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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Weekly News Round-Up: August 18th, 2017

New Members




Upcoming Events


New Report

Factory Farming in Asia: Assessing Investment Risks l Farm Animal Investment Risk & Return (FAIRR) Initiative

  • A popular investment thesis for Asia is that its rapidly industrialising animal protein companies are a smart play on rising middle-class incomes and the growing demand for meat. As this report shows, however, Asia’s meat, seafood and dairy industries face a range of badly managed sustainability risks – from emissions to epidemics, fraud to food safety, and misuse of antibiotics to misuse of labour – all of which have significant potential to derail returns. Find out how to manage these risks in FAIRR’s latest report.


Sustainable, Responsible, Impact & ESG Investing

Bloomberg Brief l Sustainable Finance


  • This week's Bloomberg Brief highlights how global companies are expected to purchase smaller amounts of clean energy this year, according to a Bloomberg New Energy Finance report; Vanguard Group plans to say more this month about how it votes on climate; Tesla skips the green bond label; JPMorgan Asset Management's Jamie Kramer sees growing ESG interest in the credit markets; and zombie directors are sticking around corporate board rooms.

Millennials are Investing With a Purpose, and It’s Changing Wealth Management l Visual Capitalist


  • This article explores the growth of the sustainable investment market and the role millennials are playing in its uptake.
The Race to Embrace ESG Ratings l Business Green
  • Major investment firms are snapping up ESG research and ratings companies at a rapid clip —  three hookups within just the past year. This article explores what this means, and if the SRI market has reached a tipping point.
  • This article discusses the first ever CECP forum bringing together CEOs and large investors, which took place on February 27, 2017 in New York. At that event, six pioneering corporate leaders presented their companies’ plans for long-term value creation to an audience of over 200 longterm investors representing over $20 trillion in assets under management.
Financial Advisors Have Positive Market Outlook; Are Focused on Future Volatility l PR Newswire
  • Advisor concerns about managing volatility, generating income, growing wealth and reducing taxes fell over the past quarter, according to the latest Eaton Vance Advisor Top-of-Mind Index (ATOMIX) survey, a quarterly survey of more than 1,000 financial advisors. Managing market volatility regained its position as the top focus for advisors despite falling to 110.5 on the index, well below its peak of 129.7 in Q3 2016.
Why Smart Money Seeks “Broad Diversification” l Divest Invest Guide
  • In our last blog post we showed that green investors who keep most or all of their capital in just the largest US sustainable companies may pay a high price due to lower diversification and missed opportunity. For example, one dollar invested in just large US companies (S&P 500 Index) in 1970 would have been worth $100 on New Year’s Eve 2016. A very nice return, which could have been much better. The same dollar would have been worth $400 if invested in the Global Diversified Equity Strategy Index. Combining diverse financial assets in a globally diversified portfolio can be less risky and achieve higher returns than putting all your investment eggs in one basket (e.g. large US companies only).
Shareholder Engagement
Walden Withdraws Vanguard Proxy Voting Shareholder Resolution l CorporateGovernance.net
  • In 2017, Walden filed resolutions with two Vanguard equity index funds that requested a review of their proxy voting at portfolio companies, particularly on shareholder resolutions focused on climate change. The Walden resolution prompted Vanguard and Walden to engage in a new round of discussion, culminating in a letter from Vanguard describing its updated approach to engaging companies and voting proxies of fund holdings. Vanguard stated its intention to expand reporting on company engagement priorities such as climate change, board diversity, and corporate governance. In light of ongoing conversations as well as changes in Vanguard’s voting approach, Walden withdrew the resolution that had included several individual co-filers.
Green Bonds
Tesla Skipping Green Bond Label Keeps Market Limited l Bloomberg
  • Investors are hungrier than ever for green bonds, yet companies known for their sustainable prowess -- including Tesla Inc. -- are choosing to sit out, raising questions about just how valuable the label is. U.S. non-financial companies have been among the slowest to embrace green bonds -- debt that’s designated to only finance eligible green projects -- issuing just $4.3 billion last year, a tiny fraction of an overall U.S. corporate bond market that sold $1.6 trillion. U.S. companies are expected to issue $5.2 billion in green bonds this year, meaning a green label for Tesla’s offeringlast week would have grown U.S. corporate issuance in 2017 by more than a third, according to Bloomberg New Energy Finance data.
Investment Manager News
  • As a value investor, GAMCO Co-Chief Investment Officer Chris Marangi puts more emphasis on the quality of a company's management and culture. And he sees a future for active management in a choppy or bear market.
