the $37.1 billion endowment and helps explain why the world’s richest school trailed in performance against its peers.
The Endowments Ignoring Passive l Institutional Investor
  • Leading allocators are not only continuing their dogged pursuit of alpha – they’re doing it in a way that would make more timid investors weak in the knees. A small subset of allocators, including Verger Capital CEO Jim Dunn, have eschewed asset allocation in favor of risk allocation. Dunn explained on a recent podcast that “the problem with modern portfolio theory is that it’s not very modern.” His approach analyzes the factors that drive a manager’s returns and optimizes across factors rather than across asset classes. The resulting portfolio tends to look quite different from one that starts with allocations to asset classes and fills buckets and sizes managers accordingly.
  • A new study by University of Michigan sustainable enterprise professor Andy Hoffman and Temple University's Todd Schifeling, a former postdoc with U-M's Erb and Graham institutes, shows that media coverage of climate change increased during Bill McKibben's 350.org activism and that it influenced the public debate.
Fossil Free George Washington University Continues Divestment Protests Outside Board of Trustees Meeting l The GW Hatchet
  • About 30 members of Fossil Free GW held a silent protest during a Board of Trustees meeting Friday, urging the University to divest from fossil fuels. Members of the group gathered in the public viewing area of the meeting wearing white T-shirts emblazoned with the word “divest.” When the meeting was called to order, demonstrators stood up silently and unfurled a large banner. Protesters left the meeting after speaking with University Police Department Chief Rashall Brackney. Demonstrators walked out after being told holding the banner and standing during the meeting was creating a disruption, the group wrote in a Facebook statement.
Why Native American Women Are Going After Europe’s Banks to Divest From Big Oil l Yes Magazine
  • Last week, a delegation of Indigenous women returned from a trip to Europe where they met with leaders of financial institutions in Norway, Switzerland, and Germany, the “home bases for several of the world’s largest financial and insurance institutions supporting dangerous extraction developments,” according to the news release. The delegation was organized by Indigenous women leaders in partnership with the Women’s Earth and Climate Action Network. Jackie Fielder, who is Mnicoujou Lakota and Mandan-Hidatsa, was a member of that women’s delegation. Fielder is an enrolled member of the Three Affiliated Tribes and a campaign coordinator of Lakota People’s Law Project as well as an organizer with Mazaska Talks. Others in the delegation included LaDonna Brave Bull Allard, Michelle Cook, and Tara Houska. In this interview, Fielder talks about divestment, the delegation’s trip to Europe, and what’s next for the movement to defund fossil fuel projects that threaten Indigenous peoples.
University of Vermont Students Silently Protest at Board of Trustees Meeting; Support Divestment l The Vermont Cynic
  • University of Vermont student activists called upon the board of trustees to divest from fossil fuels in a silent protest at the board meeting Oct. 20. While the budget, finance and investment committee met, Student Climate Culture and Young Progressives entered Silver Maple Ballroom with signs demanding fossil fuel divestment. The students stood, without talking, while the board went through the agenda and raised their signs when they spoke about the University endowment. The protest came after SGA passed a resolution last week backed by a number of student environmental advocacy groups.
Brandeis University Faculty Votes on Gen Ed and Divestment Resolution l The Justice
  • Brandeis University’s faculty convened for their monthly assembly on Friday afternoon and passed both a resolution to divest from fossil fuels and the first of two votes on the general curriculum changes.  The resolution states, “We pledge to support the president and his team as Brandeis adopts increasingly ambitious climate action plans to help fulfill the [Paris Agreement’s] commitment to ‘take forceful action’ in support of ‘the global effort to hold warming to under 2°C.’" Senate Chair Susan Curnan (Heller) said that the Faculty Senate unanimously supported the resolution and that the resolution aims to put more commitment on the part of the faculty in supporting ambitious action planning. Several faculty members voiced concern about the final sentence of the resolution, which described the Trustees’ responsibility “to develop and implement a strategy for ending our university’s investments in fossil fuels at the fastest pace.” 
University of Missouri System President Declines Students' Request For Fossil Fuel Divestment l Missourian
  • Since 2015, a student environmental organization focused on divestment from fossil fuels has worked to revitalize a fossil fuel divestment campaign at MU.  In April, the Missouri Students Association passed a resolution asking that the UM System divest from fossil fuel companies. Frankie Hawkins, a representative for the coalition, said the UM System's estimated $10 million invested in fossil fuels represents about 1 percent of the system's $1.5 billion endowment pool. In a June response to the resolution, UM System President Mun Choi and Maurice B. Graham, the chair of the UM System Board of Curators, sent the coalition a letter emphasizing the importance of fossil fuels in the global economy.  
University of Cambridge Town Hall Meeting Debates Divestment l The Varsity
  • Members of the University of Cambridge gathered this week in a ‘town hall’ style meeting to discuss the issue of divestment, as part of an information-gathering exercise carried out by the University’s divestment working group. During the ticketed event, which was held at Lady Mitchell Hall on Sidgwick site, speakers proposed a range of arguments both in opposition to and in support of divestment. Twelve speakers, who had submitted speeches to the working group prior to the meeting, were invited to address the audience.

 

 

 

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Weekly News Round-Up: October 20th, 2017

Upcoming Events


The Oekom Impact Study 2017 and How to Measure Impact in Publicly Traded Investments l oekom, October 24, 2017, 8:00 - 10:30, New York, NY
  • This event will focus on the oekom Impact Study 2017 and the opportunities that exist in assessing impact in investment portfolios, and is free to attend.
Webinar: Path to Value Forum: Finding the Signal in the Noise l High Meadows Institute, October 24th, 2017, 12:00 - 1:00 p.m. EDT
Forest Resilience Bond Investor Roundtable l Blue Forest Conservation, Encourage Capital, Rockefeller Foundation, & WRI, October 30, 2017, New York, NY

The SRI Conference l November 1-3, 2017, San Diego, CA
 
The Case for Social Progress l Breckinridge Capital Advisors & Social Progress Imperative, November 1, 2017, San Francisco, CA
  • Please join Breckinridge and the Social Progress Imperative for a luncheon and panel discussion that will explore what social progress means today and how investors can help drive inclusive growth. Building off the success of the panel from the What Works 2017 conference, Breckinridge and the Social Progress Imperative are excited to continue the conversation on social progress. Our panelists will broadly introduce the Social Progress Index (SPI), explore the importance of inclusive growth today and discuss the investment case for the use of SPI.
Investing for Impact Symposium l High Water Women, November 30, 2017, New York, NY

2018 Higher Education Climate Leadership Summit l Second Nature & The Intentional Endowments Network, February 4-6, 2018, Phoenix, AZ
New Reports
 
Embracing Sustainability l Appleseed Capital
  • This report details how and why Appleseed Capital is always looking for useful tools which can help identify, mitigate, or avoid investment risk, and how ESG factors, help avoid investment risks, which, in turn, should reduce idiosyncratic business risk. 
 
Endowment and Foundation Sustainable Investing News
 
Pitzer College to Invest $58 Million in Non-Fossil Fuel Index Fund l The Student Life
  • Pitzer College, along with asset management firm BlackRock, has launched the first-ever ESG-focused global equity index fund that is completely divested from fossil fuels, the college announced Sept. 21. Pitzer is set to invest $58 million of its $135 million-endowment into the fund, which represents the entirety of the public equity portion of Pitzer’s endowment. The creation of the fund is a continuation of the climate action plan that Pitzer announced in 2014, which included a commitment to divest 99 percent of the college’s endowment and create a fund to facilitate the investment of endowment funds into environmentally responsible companies.
Sustainability Focus, Extraordinary Performance l McKnight Foundation
  • Humming the iconic bars to Pomp & Circumstance, the McKnight investment team celebrated the “graduation” of its first impact investment. On October 2, an early market-rate mission-related investment — Generation’s Global Equity Fund — “graduated” from the experimental impact portfolio to the main $2.2 billion endowment. Increasing the original $25 million to a $75 million investment is proof that an impact investing program can have financial success.  And it gets better. Since McKnight's initial investment three years ago, Generation Global Equity has been the best-performing equity fund in the entire McKnight endowment. McKnight’s investment has returned 17.3% against the MSCI World benchmark’s 6.6% (as of June 2017). In three years, the initial $25 million investment blossomed to over $38 million – extraordinary outperformance by any measure.

 

Sustainable, Responsible, Impact & ESG Investing
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how investors are putting more money into metals needed to build electric-vehicle batteries; More companies are pricing carbon internally; and Pala Investments' New Energy Metals Fund targets decarbonization.
Asset Owners Push to Satisfy U.N. Goals l Pensions & Investments
  • Institutional investor executives said they are now reflecting on — or have already implemented — ways to align their investment portfolios with the goals. Some pension funds are further along in the journey. The $337.2 billion California Public Employees' Retirement System, Sacramento, is starting to map its current portfolio to the sustainable development goals to find "connectivity," said Anne Simpson, investment director of sustainable investments, speaking on a recent panel discussion at the annual Principles for Responsible Investment in Person conference, held in Berlin.
Impact Investing to Receive a GBP300 Billion Boost l AlphaQ
  • The UK National Advisory Board on Impact Investing is launching its report today with clear steps to create a more inclusive and sustainable economy. It reveals an opportunity to unlock an additional GBP300 billion over the next 10 years to directly help address social and environmental challenges including affordable housing, climate change and the social care crisis. The UK NAB is the UK’s voice in a Global Steering Group of 15-member states plus the EU, chaired by Sir Ronald Cohen, and was established as the successor to the Social Impact Investment Taskforce set up during the UK presidency of the G8.
U.K. Impact Investing Board Outlines Steps for Investors to Align With Sustainable Development Goals l Pensions & Investments
  • Institutional investors' capital should be aligned to the United Nations' sustainable development goals to promote an inclusive and sustainable economy, says a new report. The U.K. National Advisory Board on Impact Investing launched a report outlining five steps to reach this goal: adopt an inclusive and sustainable U.K. investment agenda; empower savers to invest in line with their values; put purpose at the heart of public procurement; accelerate the rise of purposeful business; and strengthen the U.K.'s role in international development finance.
  • Leading investor law firm Grant & Eisenhofer announced the launch of a new ESG Institute, a global thought leadership and advocacy group focused on legal considerations surrounding environmental, social and governance issues in institutional investing. The ESG Institute debuts as G&E marks its 20th anniversary as an advocate for investors internationally. Interest in sustainable and responsible investment continues to accelerate: in the past three years, global assets in the sector have soared by 25% to $23 trillion, according to the Global Sustainable Investment Review.
Betting on Social Progress l Breckinridge Capital Advisors
  • Traditional social and economic theory tends to link social stability to economic success, arguing that more economically prosperous societies are more socially stable. The argument goes that national wealth generates security and satisfaction, enabling citizens to move beyond basic needs to contribute to higher-order goals such as supporting their communities, helping develop and strengthen key institutions and generally driving humanity forward. But this line of thinking is being brought into question today. While most would agree the United States and many other developed countries have largely recovered from the global financial crisis, post-crisis economic improvements haven’t always translated into broader societal wellbeing because prosperity has not been sufficiently inclusive. This lack of inclusiveness presents broader challenges that can in turn undermine economic prosperity as well.
  • Canadian's investors dominate in a new ranking of the world's most responsible asset allocators. The list, which includes 25 sovereign wealth funds and pension funds responsible for $4.9 trillion in combined AUM, was developed by Breton Woods II, the impact investing initiative of non-partisan think tank New America.
Impact Investment: Foundations Go Deeper l Euro Money
  • While foundations may be known for their giving, their investment portfolios lack creativity when it comes to solving environmental and social challenges. Some are taking their missions further. According to the Foundation Center, at the last count there were 86,726 foundations in the US. Together they had more than $865 billion in assets. In Europe, there are some 130,000, according to Fondation de France, with a combined €22.5 billion. Whether in size of assets or in number, foundations are a large and powerful group of investors – because the majority of their money is indeed invested. European foundations allocate just 12% a year to their missions through grants and expenses, while US foundations allocate 7% on average.
oekom Impact Study 2017: The Impact of Responsible Investment on Companies Is Increasing l CSR Newswire
  • oekom research concluded in its Impact Study 2017 that the influence of the responsible capital markets is clearly positive. According to companies, the impact that responsible investors, banks and rating agencies have on the company’s sustainability efforts has increased considerably since the last survey in 2013. The sustainability rating agencies play a decisive role in this, whereas the UN SDGs (Sustainable Development Goals) are currently less significant for most companies. The study of almost 500 companies around the world was conducted in partnership with PRI (Principles of Responsible Investment). 
Millennials Love ESG, Just Not As Much As Their Parents, Grandparents l Financial Advisor
  • Sustainable and socially responsible investing isn’t just for the kids, according to a recent Allianz Global Investors study. In the AllianzGI ESG Clarity survey, investors aged 65 and older were more interested in environmental, social and corporate governance (ESG) investing than younger generations. While ESG strategies are often pitched as appeals to young, affluent investors, 68 percent of the respondents aged 65 and older expressed favorable views towards ESG investing, compared with 59 percent of those aged 25 to 44.
ESG Analysis Grows in All Regions for CFA Institute Members; EMEA Takes Biggest Leap l Pensions & Investments
  • Portfolio managers and data analysts in North and South America continue to fall behind the Europe, Middle East and Africa and Asia-Pacific regions in their use of ESG factors in their investment decisions and analysis, said a survey report released Wednesday by the CFA Institute. Although ESG consideration was up for all regions from the CFA Institute's 2015 survey, Europe, the Middle East and Africa replaced Asia-Pacific as the region where investors are most likely to take ESG issues into account at 85%, up from 74% in 2015. Meanwhile, some 81% and 68% of investors in the Asia-Pacific and Americas, respectively, said they take ESG factors into account, up from 78% and 59% in 2015.
General Endowments News
 
Harvard Endowment's Rebirth l Institutional Investor
  • After a decade of low returns and high turnover, the group responsible for managing Harvard's $37 billion endowment is beginning anew. Ushering in this era is CEO Nirmal Narvekar, an Ivy League Endowment Alum who joined in December.
United Nations Appoints New CIO l Chief Investment Officer
  • The United Nations has completed its search for the CIO position of its $62 billion staff pension fund, and announced it will hire Sudhir Rajkumar of India. The position is currently held by Carolyn Boykin, who reapplied for the job, according to Farhan Aziz Haq, deputy spokesman of UN secretary-general António Guterres. Haq was asked if the decision was made because of performance and he responded, “It is the Secretary-General’s prerogative to fill senior posts, and many senior posts have been advertised while there is still an incumbent in the post.”
Investment Manager News
Candriam Launches Academy for Sustainable and Responsible Investing l FTSE Global Markets
  • Candriam Investors Group, the pan-European multi-specialist asset manager owned by New York Life Investment Management (NYLIM), today launches the Candriam Academy, the world’s first free-to-access accredited training platform for Sustainable and Responsible Investing (SRI).
JPMorgan Mulls Further Sustainable Fund Launches l Fund Strategy
  • JPMorgan Asset Management is mulling further launches in the sustainable investing space, with global equity and Asian equity funds top of the list. The fund group currently has two ESG mandates; the Europe Sustainable Equity fund and the US-based Intrepid Sustainable Equity fund. Robert Hardy, head of the corporate governance team, says JPMAM has “an enormous amount of global expertise it could leverage” to launch further products.
Fossil Fuel-Free Fund Challenges Perceptions About Divestment With 16% Annualized Return l Benefits Canada
  • Carbon divestment doesn’t have to mean sacrificing investment returns, a Canadian asset manager is arguing.  On Monday, Genus Capital Management Inc. released a report on the four-year performance of its fossil-free Canadian and global equity fund. The results show from the end showed that from May 2013 to the end of last year, the fund saw returns of 16 per cent annually. That compares to the 13.3 per cent annual return reported by its benchmark over the period.
Caisse Aims to Cut Portfolio's Carbon Footprint 25% by 2025 l The Globe and Mail
  • The Caisse de dépôt et placement du Québec is setting bold targets to shelter its portfolio against the impact of climate change. The country's second-largest pension fund is seeking more profitable investment opportunities and means to avoid assets it forecasts will be left behind in a global marketplace being reshaped by an increasingly low-carbon world economy. The move comes as institutional investors around the world are reassessing climate risks and other so-called ESG factors in response to stakeholder pressures, marketplace shifts and new regulations.

Standard Live Investments Launches First Impact Fund l Portfolio Adviser

  • The SLI Global Equity Impact Fund, which is co-managed by Sarah Norris and Dominic Byrne, aims to invest in companies which have a truly positive impact to benefit the environment, society and clients. To achieve this SLI has used the universally accepted 17 United Nation’s Sustainable Development Goals (SDGs) as a framework to develop its own impact process and analysis. All 17 SDGs are incorporated into the portfolio, while the UN’s associated targets will also inform the investment process. According to the SLI the fund then invests in global companies whose activities, technologies or products are specifically to provide solutions in areas such as healthcare, education and poverty.
  • The University’s divestment working group will host two ‘town hall’ consultation meetings in the coming weeks, seeking to gauge opinions from students and staff on selling off Cambridge’s investments in oil and gas companies. All members can apply for a ticket to the two events, which will take place at 1pm on October 25th and 4pm on November 9th, both at Lady Mitchell Hall on the Sidgwick site. Professor Dame Athene Donald, who is chairing the group, said the consultations would “provide an opportunity for those concerned about these issues to voice their opinions in a respectful manner.”
University of Toronto Announces Sustainability Committee l The Medium
  • The University of Toronto has announced a Committee on the Environment, Climate Change and Sustainability amid calls to divest from fossil fuel by labour unions and student group Toronto350.org. According to John Robinson, the committee was formed as a result of the decision of U of T’s president, Meric Gertler, to not partially divest from fossil fuels last year, but instead search for alternative sustainability initiatives. The group aims to focus on implementing initiatives that emphasize sustainability through current work by the committee.
Indigenous Women’s Delegation Pursues Fossil Fuel Divestment Across Europe, Amidst Growing Global Movement l Common Dreams
  • In the face of many dire challenges, Indigenous women leaders of the Standing Rock movement and their allies remain unyielding in their quest for justice regarding the violations of Indigenous rights, human rights and the rights of the Earth and climate perpetrated through the development of the Dakota Access Pipeline (DAPL) and other fossil fuel projects across Indigenous territories in the U.S. and around the world. For the past two weeks, an Indigenous Women's Divestment Delegation to Europe has traveled through Norway, Switzerland and Germany to engage with political leaders, representatives of financial and insurance institutions, civil society groups, and members of the media to share personal accounts and calls to action for immediate divestment from fossil fuel companies that endanger rights and neglect Indigenous People’s right to Free, Prior, and Informed Consent (FPIC) as outlined in the United Nations Declaration on the Rights of Indigenous Peoples.
Doctors Call on Health Super Funds to pull $1.7 billion out of Coal and Oil Companies l The Age
  • Hundreds of Victorian doctors and medical staff are pressuring their super funds to quit investing in coal and oil for the sake of health, as they did with tobacco five years ago. The group, which includes some of Australia's leading health experts, says there is overwhelming evidence that climate change is already making people sick and causing thousands of deaths.
Vassar College Campus Investment Responsibility Committee Votes to Reccomend Fossil Fuel Divestment l Miscellany News
  • In a historic vote last May, the Campus Investment Responsibility Committee (CIRC), which is made up of faculty, students, alums and administrators, and makes recommendations to the Board of Trustees on endowment investment decisions, voted to officially recommend direct fossil fuel divestment. The next step is to bring this decision in front of the Trustee Investment Responsibility Committee (TIRC), and this (also unprecedented) meeting between CIRC and TIRC will happen this Friday, Oct. 20, when the Trustees are on campus for their tri-annual convening.

 

  • Smith College students organized in protest against the school's investment in fossil fuels at a campus rally Thursday. Wearing t-shirts that said "Divest" and holding signs that said "#leadwithus," a group of several dozen students stood outside College Hall, where the Board of Trustees regularly meets. The event was organized by Divest Smith College, a student run group that was formed in 2012. On its website, the group states its opposition to the school's investment in fossil fuels.  The college currently has over $100 million invested in fossil fuel industry, according to Divest Smith. 
University of Vermont  SGA Resolution on Divestment l The Vermont Cynic
  • At this week's meeting, the Student Government Association passed a resolution that called on the board of trustees to divest from fossil fuels. The resolution demanded UVM divest from the top 200 companies who contribute the most to carbon emissions as indexed by the Carbon Tracker Initiative. The resolution also called for board transparency on fossil fuel investment and where the University endowment is being invested.
Private Prison Divestment
 
Letter to the Editor: Board’s response to Stanford University Prison Divest l The Stanford Daily
  • Last week, Stanford's Board of Trustees provided its response to the request by SU Prison Divest to review investments in private prisons and related companies. Given some of the dialogue that has occurred since then, this open letter from the Chair of the Special Committee on Investment Responsibility of Board of Trustees provides the community with information about the Board’s response.

 

 

 

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Weekly News Round-Up: October 13th, 2017

Upcoming Events
 
AASHE Conference and Expo: Stronger in Solidarity l AASHE, October 15-18, 2017, San Antonio, TX
  • IEN will be hosting a session on investing in line with the goals of the Paris Agreement and the Sustainable Development Goals and participating in a session on investing in clean energy.
Roundtable - Antibiotic Risk and Sustainable Animal Agriculture:  The Path to Protecting Human Health l Farm Animal Investment Risk & Return, October 17, 2017, 8:30 - 4:30, New York, NY
  • FAIRR, in collaboration with ICCR, is organizing a Multi Stakeholder Roundtable on the Tuesday, October 17th in New York City.    The day will bring together investors, corporates, academics and others to discuss antibiotic use in the animal agriculture sector and to address the risks posed to the environment, human health as well as the broader impacts to the global food industry and investors’ portfolios. 
The Oekom Impact Study 2017 and How to Measure Impact in Publicly Traded Investments l oekom, October 24, 2017, 8:00 - 1:30, New York, NY
  • This event will focus on the oekom Impact Study 2017 and the opportunities that exist in assessing impact in investment portfolios, and is free to attend.
Webinar: Path to Value Forum: Finding the Signal in the Noise l High Meadows Institute, October 24th, 2017, 12:00 - 1:00 p.m. EDT

The SRI Conference l November 1-3, 2017, San Diego, CA

Investing for Impact Symposium l High Water Women, November 30, 2017, New York, NY

2018 Higher Education Climate Leadership Summit l Second Nature & The Intentional Endowments Network, February 4-6, 2018, Phoenix, AZ

  

New Reports
 

The Rise of ESG Investing l Calvert Research & Management

  • As clients continue to assign importance to investments that meet certain environmental, social or governance standards, financial advisers will need to help their clients navigate through an expanding set of ESG considerations and strategies. This new research paper offers an outlook for ESG investing and addresses the primary drivers, motivators and educational needs that are re-shaping adviser-client conversations.
Morgan Stanley Releases New Report Finding Sustainability Communication Disconnect between Companies and Investors l Business Wire
  • This week, the Morgan Stanley Institute for Sustainable Investing released a new report analyzing the communications disconnect between the ESG information investors seek and what companies provide. The paper, Sustainable Value: Communicating ESG to the 21st Century Investor, identifies the communications opportunities and best practices for companies to better communicate their ESG stories to enhance their business and investor value.
Risk Reporting & Global ESG Framework Critical for Investor Interest l Environmental Leader
  • Nearly all (95%) of respondents from a recent study say they plan to engage with companies they invest in about issues related to the Sustainable Development Goals (SDGs), according to an S&P Global report. Investors say their assessment of a company’s environmental, social and governance (ESG) profiles have evolved from a simple measure of corporate responsibility to a key driver of an investor’s decision-making. So the standardization of an ESG framework – which the market currently lacks – is a critical part of an increasingly values-based economy, the report finds.
  • This document is intended to help higher education sustainability practitioners more powerfully articulate the value of sustainability to higher education leaders as well as the general public. As different points will be more or less relevant at individual institutions or with specific audiences, practitioners are welcome to create more targeted versions of this publication. After each point is a reference link that will take the reader to a list of supporting resources in the Campus Sustainability Hub, AASHE’s online resource center. AASHE will be adding new resources over time so the list of supporting resources will grow over time. As the reference links will not be accessible in printed copies, this publication is best used in electronic form. 
 
 
Sustainable Investing at Endowments
 
  • In this article, Stanford's Board of Trustees provides an update to the Stanford community on its consideration of investment responsibility issues – including an upcoming review of the university's investment responsibility statement and the conclusion of a review of investment issues around private prisons.
Smith College Investing in Environmental Sustainability l Grecourt Gate
  • Smith is providing $100,000 to the Smith College Investment Club to create and manage a new portfolio of fossil-fuel-free investments. The new fund—which grew out of a recommendation from the Study Group on Climate Change—offers a unique opportunity for students to gain hands-on experience in the growing field of impact investing. “Impact investing is about investments that achieve financial objectives while also accomplishing a social good,” said Mike Howard, Smith’s executive vice president for finance and administration and co-chair of the study group. “Our student club has been managing an investment portfolio here for some time. With these new unrestricted funds, students will have an opportunity to create a portfolio of socially responsible investing focused on climate change.”
 
 
Sustainable, Responsible, Impact & ESG Investing
  • Barron’s second annual survey of sustainable funds in Morningstar’s database found a similar trend toward outperformance, confirming last year’s study. Morningstar partner Sustainalytics evaluates the sustainability of 8,000 companies worldwide using more than 100 ESG factors, such as incidences of environmental accidents, fraud, and discriminatory behavior. Morningstar also uses Sustainalytics’ data to score 35,500 funds in its database based on their holdings. Barron’s used the Morningstar data to screen for large-company U.S. stock funds with sustainability grades of “above average” or “high.” A Standard & Poor’s 500 index fund has an “average” sustainability rating.
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how investors pumped $66.9 billion into clean energy globally in 3Q; The solar industry is courting Puerto Rico; The Sustainability Accounting Standards Board says the next phase in corporate disclosure is coming.
  • At the end of last year, the number of funds espousing virtuous and sustainable investing – including mutual funds and ETFs – was over 1,000, with $2.6 trillion in assets. ETFs are still a small part of the SRI equation, with many of the largest sustainable ETFs hovering around the neighborhood of $1 billion in assets. The largest ETF focusing on ESG and sustainability principles is the $903.6 million iShares MSCI KLD 400 Social ETF Just a month shy of its eleventh birthday, DSI is also one oldest ESG ETFs on the market. 
The Problem With ESG ETFs, and the Opportunities l Barron's
  • Whether index or active, the transparency of ETFs is particularly important in ESG investing, especially with regard to more controversial companies. For instance, McDonald’s effort to increase beef purchases from sustainable sources and to boost recycling has earned it a spot in the top 25 holdings of the $892 million iShares MSCI KLD 400 Social. Those who object to the firm’s products or labor practices, though, can decide if they want to invest in the iShares ETF or not. Sustainable ETFs may not come of age until the giants enter the market. Vanguard, which offers the largest ESG index fund, the $3.4 billion Vanguard FTSE Social Index, hasn’t launched an ETF version of the portfolio. Observers like Dave Nadig, CEO of ETF.com, don’t think that will be the case for long. “Looking 10 years out,” he says, “it seems inconceivable Vanguard won’t have an ETF sleeve on its fund.”
Sustainability Funds – the Real Achievers and the Fakes l Money Observer
  • A new report from Triodos Bank finds that two-thirds of investors would like their money to support companies which are profitable and at the same time make a positive contribution to society and the environment.  The easiest way to make such investments is to use an ethical or SRI fund; the UK’s ethical and environmental funds were valued £1.5 trillion in 2016, according to ethical financial adviser Castlefield. But it is important to test whether funds are actually as sustainable or ethical as they claim to be. For this purpose, Castlefield published a ‘winners’ and ‘spinners’ report to identify funds that really are sustainable and those that aren’t.
The Impact Investment Strategies That Helped Make These Funds Among the ‘Best for the World’ l Impact Alpha
  • More than 90 funds have now opted to have their portfolios independently measured and verified by B Lab’s GIIRS Impact Rating system, a rating system analogous to Morningstar. Of those, B Lab identified 28 funds for their outperformance in social and environmental impact. B Lab has assessed more than 30,000 companies, enough to allow fund portfolios to be benchmarked and compared. This year’s list recognized top performers in six categories: overall, environment, community, governance, workers and customers. The list includes many funds familiar to those who have followed impact investing in recent years, such as Leapfrog Investments, Village Capital, Deutsche Bank and Vox Capital (see the full list here). Here are five others with distinct impact strategies that helped them stand out.
Goldman Sachs: ESG Investing is No Mere Niche l Barron's
  • ESG and impact investing have gone from niches to the mainstream, according to Goldman Sachs Asset Management officials. So reports Financial Advisor. “There has been a dramatic increase and interest over the past four years in all sorts of our clients in ESG and impact investing,” Hugh Lawson, global head of ESG and impact investing for Goldman Sachs, said at a news conference at the company’s Manhattan headquarters. “What was once the province of a small number of family offices and foundations has drawn sharply increased participation among pension funds, insurance companies, non-profits and faith-based investors,” a Goldman paper says, according to Financial Advisor.
  • This article discusses how, according to Schroder's 2017 Institutional Investor Survey, 47% of investors in Europe cited long-term performance as a barrier to adopting ESG oriented investment strategies.
Performance, Transparency and Risk Cited as the Biggest Barriers to Sustainable Investing — Survey l Pensions & Investments
  • Seventy-seven percent of institutional investors globally believe sustainable investing remains a challenge, with performance, transparency and risk concerns cited as the biggest barriers to its incorporation, said a survey from Schroder Investment Management released Wednesday. Forty-four percent of respondents identified performance concerns as a hurdle to sustainable investing; 41% said "a lack of transparency and reported data"; and 28% cited risk measurement and management difficulties. Another 23% said cost was a challenge. (Multiple answers were allowed.) While challenges remain, 48% of respondents reported that they've increased their allocation to sustainable investments over the past five years, and 67% believe sustainable investing will become more important over the next five years. Globally, 17% of respondents said they do not invest in sustainable investment strategies.
  • There are certainly passive products available for investors which have an ethical or sustainable remit but whether they are indeed as low in price as other passive strategies is up for debate. Unlike other asset classes and themes, there are some limitations when it comes to using passive strategies to get access to ethical and ESG investments. In September, the MSCI launched the MSCI Factor ESG Target Indexes, which are designed to help investors incorporate environmental, social and corporate governance factors into their investment process.
Sustainable Funds Universe Continues to Expand l Morningstar
  • The universe of sustainable funds in the United States continued to grow in the third quarter, with five new fund launches and positive estimated net flows that keep the group on track for a record year of attracting new assets. The third quarter saw more funds reach viability, and more choice in emerging-markets equity and fixed income.
Investment Manager News
 
BlackRock Hires Former Obama Climate Adviser: Memo l Reuters
  • The world’s largest asset manager, BlackRock Inc, on Tuesday hired the Obama administration’s one-time adviser on climate change to lead an effort to appeal to people who want to invest in a way that helps society. BlackRock is bringing in Brian Deese to run its recently-renamed Sustainable Investing group, according to a company memo seen by Reuters.
New ETF Player Launches Diversified Socially Responsible Strategy l ETFTrends.com
  • Change Finance, a majority women-run money manager, has entered the ETF arena, launching its first ETF strategy that looks beyond fossil fuel-related companies to provide a comprehensive approach to socially responsible investing. On Tuesday, Change Finance rolled out the Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free ETF. The Diversified Impact U.S. Large Cap Fossil Fuel Free ETF tries to reflect the performance of the Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free Index, which follows a rules-based methodology to measure the performance of an equally weighted portfolio of 100 large-cap U.S. companies that meet certain environmental, social and governance standards, according to a prospectus sheet.
Aeris Issues First Impact Managment Rating on a Mutual Fund l Aeris
  • Aeris has issued its first impact management rating of a publicly-traded, fixed-income mutual fund, Community Capital Management (CCM)’s CRA Qualified Investment Fund. The rating was announced at the 2017 Social Capital Markets (SOCAP) Conference today. “With a ballooning number of funds claiming to have positive environmental and social impacts, CCM was eager to participate in a third-party validation of our impact performance and metrics,” said David Sand, CCM’s Chief Impact Investment Strategist, who also serves as a member of the Aeris board of directors.
Northern Trust launches Northern Funds US Quality ESG Fund l Institutional Asset Manager
  • Northern Trust Asset Management has launched the Northern Funds US Quality ESG Fund (NUESX), which is designed to give investors access to Northern Trust Asset Management’s investment expertise in factor-based strategies and to a fund that will invest in companies that have favorable environmental, social, and governance (ESG) characteristics.
Green Bonds
 
ESG Investing? Don’t Forget About Bonds l Barron's
  • ESG investors may find bonds a better way to go: Fixed-income portfolio managers focus on mitigating risk. Avoiding blowups tied to corporate governance or environmental missteps fits right in to their process. What’s more, bonds that go in sustainable portfolios usually have the same yields and credit ratings as ones that don’t—sometimes better. “There is overlap between good social and good credit stories,” says James Dearborn, co-portfolio manager of the Columbia U.S. Social Bond Fund. The problem with fixed-income sustainable investing is that there aren’t a lot of funds to choose from—Morningstar tracks just 32—and many of the best are downright tiny. The current crop has a variety of strategies and risk profiles, and several more funds are slated to launch later this year. “It’s a little bit of a crazy quilt right now,” says Bob Smith, chief investment officer at Sage Advisory Services, which just launched an index that should help investors compare ESG investment-grade funds against a benchmark.
Why ‘ESG’ Bonds Better Than ‘Green’ Bonds l ETF.com
  • Sage Advisors, a well-known money manager with some 20 years’ experience in fixed-income investing, has created an ESG-focused bond index, the Sage ESG Intermediate Credit Index, with Wilshire Associates. According to the firm, the index, which picks some 110 investment-grade securities from the Barclays Intermediate Credit Bond Index through ESG factors, is designed to mitigate risk and generate better returns over time than a vanilla allocation. Bob Smith, Sage’s president and chief investment officer, and Ryan O’Malley, portfolio strategist, explain is this article why ESG in fixed income is important, and how investors can access this strategy.
GPIF, World Bank to Study Extending ESG Approach to Bond Investments l Pensions & Investments
  • Japan’s Government Pension Investment Fund and the World Bank Group pledged to partner on research aimed at extending the application of environmental, social and governance criteria to fixed-income investments and other asset segments. A GPIF news release Wednesday said a number of issues need to be resolved before ESG factors can be applied to bond investments the way they’ve come to be taken into account for equity investments.
General Higher Education Endowment News
 
Washington University in St. Louis Board of Trustees Meets, Hears Updates on Endowment, Plan for Excellence l The Source
  • At its Oct. 5-6 meeting, the Washington University in St. Louis Board of Trustees heard an update on the university’s endowment, welcomed new trustees and heard a presentation by Chancellor Mark S. Wrighton on the university’s Plan for Excellence. In a special presentation, Wrighton highlighted the goals achieved so far through the Plan for Excellence, the university’s long-range, strategic planning process that began in 2006 when deans, directors of various centers and initiatives, and heads of the university’s central fiscal units developed strategic plans for the decade from 2010 to 2020.
  • David McAuliffe was named president and chief investment officer of Berkeley Endowment Management Co., effective Dec. 1, said spokesman Jose Rodriguez in an email. Mr. McAuliffe replaces John-Austin Saviano, who left BEMCO in the spring to start his own investment advisory firm. Nicholas Werner, director of investments, has been serving as CIO in the interim.
Yale Endowment, Often a Pacesetter, Is a Laggard This Time l New York Times
  • Yale University’s endowment, the second largest among the nation’s colleges, has been distinguished in recent years for its handsome returns — and for turning out money managers who follow the investment principles of its chief, David F. Swensen. But its latest report card, issued Tuesday, was disappointing. At a time when many of the largest endowments are reporting gains in the midteens, Yale said it generated an 11.3 percent return for the fiscal year ended June 30, bringing its value to $27.2 billion. Among the better performers were the Massachusetts Institute of Technology, which registered a 14.3 percent increase; Stanford University, with a 13.1 percent return, and Princeton, with 12.5 percent growth. Dartmouth, a far smaller school with a $4.96 billion endowment, appeared a strong winner with a 14.6 percent return. A number of the larger schools have yet to release returns.
Climate Risk, Science & Regulation
 
California Fires Lay Waste to 140,000 Acres and Rage On l New York Times
  • The fires ravaging California’s wine country since Sunday night — part of an outbreak of blazes stretching almost the entire length of the state — continued to burn out of control on Wednesday, as the toll rose to at least 21 people confirmed dead, hundreds hospitalized, and thousands of buildings destroyed or damaged. But state and local officials warned that with several hundred people still missing and unaccounted for, and some areas still out of reach of emergency crews, those figures are almost certain to rise. The two biggest and most destructive fires had consumed more than 70,000 acres in Napa and Sonoma Counties by Wednesday morning, up from 52,000 on Tuesday afternoon, according to Cal Fire, the state’s firefighting agency. In all, six fires had burned more than 91,000 acres in the two counties, and Cal Fire rated all but the smallest of them as 3 percent contained, or less.
Investing In The Age Of Climate Change l Forbes
  • In this Q&A, Marija Kramer, Head of Responsible Investment Business at Institutional Shareholder Services (ISS), who is responsible for all aspects of responsible investing (RI) offerings, including policy development, as well as research and data screening services covering more than 13,000 global companies for institutions seeking to fully integrate ESG into their investment decision-making, discusses investing in the age of climate change.
Clean Energy
 
DONG Energy Re-Emerging as Ørsted to Commemorate Oil, Gas Divestment l Sustainable Brands
  • Over the past decade, Danish energy company DONG Energy has ambitiously transitioned away from oil and coal to transform itself into one of Europe’s cleanest, most sustainable energy companies. Since 2006, DONG Energy has reduced carbon emissions by 52 percent and is on track to achieve its 2023 Science-Based Target of reducing emissions by 96 percent. Now, following its recent divestment of upstream oil and gas production, the company has announced plans to change its name — which stands for Danish Oil and Natural Gas — to Ørsted.
 
Fossil Fuel Divestment
 
You Don't Need Hydrocarbons for Performance: Behind the Divestment Push l Financial Post
  • Over the winter, Quebec’s Université Laval committed to switch its endowment fund investments in fossil energy to other types of investments. The matter has been the subject at the other tertiary institutions including the University of British Columbia and the University of Ottawa. In other parts of the world a number of universities including, for example, Oxford but not Cambridge, have announced similar divestment plans. But what about the argument that a well-diversified portfolio requires an allocation to companies in the fossil fuel business? “The returns are good. We have got four years of live divestment and we have beaten all our benchmarks in both the equity funds and the balanced funds,” he said. “We are getting good performance (relative to our benchmark) and you don’t need hydrocarbons to get performance,” Wayne Wachell, chief executive at Vancouver-based Genus Capital Management, said. Other institutional investors have adopted a different approach, arguing for divestment and engagement.
Your Money or Your Morals: Capitalism and Fossil Fuel Divestment l Open Democracy
  • The fossil fuel divestment campaign has become one of the most rapidly growing divestment movements in history and has unified an impressive diversity of supporters—from liberal Californian universities to the Rockefeller’s family trust. But the contradictions between divestment and the logic of neoliberalism are enduring, and arguments between campaigners and their opponents are typically framed by questions relating to efficiency, feasibility, and the ethics of using fossil fuels. Such questions are certainly important to ask, but we should also look beyond them, because by doing so we can uncover the deeper ethical contradictions inherent to capitalism which shed important light on strategies for change.
Pressure Grows on £6.3bn Cambridge University Fund to Drop Fossil Fuels l Financial Times
  • Cambridge university’s £6.3bn endowment fund, the largest in the world outside the US, is facing renewed pressure to abandon its investments in fossil fuels after 60 academics and leading campaigners warned they posed huge financial and reputational risks. Academics including Rowan Williams, the former archbishop of Canterbury, as well as campaigners such as Noam Chomsky, a professor at the Massachusetts Institute of Technology, have stepped up efforts to push for action on carbon-intensive investments that are “incompatible with the Paris climate agreement”. Lord Williams said the university had to “think hard” about taking a “leading role in effecting the change we need in our attitude to fossil fuels”.
  • In this opinion piece, the author is writing to consider the following perspective: that the global discourse of climate change, including that of our Grinnell community, glosses over the stark political implications of the fossil fuel industry while simultaneously mythologizing which efforts are effective in protecting the environment.
Cambridge Academics and Activists Join Calls for Divestment l Varsity
  • Over 60 academics and activists have added their names to a submission calling for the University to divest from fossil fuels. The submission, co-written by the National Union of Students (NUS) and the campaigning group People & Planet, calls on the university to fully divest its £6.3 billion endowment. Among those to have signed the submission are the renowned academic Noam Chomsky, Shakira Martin, President of the NUS, and Daisy Eyre, President of CUSU.
Yale’s Climate Hypocrisy (Opinion) l Yale Daily News
  • In this opinion piece, two students discuss how, despite the University’s stated commitment to improving the world, Yale has failed to take any action commensurate with the magnitude of the problem of impending climate change. While the University announced in 2016 that it would divest holdings worth less than $10 million, research reveals that Yale increased its investments in fossil fuel companies by hundreds of millions of dollars in the past two years alone.
Boston College Climate Justice Responds to BC Endowment Growth News l The Heights
  • In this article, Climate Justice at BC (CJBC) explains how, while they support BC’s right to increase the university’s endowment, they fervently believe that investing in fossil fuels is in direct opposition to BC’s Jesuit Catholic values. BC needs to join the movement of nearly 800 institutions worldwide that have divested $5.5 trillion.

 

 

 

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Weekly News Round-Up: October 6th, 2017

Upcoming Events
  • AASHE Conference and Expo: Stronger in Solidarity l AASHE, October 15-18, 2017, San Antonio, TX
    • IEN will be hosting a session on investing in line with the goals of the Paris Agreement and the Sustainable Development Goals and participating in a session on investing in clean energy.
 
 
New Resources
 
  • In this webinar, we will be joined by two students who manage The Dwight Hall socially responsible investment (SRI) fund at Yale, Russell Heller and Gabe Malek. They will discuss the origin, history, and mission of the fund, as well as how the fund is organized and managed. Follow the link to view the recording.
UNH Pathway to Platinum Report l University of New Hampshire
  • In September 2017, the University of New Hampshire (UNH) at Durham became one of only three institutions of higher education in the country to earn a STARS Platinum rating from the Association for the Advancement of Sustainability in Higher Education (AASHE). This recognition places us at the highest level of sustainability performance among colleges and universities. UNH’s Platinum rating was made possible through a concerted, university-wide effort that engaged faculty, staff, and students over the past year. This report offers a snapshot of the metrics that underpin UNH’s accomplishments with regard to sustainability, the benefits that have come from the submission process, and a candid assessment of the challenges and opportunities that lay before us as we continue to work toward our shared vision of sustainability at UNH.
 
Sustainable, Responsible, Impact & ESG Investing
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how new pure electric vehicles coming to market will make for a crowded field where financial losses still loom large; ESG ETFs meet fixed income; and gender policies grab investor focus.
Steve Schueth on Dollars and Change l Wharton Business Radio
  • Steve Schueth, Director of SRI Conference and President of First Financial Affirmative Network, joins hosts Sandi Hunt and Nick Ashburn to discuss the upcoming Sustainable, Responsible, Impact (SRI) Conference on Dollars and Change.
  • Millenials are investing in ESG funds that invest in the stocks and bonds of companies that adhere to specific ESG guidelines. Each fund’s investment criteria differs slightly, but most look to invest in companies that promote issues such as supply chain transparency, a reduction on reliance on fossil fuels and a safe and fair workplace environment. By and large, they’ve been delivering competitive financial returns for their investors. Those in the 18 to 34 age range (as Pew defines the generation) have been leading the charge in increasing the popularity of these funds. The U.S. Census Bureau estimates that there are currently over 75 million millennials in the U.S.—the largest living generation in the country, and they also represent the largest group to invest in ESG funds.
Responsible Investing: Past, Present and the Next 25 Years l 3BL
  • This article contains Insights from the President of Parnassus Investments on the origins of values-based investing, how sustainability jobs are joining the mainstream, and expectations for broader and deeper ESG influences.
  • Natixis Global Asset Management has released the results of its 2017 Global Individual Investor survey. A total of 8,300 individual investors (750 in the UK) have been surveyed between February and March 2017 in 26 countries across Asia, Europe, the Americas and the Middle East, with minimum net investable assets of $100,000.
Cybersecurity Becoming Big ESG Concern l Pensions & Investments
  • Cybersecurity is moving up the agenda for institutional investors and their money managers as a responsible investment consideration, as several high-profile attacks and breaches bring the issue to the front of investors' minds. Sources at retirement plans and money management firms said the issue is being considered in particular when thinking through environmental, social and governance factors within investment portfolios. Some investors already are weaving cybersecurity into their expectations when it comes to money management. 
The Benchmark to End All Benchmarks? l Innovation Forum
  • The new World Benchmarking Alliance’s ranking of performance against the sustainable development goals might just become the list that CEOs worry about – but there are obvious pitfalls it must avoid.
Gender Focus Proves Rewarding for This ETF l Investopedia
  • The universe of exchange-traded funds (ETFs) dedicated to ESG investing principles is growing, and some members of this ETF sub-section are coming of age. That includes the SPDR SSGA Gender Diversity Index ETF SHE, which tracks the SSGA Gender Diversity Index, debuted in March 2016, and as highlighted by more than $341 million in assets under management, it has gained traction with investors. Components in SHE's index are ranked by three gender diversity metrics, with the ETF's objective being "to provide exposure to U.S. companies that demonstrate greater gender diversity within senior leadership than other firms in their sector," according to State Street. SHE is up 12% year to date and 15.5% over the past year.
  • Over the past two years, Salesforce founder and CEO Marc Benioff authorized spending of more than $6 million to close the pay gap between men and women at the cloud software firm. He's also closely aligned with B Team, a non-profit dedicated to the idea that businesses can be at the center of a "new era of sustainable, inclusive business for all." And he has taken a personal interest in causes related to ocean research. Now Salesforce Ventures — one of the most active investors in the corporate venture capital world — is creating a $50 million fund dedicated explicitly to software startups with working on services for workforce development; tools that promote opportunities for women or under-represented groups; companies creating better access to clean energy options or that improve supply chain performance; and apps that help non-profits or non-governmental organizations achieve their missions and interact with partners, donors and volunteers.

Investors Renew Push to get Sanderson Farms to cut Antibiotic Use l Reuters

  • Sanderson Farms Inc shareholders have filed another proposal aimed at convincing the third-largest U.S. poultry producer to stop giving medically important antibiotics to healthy chickens for disease prevention. Sanderson is the only large U.S. chicken producer that has not committed to curbing the use of those life-saving drugs. The new proposal from the non-profits As You Sow and Oxfam America will get a vote from investors at the company’s annual meeting in early 2018 if it is not successfully challenged by the company with regulators. More than 70 percent of medically important antibiotics in the United States are sold for use in farm animals. Scientists have warned that routine use of antibiotics in healthy chickens and other food animals contributes to the rise of dangerous antibiotic-resistant superbug infections, which kill at least 23,000 Americans each year and pose a significant threat to global health.
  • Last year, MSCI asked whether pay awards to U.S. chief executive officers reflected long-term shareholder returns, and found they did not. The bottom fifth of companies by equity incentive award outperformed the top fifth by nearly 39% on average on a 10-year cumulative basis. That study looked at awarded pay — of which 60%-70% reflected incentive stock awards. Awarded pay figures, which are based on the value of the company’s stock at grant date, lay out the range of potential CEO earnings, and are intended to align CEO and shareholder interests. We now extend that study to examine realized pay – how much compensation CEOs actually took home after exercising their equity grants. But realized pay was just as poorly aligned with long-term performance as awarded pay. More than 61% of the companies we studied exhibited poor alignment relative to their peers. We found little correlation overall between realized pay and long-term investment returns, as indicated by the very low R-squared value of 0.0093 shown in the article.
The Challenges of Passive ESG Investment l Pensions Expert
  • Bfinance's Joey Alcock outlines key considerations for schemes opting for passive ESG investment strategies, and says implementation should be adapted to the investor's specific preferences.
Investment Manager News
 
Northern Trust AM Launches Two ESG Index Funds l Real Estate Investment Times
  • Northern Trust Asset Management (AM) is launching two ESG funds, enabling investors to incorporate ESG principles into their portfolios. The Northern Trust World ESG Leaders Equity Index Fund and the Northern Trust Emerging Markets ESG Leaders Equity Index Fund will be managed by the MSCI ESG Leaders indices, and will enable investment into companies setting the standard in ESG criteria. The MSCI World ESG Leaders Index comprises best-in-class and mid-cap companies in 23 developed markets, while the MSCI Emerging Markets ESG Leaders Index will consider similar companies in 24 emerging market countries. The two funds will be the first in Europe to track the MSCI Leaders indices, in addition to a fund already available to US investors.
Introducing JF Fossil Fuel Free Funds l Jarislowsky Fraser
  • Jarislowsky Fraser and the University of British Columbia are pleased to announce their collaboration on the new UBC Sustainable Future Pool, which will invest in select Jarislowsky Fraser Fossil Fuel Free Funds, to offer a new choice for donors.
Green Bonds
 
BNP Paribas Launches Green Bond l Financial Times
  • A new bond is hoping to address climate change issues and boost the socially responsible investing market. BNP Paribas Asset Management has launched the Parvest Green Bond which identifies investments expected to have the most positive environmental impact.  It invests in bonds used to finance projects designed to mitigate or address climate change issues. Currently valued at €100m (£89m), it is managed by BNP Paribas AM’s fixed income team while leveraging proprietary analysis provided by its sustainability research team.
 
 
Sustainable Development Goals News
 
  • Enter the 2030 Sustainable Development Goals (SDGs) adopted by the United Nations General Assembly in September 2015— a list of 17 audacious initiatives, including eliminating poverty, fostering decent work and economic growth, and responsible consumption and production. Designed to track where (region, goal), how much and by whom (private, government, charitable) resources flow, they immediately resonated with member countries. The SDGs also provide advisors with a definition of the planetary and societal needs, as well as products to offer clients that align with individual values. The 17 global goals provided by the UN SDGs are therefore a win-win for all involved.  A new report from InvestorFlow finds the most popular UN SDGs—from an impact investing capital allocation standpoint—include No. 1 (no poverty), No. 3 (good health), No. 6 (clean water) and No. 7 (affordable and clean energy).
BoP Investor Unitus Seed Fund Mapping Its Impact To The UN's Sustainable Development Goals l Forbes
  • In case you haven’t noticed, many players in the impact investing universe, from accelerators to funds, are using the UN's Sustainable Development Goals as a framework for their efforts. That is, the 17 SDGs are becoming a standardized language for assessing impact. Unitus Seed Fund recently announced it’s joined the club. According to managing partner and co-founder, it's the first fund in India to do so.  “Impact investing has been held back by the complexity of how we talk about impact,” he says. “By coming together around these goals, you can communicate in a way that’s clearer to investors.”
Clean Energy
 
Origis Energy USA announces 32.5MW solar project for Georgetown University l PV Tech
  • Origis Energy USA has announced a power purchase agreement (PPA) to develop a 32.5MW PV project for Georgetown University — with the project set to be constructed in La Plata, Charles County, Maryland. Once completed, the solar plant will generate approximately 75,000 MWh of power annually and power 49% of Georgetown’s electricity load for campus operations located in Washington, D.C.
Fossil Fuel Divestment
 
Catholic Church to Make Record Divestment From Fossil Fuels l The Guardian
  • More than 40 Catholic institutions are to announce the largest ever faith-based divestment from fossil fuels, on the anniversary of the death of St Francis of Assisi. The sum involved has not been disclosed but the volume of divesting groups is four times higher than a previous church record, and adds to a global divestment movement, led by investors worth $5.5tn.
  • In 2013, HSU began the process to divest from fossil fuels. Since then, the goal of divesting has expanded and prompted growth within the university.
  • Chloe Maxmin and other Millennials pushing the Divest campaign are swiftly convincing Wall Street that investing in coal, oil, or natural gas is a sure-fire way to lose billions.
  • This past July the University of Toronto Asset Management (UTAM), the corporation responsible for UofT’s investments, released the 2016 Responsible Investing Report . President Gertler directed the UTAM to make this report back in April 2016, after he rejected a petition to divest the university from its fossil fuel holdings, after years of campus campaigning. This atricle explains why divestment should still be considered.

 

 

 

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Weekly News Round-Up: September 29th, 2017

Upcoming Events
  • IEN Webinar: Student Managed Fund Story - Dwight Hall at Yale SRI Fund l October 6th, 2017, 3:30 p.m.
    • In this webinar, we will be joined by two students who manage The Dwight Hall socially responsible investment (SRI) fund at Yale, Russell Heller and Gabe Malek. They will discuss the origin, history, and mission of the fund, as well as how the fund is organized and managed. Please join us for this presentation followed by a facilitated dialogue with audience questions.
 
 
New Reports
 

Lead From the Top: Building Sustainability Competence On Corporate Boards l Ceres

  • In a climate of increasing investor focus and company attention on the role of the board for sustainability, the report makes the business case for sustainability-competent corporate boards by arguing that factoring in these material risks in decision-making is key for boards to meet their fiduciary responsibilities, drive strong long-term financial performance goals, and help companies increase their competitive advantage. The report addresses three main ways to build sustainability competence on corporate boards: the proactive integration of sustainability into board recruitment, the importance of board education, and the need for directors to engage proactively with investors and other stakeholders on ESG.
EDF Releases Guidebook to Accelerate Investment in Sustainable Infrastructure l Business Insider
  • The Environmental Defense Fund (EDF) released a new framework that will help state and local governments mobilize private investment to repair existing and build new infrastructure that can help mitigate the effects of extreme weather events. The "Investment Design Framework" is part of a larger report, Unlocking Private Capital to Finance Sustainable Infrastructure, that introduces the first-ever roadmap for increasing collaboration with the private sector to fill critical public funding gaps.

 
Sustainable, Responsible, Impact & ESG Investing

Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how a federal trade panel concluded cheap foreign solar imports are hurting manufacturers, teeing up an opportunity for President Donald Trump to impose tariffs; California considers a ban on fossil-fuel vehicles; and women are missing from Asian boardrooms.
Passive Aggressive: The World of Index Investing is in Flux as Integration into Passive on Course to Become the Norm for New Mandates l Top 1,000 Funds
  • In the last year there has been a quiet revolution taking place as asset owners have been moving to integrate ESG into index designs for new mandates on core passive portfolios. Integrating sustainability into investment strategies was a “minority sport” when David Harris joined FTSE 15 years ago. “For many years all the action on ESG integration has been in active asset management, whilst for passive, the focus has been limited to engagement and voting – in the last year that has all changed – for new mandates integrating climate and sustainability parameters into index design is being applied at scale and to core portfolios,” said Harris.
  • Morningstar, a data-tracking firm, places any fund that uses terms such as sustainable investing, ESG and so on in its prospectus into a category that now has 204 members with $77bn in collective assets. The oldest fund in the Morningstar group dates back to 1971. But nearly half have been launched in the past three years. Two perennial questions have accompanied the deluge of money. The first is whether the approach comes with special costs: ie, is there a virtue discount? Second is the question of what should be measured. This article explores a few answers to each of the above questions.
The Future Role of Philanthropy: Mission-Aligned Investing l Local Investing for Impact
  • Innovative foundations such as Ford, Heron, Kresge, Gates and Rockefeller are leading the way, investing a percentage of their assets in affordable housing, enterprises that create employment in low-income communities and other revenue-producing ventures that serve a philanthropic purpose. What lofty purposes might we accomplish, should this nascent trend catch fire with charitable foundations more broadly? How would communities be transformed if place-focused foundations starting using more of their assets to invest locally to build vibrant, prosperous places?
Schroders: Sustainable Investment on the Rise as ESG Issues Gain Prominence l Investment Week
  • Sustainable investments are becoming an increasing part of investors' portfolios with over half of UK investors raising their allocations over the past five years, according to a global study conducted by Schroders. The study, which surveyed over 22,000 investors globally, including over 1,000 in the UK, found 54% of UK investors had increased their allocation to sustainable investments, while some 67% said sustainable investment was becoming more important to them.
  • A group of 12 investment consultants is publicly backing guidance by the U.K. Pensions Regulator stating that retirement plans should take environmental, social and governance factors into account in investment portfolios. The regulator said in guidance in March that most investments are exposed to long-term financial risks such as climate change and corporate governance. "We expect you to assess the financial materiality of these factors and to allow for them accordingly in the development and implementation of your investment strategy," said the regulator.
Silver Lining for ESG Seen in U.S. Withdrawal From Paris Accord l Pensions & Investments
  • The decision by President Donald Trump to withdraw the U.S. from a global climate pact and the U.K.'s departure from the European Union might not be as bearish for responsible investing as they appear. Glenn Davis, director of research at the Council of Institutional Investors, said while on the face of it the withdrawal looks like it has been a blow to sustainable investing, it is important to consider the attention from the investor community in terms of it being an "impetus" and leading to investors taking charge. Mr. Davis added this is "not as bearish" a situation as it might seem on the surface.
PRI in Person: Stewardship, ESG Policy, Climate Action l Investments & Pensions Europe
  • Japan’s financial services regulator expects the country’s investors to start working together on engagement with companies, according to the deputy director of its corporate accounting and disclosure division. Speaking at the PRI in Person conference in Berlin this week, Amame Fujimoto said the Financial Services Agency’s (FSA) original stewardship code did not explicitly mention collaborative engagement, meaning some Japanese investors might have misunderstood it to not be permitted. The FSA’s first stewardship code was launched in 2014. It was revised this year to remedy certain perceived shortcomings, including that some investors were felt to be engaging with companies only on a superficial level.
ESG or Else Clients Warn Pension Clients l Institutional Investor
  • Some of the U.K.'s largest pension consultants have have agreed to pressure asset owners to consider ESG factors in their investment decisions. In total, 12 major U.K. consultants signed on to remind schemes of the Pensions Regulator's ESG Guidance, where such factors are financially material.
The Real Impact of Impact Investing l GreenBiz
  • Whether it concerns climate change, supply chains, human rights or corruption, investors increasingly seek to better understand the impact that their investments are having. One recent Bank of America press release states that three-quarters of investors want to work with an advisor who offers investment strategies that result in competitive returns and positive impact. An even higher percentage of millennials want to make a connection between financial and societal outcomes — as high as 86 percent, according to a recent Morgan Stanley analysis. But can investors really have a positive impact with their investment dollars while also maximizing financial returns? This is no small matter. It is more than a trillion-dollar opportunity — consider that Bank of America alone has a client base representing over $2 trillion in assets. It is important is for investors to understand, arguably for the first time, how they can maximize their own positive impact — and that maximizing positive impact doesn’t mean having sacrificed financial performance at all.
Supply Chain and the Circular Economy
 
  • This is a story about an extraordinary effort to transform an ordinary piece of clothing. In June, C&A, the international Dutch chain of retail clothing stores, launched a line of T-shirts certified to the Cradle to Cradle standard, meaning that they were designed and manufactured in a way that is benign to the environment and human health, and whose materials can be recirculated safely back into industrial materials or composted into the soil.
Investment Manager News
 
MSCI Launches Four ESG Factor Indices l Investment Week
  • MSCI has launched four ESG factor target indices in response to increasing demand from clients. The MSCI Minimum Volatility, Quality, Value and Multiple-Factor ESG Target indices are designed for investors to gain exposure to the firm's existing factor indices, on which they are based, while integrating an ESG focus into their strategy. Rebalancing twice a year, the indices will look to mitigate short-term and long-term ESG risks by not investing in controversial weapons, while the framework enables client specific customization.
Sustainable Portfolio Building Blocks: 2 ESG Funds at the Top of Their Games l Morningstar
  • Interest in sustainable investing is growing, but many investors don’t know where to begin. This article shares two ESG funds–one stock, one bond–that would be solid building blocks for any sustainable portfolio.
Shareholder Engagement
 
Commentary: CHOICE Act Gives Investors No Voice l Pensions & Investments
  • The Financial CHOICE Act, which the House of Representatives passed in June on a largely party line vote, weakens many important provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and introduces a slew of changes that would harm U.S. capital markets, consumers and investors.  One of the most concerning aspects of the CHOICE Act is its treatment of the shareholder proposal rule, Section 14a-8 of the Securities Exchange Act of 1934. As long-term investors will attest, shareholder proposals are a vitally important, market-based mechanism for communicating with companies, directors and other shareholders. For decades now, the shareholder proposal rule has been highly constructive in facilitating dialogue between shareholders and companies. Yet, the CHOICE Act would eviscerate the rights of nearly all shareholders.
Climate Risk, Science & Regulation
 
Climate Shocks May Cost U.S. $1 Billion a Day l Bloomberg
  • Stronger hurricanes, hotter heat waves, more frequent wildfires and more severe public-health issues are all adding to the costs of climate change, which will reach almost $1 billion a day in the U.S. within a decade, according to a report released Wednesday. Total costs to address the impact of rising temperatures will swell 50 percent by 2027, to $360 billion annually, according to the study from the Universal Ecological Fund. That equates to about 55 percent of expected economic growth in the U.S.
  • Coming two years after the Paris Agreement, the initial public offering (IPO) of Saudi Aramco will be strongly shaped by climate change. Most analysts believe that Crown Prince Muhammad bin Salman’s US $2 trillion estimate of Aramco’s value was unrealistic, reckoning instead on somewhere in the range $1 to 1.5 trillion. But there has been a gap in commentary, on how moves to decarbonise the energy system will affect the IPO’s valuation. The report discussed in this article found that, compared to a base-case estimate of around $1.5 trillion, the value of Aramco could be between 25% to 40% lower in the IEA’s safer-climate scenarios (which correspond to the absolute minimum ambition within the range of the Paris goals); and if oil prices stay at $50 in real terms, Aramco’s value could be reduced to less than $700 billion, 55% below the base case.The IPO is thus a real test of whether investors are thinking seriously about climate change.
Commentary: Investing in Oil for Now, the Next Year and the Next Decade l Pensions & Investments
  • Although focusing on ESG-conscious oil businesses is beneficial for now, the secular decline in demand that is likely to stem from the wave of changes in policy and in public perception means investors need to look more broadly at their oil allocation. The cultural shift away from carbon-intensive energy production is already underway, with approximately 40% of Denmark's energy supply now coming from renewable sources. In this context, the decline in demand over the next two decades could be substantial. With the lead time on some projects extending across several decades, it is prudent for investors to look at the duration of businesses' projects alongside their sustainability. By investing in businesses with a shorter duration portfolio of projects, investors can benefit from the drivers now supporting the oil industry, without exposing themselves to businesses leveraged for an uncertain future.
  • $52 billion is invested in global environmental conservation annually, but research shows at least six times that sum is necessary to preserve the world's ecosystems. The Forest Resilience Bond could help meet this challenge. In their inaugural report, "Fighting Fire with Finance: A Roadmap for Collective Action," the FRB team details how conservation finance can be applied not just to forest restoration, but to other environmental contexts across the globe. With fire seasons getting longer and more severe, relying on public funds to maintain forest health is increasingly unsustainable. Instead, collaborative approaches like the FRB represent an alternate path forward that redefines how conservation is funded. It may be too late for the 2017 fire season, but there is still hope for the tens of millions of acres in need.
Nine Countries Agree to Reduce Deforestation by 80 Percent l Netral English
  • Members of the Governors' Climate and Forest Task Force (GCF) have agreed to reduce deforestation by 80 percent by 2020 which had been declared in the Rio Branco Declaration and signed at the 2014 GCF Annual Meeting. A quarter of the world's tropical forests are represented by GCF members consisting of 35 provinces in nine countries. To achieve the target, international funding and financing mechanisms are required to maximize investment quality.
General Endowment News
 
10 Universities With the Biggest Endowments l U.S. News
  • Among the 10 colleges with the largest endowments at the end of fiscal year 2016, the average endowment was $16.6 billion – this represents a drop of around $300 million compared with the prior year. The median U.S. college endowment among ranked institutions at the end of fiscal year 2016 was $56.7 million. All of the colleges with the largest endowments are National Universities, schools that emphasize research and offer not only bachelor's degrees but also master's and doctoral degrees. Below is a list of the 10 universities with the largest endowments at the end of fiscal year 2016. Endowments were examined by campus, not across public university systems. Unranked schools, which did not meet certain criteria required by U.S. News to be numerically ranked, were not considered for this report.
  • University of Missouri System's $1.5 billion endowment pool returned a net 13.7% in the fiscal year ended June 30, said Thomas Richards, treasurer and chief investment officer of the Columbia-based university system, in an e-mail. The return exceeded the policy benchmark of 10.9%. The best-performing asset class was global equity, which returned a net 21.5% in the fiscal year ended June 30, exceeding its 18.1% benchmark, followed by private equity, at 15.6%, above its 12.5% benchmark.
University of Houston Foundation Chalks up 16.06% Return l Pensions & Investments
  • University of Houston Foundation returned a net 16.06% on its approximately $129 million endowment for the year ended June 30, topping its 10.87% benchmark, said a performance report provided by Erik P. Littlejohn, senior vice president, wealth management, at Merrill Lynch, Pierce, Fenner & Smith, investment consultant to the foundation. By asset class, domestic equities returned 21.01% (vs. its 17.9% benchmark); global balanced (unconstrained domestic and foreign stocks, bonds, gold or gold-related securities and cash/cash equivalents), 13.4% (10.87%); global long/short equity hedge funds, 12.88% (3.66%); and total return fixed income, 9.61% (-0.13%).
Penn's 14.3% Return Was Boosted by 'Notable' Stock Performance l Bloomberg
  • The University of Pennsylvania’s endowment posted a 14.3 percent investment return for the 12 months through June, with equities fueling gains just like at other large college funds. The value of the endowment rose 14 percent to $12.2 billion. The fund’s growth of $1.5 billion includes investment returns and new gifts, the Ivy League school in Philadelphia said Thursday in a statement.
Caltech Gains 17.8%, Among Highest Endowment Returns l Bloomberg
  • California Institute of Technology’s endowment gained 17.8 percent in the year through June, placing it among the top performing college funds. The returns helped boost the value of Caltech’s fund to $2.6 billion as of June 30, according to a person with knowledge of the matter, who asked not to be identified because the information isn’t public. Only Grinnell College has posted a better return so far, at 18.8 percent, among at least two dozen of the largest college funds that began reporting, according to data compiled by Bloomberg. Grinnell’s endowment had a preliminary value of $1.8 billion at June 30. Harvard University has the lowest gain at 8.1 percent.
 
 
Fossil Fuel Divestment
 
Divestment From Fossil Fuels has not Caused Syracuse University’s Endowment to Suffer, Official Says l The Daily Orange
  • More than two years after Syracuse University announced it would divest from fossil fuel companies, the university’s chief financial officer said there is no evidence the endowment has suffered as a result of divestment. Amir Rahnamay-Azar, SU’s senior vice president and chief financial officer, said in an email that SU’s $1.25 billion endowment has increased investment performance by 12 percent in fiscal year 2017. The endowment is a pool of money collected from donors that is invested in the stock market. The funds are then used for scholarships and academic programs on campus. The university’s growing endowment, in the wake of its headline-grabbing decision to divest from fossil fuels, may be a signal to other schools that divestment is a viable option, experts said.
Friendship and Divestment at Amherst College l The Amherst Student
  • In this opinion piece, an Amherst College student discusses the College's Direct Action Coordinating Committee's campaign pressing for divestment from fossil fuels and private prisons, and how it relates to one of the three pillars of community life at Amherst: friendship.

 

 

 

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Weekly News Round-Up: September 22nd, 2017

Upcoming Events
  • Five Fund Forum | Big Path Capital, September 26-28, 2017, Park City, UT (on 9/26); San Francisco, CA (on 9/27); and New York, NY (on 9/28) 
  • Pitzer College and investment firm BlackRock, Inc. announced this week the first ever global equity index fund that is both ESG-focused and fossil fuel-free. The fund is designed to help endowments, foundations and other nonprofit organizations meet their Responsible Investment goals. This August, Pitzer College became the founding investor in the MSCI ACWI ex-Fossil Fuels ESG Focus Index Fund B. This new fund uses a disciplined, quantitative approach to incorporate ESG factors in its portfolio construction while maintaining zero exposure to fossil fuel companies. The fund was developed with assistance from leading index provider MSCI and investment consulting firm Mercer.
  • The SUNY New Paltz Foundation board has voted overwhelmingly to remove endowment funds from direct investment in fossil fuel companies. “This divestment from fossil fuels is the right thing to do,” college President Donald Christian said Thursday. “Climate change resulting from the use of fossil fuels presents issues of significant concern to all, including the faculty, students, staff, alumni and supporters of SUNY New Paltz. This important action by the foundation points toward a future that recognizes the college’s sustainability goals while balancing its fiscal responsibility to donors.”
New Report
 
New Report Highlights Leading Corporate Practices For Sustainability-Competent Boards l Ceres
  • A new report released last week by Ceres argues that corporate boards must keep sustainability impacts at the forefront of the decision-making process in order to meet their fiduciary responsibilities to the corporations. The report, titled, “Lead From the Top: Building Sustainability Competence on Corporate Boards,” notes that boards have a legal responsibility to act when environmental and social issues pose material risks on business models and financial performance. Factoring in material risks in decision-making is key for corporations to achieve strong long-term financial performance goals and increase their competitive advantage.
 
 
Sustainable, Responsible, Impact and ESG Investing
 
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how a watershed decision is due Friday in a U.S. federal trade case that threatens to double the price of solar panels; Renewable costs are plunging as technology advances; and internal controls could boost confidence in sustainability reports.
  • In a white paper released this week UBS' Chief Investment Office (CIO) argues firms should adopt a 'business with impact' strategy that uses enhanced sustainability standards to win round younger investors, customers, and stakeholders while also driving better financial returns. The report's executive summary sets out the basic premise. "Today the idea of business sustainability is evolving, as firms are increasingly empowered to adopt an approach that embeds simultaneous financial and social return generation as core objectives of their operations," it reads. "In this new 'business with impact' approach, firms regard social and environmental factors as opportunities to deliver commercial returns while proactively generating positive outcomes for society."
  • A growing number of academic studies have come out in support of incorporating ESG factors into investment processes. Many of these studies have concluded that integrating ESG factors at worst has no financial impact and at best can improve long-term risk-adjusted returns. In turn, investing in ESG strategies increasingly is being adopted by investors even in the face of an ever-expanding universe of available investing styles and themes. These investors have rationally come to appreciate the expected benefits of proactively identifying companies and management teams that are forward-thinking, focused on long-term trends, better at identifying and mitigating a broad spectrum of risks, and committed to best practices in governance and corporate culture.
Investors Turn Up Heat on Gender Balance l Institutional Investor
  • Asset managers are widening efforts on gender diversity by toughening up on voting and embracing new engagement approaches, including voting down boards that are all male.
ESG Roundup: Is There a Right Time for Corporate Disclosure? l Investments & Pensions Europe
  • The timing of a company’s disclosure of ESG information can make a difference to how that information is valued by professional investors, according to a new academic paper. The researchers concluded that corporate social responsibility (CSR) information “is not always treated entirely rationally by capital market participants”. Alexander Bassen, professor of capital markets and management at the University of Hamburg, Germany, was one of the authors of the paper. He told IPE the researchers chose the term CSR rather than ESG to address the corporate perspective. In academic literature, CSR is often understood as representing the perspective of corporates, while ESG represents the investor.
World Benchmarking Alliance Launches to Shine Spotlight on ESG Issues l Business Green
  • League table of major companies will give smaller investors more clarity over firms' social and environmental performance, says sponsor Aviva  A project to create a league table of the world's largest companies, ranked according to their social and environmental performance, will launch later today in New York as part of a major push to bring ESG issues to the investment mainstream. Sponsored by Aviva, the World Benchmarking Alliance will rank companies valued at $1bn or more on their ESG standards in the hope it will prompt investors to consider the wider impact of capital flow.
  • The sustainability reporting journey may take years as companies need time for the transition and to adopt sustainability reporting. The ultimate goal is for companies to view the sustainability agenda not just as a necessity, but an opportunity to stand out among peers and carve out an additional competitive edge by effectively bridging sustainability leadership and business results.
Going Sustainable: Six SRI ETFs to Consider l Investment Week
  • iShares and UBS are the only ETF providers to offer an extensive range of socially responsible ETFs. But we believe this will change as the demand for this type of product continues to grow. This article takes a look at six ETFs in which you may consider investing to make your portfolio more socially responsible.
  • The Church Pension Fund (CPF), a financial services organization that serves the Episcopal Church, has released a video highlighting an investment to provide affordable housing and community services to an underserved community. One of CPF’s many socially responsible investments, this investment supported the redevelopment of Northpointe Apartments, a multifamily affordable housing apartment complex located in Long Beach, CA. CPF served as an anchor investor in this investment, which was made with Avanath Capital Management, LLC, a minority-owned investment firm.
Investment Manager News
 
  • Barclays has launched an impact investing fund in order to meet 'growing demand' from clients for social and environmentally-conscious investments. The Barclays Multi-Impact Growth fund offers investors the opportunity to generate long-term capital growth while making a positive contribution to society. It is targeted towards investors who want to consider the societal effect of investments without compromising on their returns.  The UCITS fund of funds will be a liquid portfolio, diversified across equities and bonds as well as geographies. Funds for the portfolio are selected based on their potential for returns and consideration of their impact around social and environmental issues.
U.K. Firm Impax to Buy Pax World Management l Barron's
  • Pax World Management announced Monday that it agreed to be acquired by U.K. firm Impax Asset Management Group for about $52.5 million. In addition, Impax agreed to additional contingent payments of up to $37.5 million in 2021 based on Pax funds' performance. If approved by Pax World Funds trustees and shareholders, the combined entity would manage approximately $13.4 billion.

Climate Risk, Science, and Regulation
 
We Are Still In Website Launch l We Are Still In
  • We Are Still In is the broadest cross-section of the U.S. economy ever assembled in pursuit of climate action. Over 2,300 leaders strong and growing, We Are Still In shows the world that leaders from across America’s state houses, city halls, board rooms, and college campuses stand by the Paris Agreement and are committed to meeting its goals.
How Institutional Investors are Responding to Climate Change l MSCI
  • How are institutional investors tackling climate-change risk in their portfolios? Thanks partly to global initiatives such as the Montreal Pledge1 and the Portfolio Decarbonization Coalition,2 both launched in 2014, many institutional investors have moved quickly to understand the long-term portfolio implications of climate change and to adopt climate-risk management techniques. How have these commitments been reflected in their practices. In MSCI's recent consultation with global institutional investors, we found that the state of the art has advanced very rapidly.3 While carbon footprinting (basically, measuring and disclosing exposures to carbon risk) across asset classes was a priority for most institutional investors we consulted, we also observed a growing demand for integration of climate transition risk in portfolios.
 
General Higher Education Sustainability and Endowment News
 
UWinnipeg Launches New Institutional Sustainability Strategy l News Centre
  • The University of Winnipeg has made significant strides in reducing its environmental impact over the last decade. This week, the University launched a new Sustainability Strategy that builds on these successes and provides concrete, measurable targets for greenhouse gas emission (GHG) reduction, community building, academic programming, knowledge mobilization, and overall environmental impact.
Could Endowments Do Better With an All-ETF Portfolio? l Barron's
  • According to this article, small- and mid-size endowments and foundations that don't have economies of scale and access to star managers should consider moving to an all-ETF portfolio.
Yale Announces Collaboration With World Business Council for Sustainable Development to Improve Corporate Reporting l EurekAlert
  • Recognizing the critical role that private capital flows will play in moving society toward a more sustainable future, Yale University has launched the Yale Initiative on Sustainable Finance (YISF). This new academic effort will provide high-quality research on the flow of capital into sustainability-oriented projects and sustainable companies. As a starting point, YISF is working with the World Business Council for Sustainable Development (WBCSD) to help clarify the concept of ESG materiality for companies. YISF will bring together Yale's research expertise and WBCSD's convening power in their common efforts to improve the relevance of sustainability information in corporate reporting.
Brown Investment Advising Committee Seeks New Undergraduate Member l Brow Daily Herald
  • The Brown Undergraduate Council of Students announced an open position for the Advisory Committee on Corporate Responsibility in Investment Policies in an email to undergraduate students Sept. 12. The vacant position is for undergraduates, but the committee as a whole comprises faculty, staff, graduates, undergraduates and alums, said UCS President Chelse-Amoy Steele ’18. The committee is searching for “someone who is interested in contributing to the Brown community. They don’t need to have any specific technical knowledge of investing or of any specific social issue, but it helps if they’re a person who feels passionate about social good,” said Katie Silberman, interim chair of the committee.
 
 
Fossil Fuel Divestment
 
  • Fossil Free Universities, which is run by environmental organization 350.org and university divestment groups, released a report this week highlighting ties between Australian universities and the fossil fuel industry as part of its revitalized campaign. It is the first report released as part of the #ExposeTheTies campaign — new messaging that focuses on links forged between universities and the fossil fuel industry through research funding, and the relationship between members of university boards and companies with significant business in fossil fuels.
Pressure Mounts on Church of England to Divest from Exxon l Independent Catholic News
  • Christian campaigners are calling on the Church of England to disinvest from US oil giant ExxonMobil, on the basis of new evidence that the company intentionally misled the public on climate change. This week, supporters of Operation Noah and Christian Climate Action held a vigil outside Church House in London, the home of Church of England investors, to pray that they would cut financial ties with Exxon. A recent peer-reviewed study published by Harvard academics shows that ExxonMobil knew about climate change in the 1970s, yet its public communications intentionally cast doubt over whether climate change was real and caused by human activity. ExxonMobil is currently under investigation by the Attorneys General of New York and Massachusetts, as well as the FBI, over whether the company misled the public about the risks of climate change.
  • A group charged with considering the social impact of Johns Hopkins University's investments has made four specific recommendations, including that the university divest immediately from certain holdings in 200 publicly traded coal, oil, and gas companies—known collectively as the Carbon Underground 200—and take steps to reduce other such holdings over time. The full 41-page report issued by the Public Interest Investment Advisory Committee, or PIIAC—which comes in response to a December 2015 proposal from the student group Refuel Our Future asking the university to divest from fossil fuel companies—was published online last week.
  • After a busy past year, Mountain Justice is rebranding. They’ve joined Sunrise, a national “movement to stop climate change and create millions of jobs in the process,” according to their website. “Last year I remember hearing about Mountain Justice just about every week,” said Matt Palmer ’18, who has not been part of environmental groups at Swarthmore. From a campus-wide panel about divestment to a sit-in in President Smith’s office, the climate justice organization was incredibly visible last year. This year, they’re trying something different, but they hope their impact on campus will be even greater.

 

 

 

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Weekly News Round-Up: September 15th, 2017

Upcoming Events
 
Webinar: Factory farming in Asia: assessing investment risks | FAIRR Initiative, Weds. September 20, 2017, 10:00am eastern 
  • The FAIRR Initiative and Asia Research and Engagement (ARE) present a webinar on investment risk in the Asian livestock industry highlighting results from their recent report Speakers: Maria Lettini, FAIRR Initiative; Peter van der Werf, ROBECO; Ben McCarron, Asia Research and Engagement 
CEO Investor Forum l CECP’s Strategic Investor Initiative (SII), September 19, 2017, New York, NY
 
AASHE Conference and Expo: Stronger in Solidarity l AASHE, October 15-18, 2017, San Antonio, TX

The SRI Conference November 1-3, 2017, San Diego, CA

2018 Higher Education Climate Leadership Summit l Second Nature & The Intentional Endowments Network, February 4-6, 2018, Phoenix, AZ


Resources & Reports
Investors as Stewards of the Commons? | George Serafeim, Harvard Business School Accounting & Management Unit Working Paper
  • Serafeim provides a framework outlining the role of investors as stewards of the commons. While companies are increasingly addressing environmental and social issues that also improve their economic value, for some of these issues individual company action is costly. At the same time, for a further subset of those issues, company action coupled with collaboration between companies is value enhancing.  He suggests that a small set of large institutional investors, importantly, but not exclusively, index and quasi-index investors, could provide this commitment mechanism.
The Climate Change Mitigation Opportunities Index | Morgan Stanley & The Economist 
  • Morgan Stanley’s Institute for Sustainable Investing, with The Economist Intelligence Unit, offers a report and analytical tool, to help investors explore technologies that mitigate climate change. Five sectors, responsible for 90% of all greenhouse gas emissions, are analyzed across 20 countries.
 
 
SRI / ESG Investing at Endowments 

Barnard Endowment Switches Manager to Help It Avoid Climate Deniers | Bloomberg 

  • Barnard College is replacing its money manager, Investure LLC, with another firm that will help the $286 million endowment divest from fossil fuel companies that thwart efforts to address the impact of climate change. Strategic Investment Group, based in Arlington, Virginia, will become the fund’s manager at the end of September, Barnard said Wednesday in a statement. Investure, run by Alice Handy in Charlottesville, Virginia, had overseen the school’s investment office since 2006. Barnard is at least the third client to depart Investure in the past three years. In March, Barnard’s board of trustees voted to divest from energy companies that deny climate change, saying the women’s college, which is affiliated with Columbia University in New York, will “distinguish between companies based on their behavior and willingness to transition to a cleaner economy.”
Sustainable, Responsible, Impact & ESG Investing
Sustainable Finance | Bloomberg Briefs 
  • Lithium jumps on China's electric vehicle plan; Soda taxes gain popularity; UBS backs more climate proposals
  • Complex problems require fast, innovative and practical solutions. This is especially true in the sustainability field, where issues such as climate change, water scarcity, and social inequality require urgent action from individuals and organizations across the global economy... Concepts, tools and frameworks are built with the best intentions, but when the time comes for implementation and use in decision-making, they struggle to get buy-in or build momentum. How can we overcome this? Systems Thinking. 
ESG assets top $164 billion in Q2 | Pensions & Investments 
  • Assets invested in ESG strategies topped $164 billion as of June 30; the average fund size was $562 million and there were about 290 active funds. While assets have grown nearly 20% since the end of 2015, and 60% since the end of 2012, the number of available funds has decreased from 2015's peak of 324, and has since hovered around 300 total funds.
  • Apple, Verizon, Delta, Unilever and Chevron are examples. Companies addressing environmental issues will attract more and better talent. Studies have proven that being sustainable actually saves company costs and boosts their bottom line.
Why are some of the world’s largest meat processors investing in lab-grown meat? | Beef Central
  • Meat processing giants say recent decisions to pour funds into small start-ups developing lab-grown meat, or plant-based alternatives to conventionally farmed meat, is a response to growing consumer demand for sustainably-produced food.
The ethical investment boom | Financial Times 
  • Investors are finding that if they are good to the planet and to people, they also end up, on average, benefiting themselves. There is mounting evidence that funds which observe ESG standards in their strategies tend to outperform those that don’t by a significant margin. “It is time for ESG investing to become mainstream,” says Isabelle Mateos y Lago, global macro investment strategist at BlackRock, which manages $5.7tn in equities, fixed income, real estate and other assets worldwide. “
Interview with Michael Baldinger, Head of Sustainable and Impact Investing at UBS Asset Management | Climate Action 
  • Climate change is first and foremost an existential threat, not simply a financial or a business risk. Ever since the Paris agreement, investors started to realize that climate change presents a key investment risk. Investors are now setting explicit targets for reducing their carbon footprint of their entire portfolios, and looking at ways to measure the impact of their investments. But they want to be smart about this, and capture the upside of investing in companies that are leading their industries in adjusting to these changes. 
Board Interest in Sustainability Reporting Doubles, Survey Finds | CFO 
  • The portion of public company board members who believe that sustainability disclosures are important to inform investors has more than doubled, according to a new survey. Out of 130 board members surveyed in August by the accounting firm BDO USA, 54% say that disclosures regarding sustainability “are important to understanding a company’s business and helping investors make informed investment and voting decisions,” according to the survey. Last year, just 24% of directors felt that way.
China, India Best Bets for Green Investors, Morgan Stanley Says | Bloomberg Technology 
  • Emerging markets including China and India could be the best bets for investors hoping to fight climate change and boost returns, according to a report Thursday. If the planet heats up by 5 degrees Celsius (9 degrees Fahrenheit), well above the 2-degree threshold set by the Paris Accord, investors may face $7 trillion in global losses. But that could be mitigated by investments aimed at reducing and removing carbon from the atmosphere, according to the report by Morgan Stanley’s Institute for Sustainable Investing and The Economist Intelligence Unit.
The Brief | Impact Alpha 
  • Mirova formally launches $300 million Land Degradation Neutrality Fund; Accelerator Group announces fund for women entrepreneurs in India; ImpactUs marketplace expands impact investment offerings
  • UBS Group AG increased its backing of shareholder climate resolutions this year, according to Christopher Greenwald, head of sustainable investing research at UBS Asset Management. UBS, which has more than $1 trillion of its $3.7 trillion in assets under management in sustainable and responsible strategies, made the firm-wide change after a collaboration with a client. The Swiss firm joins other asset managers, including State Street, Blackrock and Vanguard, that are stepping up their focus on climate change in discussions with companies.
  • With an increased level of interest in BlackRock's engagement work, they have developed priorities with the aim of providing more information to clients, companies and others on issues their team will be focusing on and how they will engage companies on these governance topics, including corporate strategy, executive pay, climate risk disclosure, and human capital
Big (Passive) Voices on Gender Diversity and Climate Risk | MorningStar
  • The rise of passive investing would seem to pose a problem for stewardship--the actions that asset managers take as shareholders to improve the companies they own through direct engagement and proxy voting on management and shareholder proposals. As their passive assets under management have grown and they have become the largest shareholders of most large companies, however, the Big Three of passive investing-- BlackRock (BLK), State Street Global Advisors, and Vanguard--have become more rather than less engaged in stewardship activities.
Climate Risk, Science & Regulation
 
The Guardian view on climate change: see you in court | The Guardian
  • "Fossil-fuel companies should be held accountable for the effects of climate change. Legal warfare has a two-fold aim: to overhaul transgressors’ business models so that they are in line with the global commitment to phase out fossil fuels and limit temperature rises to 1.5°C; and to get them to pay for damages resulting from global warming. Climate litigation is the inevitable result of a failure of two decades of talks. But it is also an important way of reframing the climate crisis as a human rights emergency." 
Coastal Cities Are Increasingly Vulnerable, and So Is the Economy that Relies on Them | Harvard Business Review 
  • Gregory Unruh writes on "stranded asset" risk beyond fossil fuel reserves: "There was a time a decade or two ago when society could have made a choice to write off our massive investment in a fossil fuel-based economy and begin a policy driven shift towards a cleaner renewable infrastructure that could have forestalled the worst effects of climate change. But the challenges of collective action, a lack of political courage, and the power of incumbent pecuniary interests to capture the levers of power meant we did not. The bill is now coming due." 
Hurrichange is here: Denial in the time of accelerating climate change | Environmental Century
  • Former president of Unity College, and climate scientist Stephen Mulkey writes from his home in Florida as hurricane Irma approaches about the scientific and political implications of climate impacts.

  • Jagdeep Bachher has turned around the state university system’s $110 billion fund by ruthlessly cutting fat.Since being hired to lead the University of California Regents’ $110 billion pension and endowment in 2014, he’s fired almost half of the outside money managers formerly on his payroll as he’s sought to cut fat and concentrate market bets.“I truly believe that less is more,” Bachher says. “Let’s do a few things and do them well.”
Virginia Endowment Chief Kochard to Step Down from $7.6 Billion Fund | Bloomberg Markets
  • Lawrence Kochard, chief executive officer of the University of Virginia’s investment-management arm, will step down from the $8.6 billion endowment by year-end, according to the school. UVA is in the process of hiring a firm to find his replacement.
Colorado, Texas Lead Public University Funds in Investment Gains | Bloomberg Markets
  • Flagship public universities in Colorado and Texas are leading the way in posting double-digit investment gains as U.S. schools begin reporting performance for fiscal 2017. The University of Colorado’s $1.2 billion endowment gained 15 percent in the 12 months through June 30, while the University of Texas’s $28.8 billion fund was up 13.4 percent, according to the schools.
University of Michigan Invests $100 Million With Litigation Fund | Bloomberg Markets
  • The University of Michigan’s endowment plans to increase investments in private credit, litigation funds and real estate. The endowment will commit $100 million to the Siguler Guff Brazil Special Situations Fund, which invests in legal claims against Brazilian government entities, according to a board of regents agenda posted Monday. The school committed $50 million to another commercial litigation fund in February.
Dartmouth College endowment reaches all-time high, returns 14.6 percent this past fiscal year | The Dartmouth 
  • The College's endowment reached an all-time high value of $4.96 billion for the fiscal year 2017, which ended on June 30. Generating returns of 14.6 percent, the endowment grew by $77 million via gifts and net transfers and $630 million through net investment gains.
  • The San Francisco Employee Retirement System is facing mounting pressure to unload its roughly $470 million worth of investments in the fossil fuel industry, which would make it the first major pension fund in the nation to do so. On Tuesday, the Board of Supervisors is expected to pass a resolution urging SFERS officials to consider selling all fossil fuel investments. It’s the second time since 2013 that city lawmakers have asked the governing board of San Francisco’s $23 billion employee pension plan to reconsider the fossil fuel companies.

Private Prison Divestment 
Cities Are Divesting From Private Prisons, but Not Nashville | Nashville Scene
  • In a game of carrots and sticks, divestment is one of the few cudgels that cities, universities and other large institutions hold over corporate interests with which they might claim moral disagreements. Activists in recent years have urged universities and other institutions to rid their pension funds and endowments of investments in certain industries, including fossil fuels and, more recently, private prisons. Late last month, city leaders in Cincinnati kicked off a push to divest from private prisons. They took their inspiration from New York City, whose pension-fund leaders decided earlier this summer to sell off nearly $50 million in private-prison investments.  
New York City shows how easy divesting from private prisons can be | MuckRock 
  • In June, New York City made headlines as the first major US city to fully divest from for-profit prison investments. The full move - from conception to consideration and through completion of sales of existing shares - took less than a year. And, as seen in emails recently released by the NYC Office of the Comptroller, the turnaround from when the Office issued their divestiture directive went out on Friday, May 19, 2017 …Many of the firms tasked with handling the City’s investments and pension fund had responded to the direction the same day; all had cleared the affected assets within a week.

 

 

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Weekly News Round-Up: September 8th, 2017

Sustainable, Responsible, Impact & ESG Investing

Bloomberg Briefs l Sustainable Finance

  • This week's Bloomberg Brief highlights how evidence is mounting that green bonds can outperform conventional ones; Reinsurers are bearing the brunt of hurricane season; and Reginald Stanley, CEO of ImpactUs Marketplace, discusses breaking down barriers in impact investing.
Expanding Our Outreach to Increase Mission-Aligned Investing Dollars l Rockefeller Brothers Fund
  • The Rockefeller Brothers Fund is proud to join other institutions re-imagining ways of better deploying their investment assets, not only to create financial returns but also to generate measurable social impact. The Fund has been an active partner with several like-minded organizations, supporting the advancement of mission aligned investing, including Confluence Philanthropy, The ImPact, and Divest-Invest Philanthropy. We are pleased now to further our outreach by joining the newly expanded U.S. Impact Investing Alliance, as well as to partner with Mission Investors Exchange as a member of its inaugural class of sustaining members. RBF President Stephen Heintz and Vice President for Finance and Operations Geraldine Watson are participants on the Alliance’s Presidents’ Council on Impact Investing, which comprises the CEOs and senior staff of 20 of the largest U.S. foundations with a combined $60 billion in endowed assets which are deeply committed to practicing and promoting impact investing.
ESG ETFs: Too Young…Too Small…Too Expensive? l Barron's
  • Sustainable investing remains on the rise in the ETF universe. In a report out today, Morningstar’s John Hale noted that the number of diversified equity offerings that use environmental, social, and corporate governance issues when making investment decisions has jumped from 20 to 30 over the past year. As of July, assets under management totaled more than $3 billion. But Hale notes that sustainable investing ETFs do face several challenges that could give investors pause, outlined in this article.
The Rise of Responsible Investment: How It Can Be Incorporated Into Mainstream Finance l The Market Mogul
  • As responsible investing becomes a more widespread investment practice, it may continue to face criticism from skeptics. In response to this, proponents must work harder to show that an ESG-integrated approach is a financially competitive strategy and that the pursuit of both financial and social impact are not at odds with one another. Furthermore, they must continue to work towards propagating standards that allow for a company’s ESG impact to be assessed with greater clarity and cohesion. These objectives are very achievable, and there is good reason to believe that the momentum behind responsible investing shall only continue to grow.
ESG is Incomplete: An Investor's Perspective l GreenBiz
  • ESG research and ratings continue to gain momentum among mainstream asset owners and managers. The big investment research and index providers, such as Morningstar and S&P, have taken stakes in ESG companies or acquired them outright. More investors, both individual and institutional, demand that their investments achieve both financial and ethical returns. To cater to this increasing demand, managers are touting the fact that ESG and other sustainability criteria are, at the very least, considered in the investment process. But solely relying on ESG data and ratings is incomplete. Investors that have used ESG long before it became a buzzword in the investment industry know that ESG analysis is a complement to — not a substitute for — fundamental analysis. ESG is a discipline rooted in the fact that making an investment decision is about more than analyzing numbers; it is about understanding how non-financial factors hinder or help company performance.
Investing for the Long Run: ESG and Performance Drivers l MSCI
  • We see a growing number of institutional investors seeking to avoid financial risks associated with environmental, social and governance (ESG) factors, or even to enhance returns by investing in companies that have strong ESG track records. As we wrote in an earlier blog post, these investors are typically looking to limit the number of companies excluded from their portfolios, both to avoid sacrificing diversification and to be active owners able to engage with corporate management. The challenge raises several questions. How can a rules-based index represent the performance of a strategy with these goals? And how does construction of such an index affect its performance? Which is more important in driving performance — excluding companies with low ESG scores or picking those with strong ESG characteristics? Using the MSCI ACWI ESG Universal Index as an illustration, we find that it was possible to strike a balance between maintaining a large, diversified universe of companies with strong ESG characteristics while excluding only those companies that allegedly are the worst corporate wrongdoers.
US SIF Foundation Releases Enhanced "Fundamentals of Sustainable and Impact Investment" Online Training Course l Digital Journal
  • The US SIF Foundation's Center for Sustainable Investment Education has launched an updated version of its online course, the Fundamentals of Sustainable and Impact Investment. This course provides financial advisors and other financial professionals with a unique blend of instruction and scenario learning that explains how to talk about sustainable, responsible and impact investing (SRI) with clients, incorporate SRI into investment portfolios and understand the latest trends and research. Now through the end of September, the course will be offered at a promotional rate of $100 for US SIF members and $150 for non-members by following the prompts at www.ussif.org/courses.
Vanguard CEO to Co-Chair New High-Level Investor-Corporate Initiative (subscription) l Responsible Investor
  • Vanguard Chairman and Chief Executive Bill McNabb has joined the board of the CEO Force for Good (CECP), the US corporate sustainability project. McNabb, whose company has $4.5trn in assets and which has been upping its game in terms of climate change and governance recently, will also serve as co-chair of the organization’s new Strategic Investor Initiative (SII). The CECP – which was founded in 1999 by Hollywood legend Paul Newman — is in the process of appointing McNabb’s co-chair to help lead SII. CECP is a CEO-led coalition that “believes that a company’s social strategy – how it engages with key stakeholders including employees, communities, investors, and customers – determines company success”.
UBS to Launch Sustainable Investing Indexes l Barron's
  • UBS soon plans to push further into sustainable investing with a series of indexes that can be used to create ETFs and other investment products for retail investors, annuities and retirement funds. The indexes will include a global sustainability index and indexes aligned with the UN’s Sustainable Development Goals, like eliminating hunger. The global bank, which has more than $1 trillion in assets invested in sustainable strategies — a third of global assets under management — plans to amplify the impact of the indexes by channeling a yet-to-be-determined percentage of revenues that they generate to the Optimus Foundation, UBS’s philanthropy arm, according to Michael Nelskyla, head of investor solutions Americas, UBS Investment Bank.
 
 
General Higher Education Sustainability & Investment News
 
  • In recent decades, businesses have come to wield more power than ever before—the income of many multinational corporations now exceeds that of several countries. According to the Governance and Accountability Research Institute, 81 percent of Fortune 500 companies published a corporate sustainability report in 2015 (up from 20 percent in 2011). These reports track company progress on environmental performance—such as energy, water usage, and greenhouse gas emissions—and social performance—including workforce and supply chain working conditions, and workforce diversity. As business management styles have evolved, so too, naturally, has business management education. Pioneered by Harvard University in 1908, the Masters in Business Administration (MBA) degree is designed to prepare graduates for senior business management roles. But now, focused MBA offerings are teaching students how to take into consideration multiple stakeholders. Such programs, often referred to as “Green MBAs” or “Sustainable MBAs,”  address the triple bottom line of sustainability in their curriculum. This article profiles a few leading MBA programs and how their graduates are making a difference and making a living.
Rice University to Vote on Investor Responsibility Committee l The Rice Thresher
  • Rice University currently has no mechanism for leveraging its endowment's investment to influence corporate policy, but the Student Association will vote at its Tuesday meeting on a resolution calling to change that. The resolution expresses SA support for the creation of a Committee on Investor Responsibility, through which Rice would vote on shareholder resolutions for the companies it invests in. The Rice Management Company, which could not be reached for comment at the time of publication, decides where to invest the endowment, which provides for about 40 percent of the university’s operating cost. But they have neither the time nor the resources to monitor shareholder votes and decide how to act on them, according to Taylor Morin, author of the CIR bill and Brown College senator.

Climate Risk, Science & Regulation
 
'Our Responsibility for the Long Game': An Excerpt from ‘The Clean Money Revolution’ l Sustainable Brands
  • In this Joel Solomon excerpt, he discusses how we need a financial plan for achieving a safe world in the next thirty years. This period will be crucial as social and ecological externalities come home to roost. We need a rapid reinvention of capitalism, finance, and wealth management. We need to rethink power and purpose. Otherwise, this revolutionary moment where “the 20 percent could consciously shift trillions of dollars” will be replaced with “global meltdown, all bets are off, retreat to your bunkers, hope the military can protect you.”
  • This week, The Vanguard Group, the Nation’s second largest fund group with over $4 trillion in assets under management, issued three publications — a press release, an open letter by Vanguard’s CEO, and its 2017 Investment Stewardship Annual Report  — highlighting Vanguard’s evolving view that responsible disclosure and management of climate risk is an essential governance responsibility for corporate boards and managements to drive long-term shareholder value.  With these announcements Vanguard has joined the Nation’s first and third largest funds groups, BlackRock and State Street, that previously announced policies demanding greater boardroom attention to climate risks.
  • President Trump on Saturday said he would nominate U.S. Representative James Bridenstine to become administrator of the National Aeronautics and Space Administration. NASA is an important agency for academic science, both for the research it sponsors and for the data and information collected by NASA missions, about space as well as the Earth. The nomination is already setting off a controversy because it breaks with a tradition (in Democratic and Republican administrations) of nominating NASA administrators who have extensive experience in the agency, advanced degrees in science or both. (See biographies of recent NASA leaders here, here, here and here.) Bridenstine's status as a politician and not a scientist is already attracting bipartisan criticism.
 
 
Fossil Fuel Divestment

  • The transition from a fossil fuel-based energy mix to one that is renewable is not going to happen overnight, said the head of DBS Bank’s sustainability council this week. The bank’s exposure to oil and gas projects amounts to US$17 billion.
Fossil Free Penn Ready for Another Semester Facing off Against the University on Divestment l The Daily Pennsylvanian
  • After various protests and a highly publicized sit-in last semester, Fossil Free Penn is gearing up for another year of advocating for environmental justice at Penn.Last semester, the group continued with its three-year effort to urge Penn to divest from fossil fuels, but saw little success. The group staged a multi-day sit-in at College Hall in March, which ended with roughly 130 students amassing on the final day of the protest.Sixty-nine students signed a form stating that they had stayed at the venue after the building had closed and approximately 13 of them were cited by the Office of Student Conduct.

 

 

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Weekly News Round-Up: September 1st, 2017

New Members

Upcoming Events

2017 Bay Area Intentionally Designed Endowment Roundtable l Intentional Endowments Network and the Center for Responsible Business at Berkeley-Haas, September 8, 2017, Berkeley, CA 

PRI and Carbon Tracker Launch Events: 2 Degrees of Separation: Transition Risks for Oil & Gas in a Low-Carbon World l PRI

  • The Principles for Responsible Investment (PRI) invite investors for several launch events for a new research entitled: "2 degrees of separation: Transition risk for oil & gas in a low carbon world". The report is produced by the Carbon Tracker Initiative in partnership with Legal & General Investment Management, AP7, FRR, PGGM, PKA, and the Principles for Responsible Investment.
CEO Investor Forum l CECP’s Strategic Investor Initiative (SII), September 19, 2017, New York, NY
AASHE Conference and Expo: Stronger in Solidarity l AASHE, October 15-18, 2017, San Antonio, TX

The SRI Conference l November 1-3, 2017, San Diego, CA

2018 Higher Education Climate Leadership Summit l Second Nature & The Intentional Endowments Network, February 4-6, 2018, Phoenix, AZ
 
Sustainable, Responsible, Impact and ESG Investing
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how Japan is starting to play catch-up on green bonds; Swell Investing sees value in sustainability; and Index funds may give CEOs a raise.
The Sustainable Exchange-Traded Universe Continues to Expand l Morningstar
  • The universe of sustainable diversified ETFs is relatively new, small, and expensive when compared with conventional diversified equity ETFs. You can adjust for short performance records by examining the longer records of the indexes upon which a fund is based. If you are considering a small fund, take a look at the issuer and how well it is established in the ETF and sustainable investing spaces. Investing with better-situated issuers increases the odds that the fund will grow to scale and remain open. 
  • The boom in exchange-traded funds is leaving so-called sustainable investing behind. There are just 48 exchange-traded funds that invest based on environmental, social and governance factors, which are collectively known as ESG, according to data from research firm Morningstar. Those funds hold a total of $5.7 billion in assets - roughly a third of the $15.4 billion invested in the Parnassus Core Equity fund, the largest actively-managed, ESG-focused mutual fund. The relatively small total of assets invested in sustainable ETFs comes at a time when ETFs overall are rapidly expanding. Investors pulled $264.5 billion out of U.S. actively-managed equity mutual funds in 2016, while pumping a record $282 billion into exchange-traded funds, according to data from Morningstar and FactSet.
ESG: Sustainable Finance to the Rescue? l Investments and Pensions Europe
  • Last September, the European Commission announced it would establish a High Level Expert Group (HLEG) to advise it on developing a comprehensive EU strategy on sustainable finance. The group was established in December 2016 and comprises 20 members of the public, the finance sector and academia. It released an interim report in July, with a well-attended public hearing held shortly after in Brussels. The Commission welcomed the HLEG’s work. At the public hearing on the interim report, vice-president Jyrik Katainen, a former Finnish prime minister, described it as a “powerful and clear manifesto for change”. The European Commission has already started working on some measures the HLEG mentioned in its report, but it should decide on the concrete follow-up to the HLEG recommendations by the end of next year.
Shareholder Engagement
 
Vanguard Defies Companies to Back Climate Change Resolutions l Financial Times
  • Vanguard has broken with its past by throwing its weight behind shareholder resolutions on climate change and gender diversity as the world’s second-largest asset manager attempts to strengthen its corporate governance record. In a change of tack, Vanguard has for the first time supported two climate-related shareholder resolutions that were opposed by company management. This year, it voted against climate-risk disclosures by ExxonMobil and Occidental after judging that reports by the two US energy companies were not up to the standards now required by investors.
 
 
Investment Manager News
 
  • On August 8 Brown Advisory announced the launch of the Brown Advisory Sustainable Bond Fund.  The Fund invests in corporate, municipal, mortgage-backed and asset-backed fixed income securities that are primarily issued as “Green Bonds” or that otherwise meet the Fund’s ESG criteria.  The Fund is managed by Tom Graff and is supported by Amy Hauter, Brown Advisory's Fixed Income ESG research analyst.  Brown Advisory would welcome any questions or comments from the IEN network – please feel free to contact John Davis or Brigid Peterson for further information.
T. Rowe Price Adds Responsible Investing Director to Strengthen ESG Efforts l Pensions & Investments
  • Maria Elena Drew was named director of research, responsible investing at T. Rowe Price, said a spokeswoman for the firm. The position is new, and Ms. Drew started Aug. 14. The role deepens the firm's research on environmental, social and governance considerations. Ms. Drew partners with Donna Anderson, head of corporate governance, and works closely with the firm's investment teams to develop and integrate an ESG framework across geographies and asset classes.
 
 
General Higher Education & Endowment News
 
Wellesley Endowment Nabs MassPRIM's Deputy CIO l Institutional Investor
  • Sarah Samuels is leaving Massachusetts' $67 billion public pension fund after a decorated six-year tenure. 
Why Yale Owns a Forest l Bloomberg
  • For at least two decades, Yale and its celebrated endowment manager, David Swensen, have led a land rush by the richest colleges. Funds snapped up forests as a way to hedge against inflation and the risks of stocks and bonds, and to take advantage of endowments’ unusual ability to make investments that might not be easy to sell quickly. (Unlike most investors, big college endowments have “a time horizon measured in centuries,” Swensen once wrote.) It paid off handsomely until recently, when returns slumped and exposed more of the downsides of investments that literally grow.
A Merger Between Boston University and Wheelock College Brews in Boston l Inside Higher Ed
  • Boston University and Wheelock College have started formal discussions about merging, they announced Tuesday, a step coming after Wheelock evaluated its future this summer in the face of financial and enrollment pressures. The two institutions’ campuses sit about a mile apart. But a combination would would mean Wheelock merging into BU, not a merger of equals. Wheelock is a small private college that enrolled 726 undergraduates and 327 graduate students last fall and reported an endowment of $53.9 million in 2015. Boston University is a large private research university that enrolled almost 18,000 undergraduates and 14,751 graduate students last fall and had a $1.65 billion endowment in 2016.
 
 
Climate Risk, Science & Regulation
 
Grantham: Climate Change Offers Upside for Investors l Barron's
  • As climate change has become increasingly problematic for the world, the investment community is starting to pay attention to the investment risks it poses. In this paper, however, we focus on the exciting opportunities in companies involved in combating climate change (i.e., the climate change sector), either through climate change mitigation or helping the world adapt to climate change. Though there are risks to investing in the climate change sector, the risks this article worries about are the same risks investors face in other sectors: getting caught up in hype and stories, paying the wrong price, and investing in industries with poor competitive dynamics.
Three California Climate Lawsuits Target Fossil Fuel Industry Responsibility l CIEL
  • This week, three California municipalities – San Mateo County, Marin County, and Imperial Beach – filed complaints against thirty-seven fossil fuel companies, seeking damages for the impacts of climate change. The plaintiffs argue that sea level rise has already done damage and cost money to study and prepare for. These costs will only grow as the rising oceans threaten coastlines, sewer systems, and transportation systems. These suits allege that (1) fossil fuel companies knew about climate change for decades, and (2) actively sought to slow progress on regulation and change that would mitigate and combat its effects by sowing doubt about climate change among the public, and (3) profited immensely from doing so. The suits make claims under several theories of liability – including public nuisance, private nuisance, failure to warn, defective design, negligence, and trespass.
Northeast Strengthens Carbon Goals as Federal Rules Fade l Scientific American
  • Nine Northeastern states delivered a boost to U.S. climate efforts this week. The Regional Greenhouse Gas Initiative (RGGI) announced a proposal to cut power plant emissions 30 percent between 2021 and 2030. The plan puts the regional cap-and-trade program's members on pace to greatly exceed the emissions targets prescribed under former President Obama's carbon-cutting strategy, the Clean Power Plan. It also comes amid a rollback of climate initiatives under President Trump and a flurry of state pledges to comply with goals of the Paris climate accord.
Harvey is Already the Worst Rainstorm in U.S. History, and It’s Still Raining l Grist
  • Since Hurricane Harvey made landfall in Texas late Friday night, more than 40 inches of rain have fallen on parts of the Houston metro area, burying much of the city under water. With rainfall topping 50 inches in spots, Harvey now ranks the worst rainstorm in U.S. history. While Harvey’s rains appear unique in U.S. history, heavy rainstorms are increasing in frequency and intensity worldwide — a clear sign of climate change. A warmer atmosphere can speed evaporation rates and hold more moisture, and Harvey’s flood comes via a firehose of intense thunderstorms spawned off a warmer-than-usual Gulf of Mexico. 

The  Energy 202: Harvey Sparks New Debate over Hurricanes and Climate Change l Washinton Post

  • With at least nine dead and thousands displaced by floodwaters, the full extent of the damage wrought by --Hurricane Harvey --  the biggest storm to hit the U.S. mainland in more than a decade -- is just beginning to be tallied. Nothing quite like Harvey has hit the United States before. The National Weather Service said Harvey is "unprecedented & all impacts are unknown & beyond anything experienced.” The administrator of the Federal Emergency Management Agency said it is probably the worst disaster in Texas history. This article aims to answer the question: "Does climate change make storms like Harvey more likely?"
Connecting on Climate Change Research l Inside Higher Ed
  • Indiana University’s new “grand challenge” takes a practical approach by seeking to connect university research on environmental change to the lives and work of people across the conservative state. The ambitious environmental change project is the university’s second multidisciplinary research investment to tackle a “grand challenge,” following an ongoing attempt to better treat and prevent human diseases. Over all, the university plans to spend $300 million on its grand challenges.
 
Clean Energy
 
The Leaf Is the World’s Best-Selling Electric Car. Now, Nissan Needs to Catch Up With Tesla l Bloomberg
  • Nissan’s Leaf, which sent a jolt through the market with its 100-mile range, has been losing ground to longer-range rivals, especially Tesla. Nissan fights back with a souped-up Leaf on Sept. 6.
  • Almost one year ago, on September 12th, 2016, the UNF Student Government Senate voted in support of a joint resolution, “Declaring Support for the Mission of DivestUNF for Climate Justice. As has been the case at most universities that have been confronted by the Divest movement, the UNF administration has resisted DivestUNF demands. But it is important to recognize that the movement to divest from fossil fuel corporations is a long-term process and struggle. No single vote or resolution will produce immediate results. It will require the building of a broad-based social movement. The momentum in support of these actions will, and must, be fueled by students, faculty, and alumni. But it is equally vital for the movement to confront and contest the various arguments that are used as an excuse for inaction on divestment.

 

 

 

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Weekly News Round-Up: August 25th, 2017

New Members
 

Upcoming Events

2017 Bay Area Intentionally Designed Endowment Roundtable l Intentional Endowments Network and the Center for Responsible Business at Berkeley-Haas, September 8, 2017, Berkeley, CA 

PRI and Carbon Tracker Launch Events: 2 Degrees of Separation: Transition Risks for Oil & Gas in a Low-Carbon World l PRI

  • The Principles for Responsible Investment (PRI) invite investors for several launch events for a new research entitled: "2 degrees of separation: Transition risk for oil & gas in a low carbon world". The report is produced by the Carbon Tracker Initiative in partnership with Legal & General Investment Management, AP7, FRR, PGGM, PKA, and the Principles for Responsible Investment.
CEO Investor Forum l CECP’s Strategic Investor Initiative (SII), September 19, 2017, New York, NY
AASHE Conference and Expo: Stronger in Solidarity l AASHE, October 15-18, 2017, San Antonio, TX

The SRI Conference l November 1-3, 2017, San Diego, CA

2018 Higher Education Climate Leadership Summit l Second Nature & The Intentional Endowments Network, February 4-6, 2018, Phoenix, AZ
Sustainable, Responsible, Impact & ESG Investing
Bloomberg Briefs l Sustainable Finance
  • This week's Bloomberg Brief highlights how investors are taking their battle against dual-class listings to Hong Kong, saying that the corporate structure often favored by founder-led companies weakens governance and risks shareholder voting rights around the world; State Street adds $2.6 trillion muscle to climate disclosure; The world's largest green bond fund dedicated to emerging markets targets $2 billion by year end; and nine U.S. states plan to bolster their target for cutting carbon-dioxide emissions.
  • Most companies don’t specifically target ESG investors, according to new research. Despite the growing pile of assets invested with ESG criteria in mind, few IR teams are actively targeting ESG-focused funds, according to a forthcoming research report from IR Magazine. The report, based on a survey of more than 350 IR professionals, finds that globally just over a fifth (21 percent) of respondents say they target ESG investors. European IROs are twice as likely as North American ones to say they target this group of investors, although it is Asia-Pacific respondents who appear the most active.
Six of the Best Socially Responsible ETFs l IG
  • If you are looking to invest in the stock market but also want to make a positive impact on environmental and social issues, then socially responsible investing may be for you. In the seventh installment of IG's ‘Six of the best’ series, we take a look at ETFs that facilitate socially responsible investing.
Companies, Investors Report on SDG Contributions l IISD SDG Knowledge Hub
  • Companies in Japan, Kenya and the US have showcased their efforts to align their business goals with the SDGs and integrate the SDGs into their strategies and plans. Other private sector initiatives focus on sustainable infrastructure, inclusive business models, and identification of impact investor characteristics.
How Short Term Investing is Damaging Returns and Society l Morningstar
  • In this Q&A, Former Investment Association chief and FCA consultant Daniel Godfrey discusses why he believes short-termism is damaging returns and how he is launching a fund to prove it.
Let's Give Credit To ESG l Seeking Alpha
  • Investors instinctively understand how weak corporate governance can be linked to poor financial performance. Whether it is wasting shareholder capital on expensive acquisitions, a board that is insufficiently independent to challenge a CEO's failing strategy or an audit committee that lacks the expertise to ensure the accounts are a full and fair representation of the financial health of the company, the ways in which governance failures can damage the bottom line are many and various.
Why Investors Are Still Missing the Mark on ESG Integration l Triple Pundit
  • The notion that ESG analysis is a complement to – not a substitute for – fundamental security analysis is nothing new. However, ESG has now become a buzzword and a checkbox across much of the investment industry. More investment products and managers are touting the fact that ESG and other sustainability criteria are considered in the investment process to attract the growing pool of investors interested in making an impact. ESG analysis should not be easy. It is a discipline rooted in the fact that making an investment decision is about more than analyzing numbers – it is about understanding how nonfinancial factors hinder or complement company performance. But today, the vast majority of ESG’s application comes in the form of applying quantitative ratings and rankings to screen out prospective investments that do not meet predetermined criteria.
There’s Nothing Special About Socially Responsible Investing l Deal Breaker
  • A recently published study, Do ‘Good Guys’ Finish Last? The Relationship between Morningstar Sustainability Ratings and Mutual Fund Performance, from Eli Lilly financial analyst Anna Krukover, Steven Dolvin of Butler University and Jon Fulkerson of the University of Dayton, concludes there is no penalty for investing using a socially responsible lens. Using sustainability metrics Morningstar began providing in 2016, the team grouped mutual funds by ESG rating and tracked performance over four years. As it turns out, socially responsible funds are basically indistinguishable, return-wise – as others have previously found, albeit with less standardized data-sets than Morningstar’s.
Marginalized Returns: Who is Impact Investing For? l Stanford Social Innovation Review
  • Impact investing appears to have been seduced by a convenient narrative. According to the prevailing view, the achievement of both social impact and market-rate financial returns is the norm—not the exception. Impact investing was originally created to improve the lives of others; that impact investing could also deliver financial returns to investors was a means to that end. But nowadays, achieving predefined financial returns has become the primary goal, with the needs of investors taking priority over the interests of the communities their funding seeks to benefit. This trend has fueled a growing mismatch between the supply of impact investment and the demand for funding from enterprises working to improve conditions for marginalized communities.
Green Bonds
 
Five Reasons to Invest in Green Bonds l Funds Europe
  • Green bonds are emerging rapidly as a new category within fixed income. The market has grown over the past few years and keeps on broadening in terms of countries, currencies, sectors and seniority/ranking. Bram Bosm, green bonds portfolio manager at NN Investment Parnters, gives five reasons why green bonds matter.
 
Investment Manager News
 
  • Global Evolution partnered with the University of Vermont Sustainable Innovation MBA program to offer a unique learning experience for students pursuing a career in the growing field of sustainable business and impact investing. The leading emerging and frontier markets investment manager hosted two students in a practicum project to gain hands on experience with investing in emerging and frontier markets. The students, Mike Rama and Ted Carrick, worked closely with Ole Jørgensen, Global Evolution’s Research Director, at headquarters in Denmark. Together, they developed recommendations to enhance Global Evolution’s ESG model and offering in North America, where the company is currently expanding.
Socially Responsible Investing Just Got Easier l Barron's
  • A relative newcomer, Swell Investing, opened its doors to the public in May with a focus on the United Nations’ sustainable development goals. Swell offers six different portfolios that focus on areas like renewable energy, green technology, disease eradication, clean water, zero waste, and healthy living. What makes the Newport Beach, Calif.–based firm, which was incubated by Pacific Life Insurance, different from other investment services is that each portfolio is made up of individual stocks that have passed their strict criteria—not exchange-traded funds or mutual funds.
General Higher Education Endowment and Sustainability News
 
Endowment Funds to Return Record Payouts for Schools and Other State Entities l Idaho Business Review
  • The eight endowment funds for the public school system and other beneficiaries will see a record payout of $78.2 million after July 2018, a state endowment official said. The endowment funds are overseen by  the state Endowment Fund Investment Board, which is governed by the State Board of Land Commissioners, known as the Land Board. The payment is a 6.4 percent increase over this year’s distribution, due to an overall 12.9 percent return on the fund’s investments. Within the fund, equities, which make up two-thirds of the portfolio, saw a return of 19 percent, said Larry Johnson, the EFIB manager of investments.
Michigan State Endowment Gains 15.4% l Chief Investment Officer
  • The $2.66 billion Michigan State Endowment reported annual gains of 15.4% for the fiscal year ended June 30. The university’s common investment fund also reported annualized trailing three-, five-, and 10-year earnings of 4.5%, 8.4%, and 5.0%, respectively. The annual earnings also beat out its 12.7% benchmark. “Our performance was driven by strong returns in our hedge fund portfolio, and active management was a significant contributor in our global equities portfolio,” Philip Zecher, the fund’s chief investment officer, told Bloomberg News. “We are still concerned that active management’s performance in the long-only, large-cap space is ephemeral.”
Lewis & Clark College Tops Oregon, Ranked Among the Nation's Green Elite l Portland Business Journal
  • Lewis & Clark is back on top as the greenest school in Oregon. The Portland college landed the No. 5 spot nationally in the Sierra Club'sannual “Cool Schools” survey — a position it held in 2014 — outdistancing the next best Oregon four-year college or university, No. 20 Oregon State. College of the Atlantic in Maine topped the rankings, followed by Green Mountain College in Vermont, Sterling College in Vermont and the State University of New York College of Environmental Science and Forestry.

Climate Risk, Science & Policy
 
Some Democrats See Tax Overhaul as a Path to Taxing Carbon l The New York Times
  • With a sweeping overhaul of the tax code on the horizon, two Senate Democrats believe this is the moment to broach the third rail of climate change policy: a carbon tax. The plan by the senators, Sheldon Whitehouse of Rhode Island and Brian Schatz of Hawaii, to level a $49 per metric ton fee on greenhouse gas emissions is widely acknowledged as a long shot. But the lawmakers, along with climate activists and a cadre of conservative supporters, insist the tax reform is a way to create bipartisan support.
Analysis: Do We Really Need a price on Carbon to Tackle Stranded Assets l (Subscription) l Responsible Investor
  • Ten years on from the financial crisis, it only seems appropriate to discuss another market failure of similar proportions. In August 2007 few could have foreseen how Wall Street banks would manage to move the goalposts of capitalism on a universal scale. It was then that BNP Paribas opened Pandora’s box, informing the market about the freezing of three funds exposed to US subprime-related securities due to “the complete evaporation of liquidity”. Now, when the clock is ticking to meet the Paris Agreement’s 2° goals, another market failure is brewing: carbon pricing, or perhaps lack thereof. As Ailman put it to that very same audience: “First give me a price on carbon, and then I’ll start worrying about stranded assets. . . I either need global regulatory action or some price. I don’t need a specific price but some price on carbon emissions, otherwise people will continue to burn, to pump up those assets."
Vanguard Seeks Corporate Disclosure on Risks From Climate Change l Reuters
  • Vanguard Group on Monday said it has urged companies to disclose how climate change could affect their business and asset valuations, reflecting how the environment has become a priority for the investment industry. Under pressure from investors, Vanguard and other fund companies have pushed to pass several high-profile shareholder resolutions on climate risk at big energy firms like Exxon Mobil Corp and Occidental Petroleum Corp during the spring proxy season. Vanguard manages about $4 trillion and is often the top shareholder in big U.S. corporations through its massive index funds - giving it a major voice in setting corporate agendas.
What Exxon Mobil Didn’t Say About Climate Change l New York Times
  • This week, the NYT published the results of their peer-reviewed analysis in the journal Environmental Research Letters. To their knowledge, this is the first academic, empirical analysis of Exxon Mobil’s 40-year history of climate change communications. (The research was funded by Harvard University Faculty Development Funds and by the Rockefeller Family Fund, which also helped finance the reporting by Inside Climate News and the Columbia University Graduate School of Journalism, which published its examination of Exxon Mobil with The Los Angeles Times.) Their findings are clear: Exxon Mobil misled the public about the state of climate science and its implications. Available documents show a systematic, quantifiable discrepancy between what Exxon Mobil’s scientists and executives discussed about climate change in private and in academic circles, and what it presented to the general public.
Exxon Duped Public Over Climate Concerns, Harvard Research Says l Bloomberg
  • Exxon Mobil Corp. spent the last 40 years undermining public concern over climate change, even as its own scientists determined man-made global warming was real and a serious threat, according to Harvard University researchers writing in a peer-reviewed journal. “Exxon Mobil contributed to advancing climate science -- by way of its scientists’ academic publications -- but promoted doubt about it in advertorials,” the Harvard researchers wrote in the journal Environmental Research Letters. “Given this discrepancy, we conclude that Exxon Mobil misled the public.” The findings could add fuel to lawsuits brought against the world’s largest oil explorer by market value.
  • Brazilian regulators are planning to strengthen rules to prevent exporters such as Petrobras and Vale SA from selling aging ships to buyers who offload the vessels in South Asia’s controversial coastal scrapyards.  Earlier this month, authorities decided to develop a legal framework to ensure former Brazilian ships don’t end up with recyclers notorious for using dirty and dangerous methods, federal environmental watchdog Ibama said by email. Brazilian companies could face fines of as much as 10 million reais ($3.2 million) if Ibama finds they violate international standards by letting their vessels end up in substandard shipbreaking facilities in India, Pakistan and Bangladesh.
Clean Energy
 
Banks Put up Almost €1bn For 252MW German Offshore Wind Farm (Subscription) l Responsible Investor
  • Ten international banks have put up just under €1bn for an offshore German wind farm operated by Canada’s Northland Power. Toronto-listed Northland, which has former Canadian Prime Minister and Finance Minister John Turner on its board, said the 252MW Deutsche Bucht project in the North Sea has reached financial close. It comes after it finalized the acquisition of the project from Highland Group. Around 75% of the project’s costs will be provided from a €988m non-recourse construction and term loan and related loan facilities from 10 international commercial lenders, it said – adding the financing was “oversubscribed”.
Infrastructure, Sustainable, And Renewable Energy - Are They Still Investments For The Future? l Seeking Alpha
  • In this article, an investor outlines key factors about what they see for the future of specific stocks and outline why investors need to perform their respective criteria for due diligence before investing in particular stocks.
Fossil Fuel Divestment
 
More in the Tank for Fossil Fuels? l The Edge Markets
  • Fund managers should not remove fossil fuel-based assets from their portfolios altogether. By doing so, they risk overlooking advances in technology and regulation that could re-energise these once overvalued assets, says Mellon Capital. According to managing director and head of equity portfolio management Karen Wong, managers risk losses if advances in carbon capture technology reach a tipping point that would allow us to “burn more fossil fuel without any accompanying rise in global temperatures”. These advances could help wring out any trapped value in otherwise “stranded” assets and, crucially, cause investors who had divested to miss out. Stranded assets are those that have become obsolete or non-performing due to some unanticipated or premature write-down, devaluation or conversion to a liability.
Washington Universty Alumni Support for Fossil Fuel Divestment (Opinion) l Student Life
  • Positive social change always comes from those outside the halls of power. In the history of social change on Washington University’s campus, progress has come from the determined efforts of students, campus workers and faculty. This opinion piece comes from alumni who all worked against fossil fuel interests at Wash. U., and who support the work of Fossil Free WashU to divest the endowment from fossil fuels.

 

 

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