Christian Super Provides Leverage to TriLinc for Global Impact Investments l Business Wire
  • Christian Super has selected TriLinc Global (“TriLinc”) and its TriLinc Global Impact Fund (“TGIF”) as part of its impact investing strategy after an in-depth due diligence process evaluating both investment performance and impact measurement.
Under the Hood of UniSuper’s New ESG Shares Option l Investment Magazine
  • Australian listed property companies Mirvac and GPT Group will sit alongside the likes of Tesla in UniSuper’s new Global Environmental Opportunities option. UniSuper, the $60 billion default fund for university staff, revealed last week that it had brought responsibility for managing its environmentally friendly international equities strategy in-house. The Global Environmental Opportunities option was previously run externally by an undisclosed passive manager.
General Higher Education and Endowment News
Hedge Funds Among Marketable Alternatives Gaining Popularity in Endowment, Foundation Portfolios l Chief Investment Officer
  • A survey from NEPC revealed 68% of respondents have more than 10% of their portfolios allocated to marketable alternatives, which includes hedge funds. This marks a notable increase from last year, when NEPC’s July 2016 survey found only 45% of respondents had at least 10% allocated to hedge funds. According to the Q2 2017 NEPC Endowment and Foundation poll, 65% of respondents plan to maintain portfolio exposure rather than increase (16%) or decrease (16%) it.
  • Rhode Island lawmakers voted to become the fourth state in the nation to offer free community college for state residents Thursday. Lawmakers passed the state budget proposal, which included $2.8 million to fund the free tuition program for one year. Graduating high school seniors who maintain a 2.5 GPA and go to school full-time will be eligible, regardless of income.
Yale, Stanford Led Endowments in Paring Asia Bets Last Quarter l Bloomberg
  • Some of the biggest U.S. college endowments withdrew almost $700 million of Asia-focused investments in the second quarter. Yale University executed the largest sale, according to data compiled by Bloomberg, pulling $345.2 million from the Vanguard FTSE Emerging Markets exchange-traded fund dominated by Chinese companies including Tencent Holdings Ltd. The fund returned 15 percent through the first half of the year and an additional 4.7 percent since.
UC Endowment Boosts Real Assets Allocation by 2% l Investment & Pensions Europe Real Estate
  • The University of California General Endowment Pool has increased its real assets target weighting by 2% and integrated real estate into the allocation. The move, revealed in a board meeting document, will give the $10.6bn (€9.06bn) investor an additional $213m to invest in real assets. The real estate portfolio was valued at $505m at the end of March this year and real assets portfolio – before including real estate – stood at $215m. The UC Endowment invests mostly in domestic real estate, although its investment policy allows an allocation to foreign property of up to 25%.
Penn State’s Endowment Posts 12.6% Fiscal-Year Return l Pensions & Investments
  • Pennsylvania State University's endowment returned a net 12.6% for its fiscal year ended June 30, said a report issued by the university. The University Park-based endowment currently has $2.62 billion in assets, up 11.5% from the year ended June 30, 2016, when the endowment reported a return of -0.8%. The endowment's three-year annualized return as of June 30 was 4.8%, while the five-year return was 8.6% and 10-year return, 5.6%.
Michigan State Endowment Charges to 15.4% Return, Surpasses Benchmark l Pensions & Investments
  • The $2.7 billion common investment fund of Michigan State University, East Lansing, produced a 15.4% preliminary return for the fiscal year ended June 30, well ahead of its 12.7% benchmark return. Annualized returns for longer time periods were three years, 4.5% (benchmark, 4.2%); five years, 8.4% (8.1%); and 10 years, 5% (4.3%), a performance report showed. June 30 returns exclude performance of most private investments in the endowment for the most recent quarter.
Virginia Tech Breaks Donation Record for Second Straight Year l The Roanoke Times
  • Virginia Tech received more than $162 million in donations and commitments in the last fiscal year. That figure tops a previous record set last year of $101.45 million. The raised money comes under the direction of the university’s chief fundraiser Charlie Phlegar, Tech’s vice president for advancement. “It was a good year,” Phlegar said in a telephone interview. “But it’s just the beginning.” Almost 35,000 donors, up from about 32,000 last year, gave money, including individuals, corporations and foundations. Phlegar said giving was up from grassroots donors, midrange donors and the wealthiest donors.
Climate Risk, Science & Regulation
America's Pledge on Climate l America's Pledge
  • Across America, states, cities, businesses, universities, and citizens are taking action to fight climate change, grow the economy, and protect public health. America’s Pledge brings together private and public sector leaders to ensure the United States remains a global leader in reducing emissions and delivers the country’s ambitious climate goals of the Paris Agreement.
  • Norway’s 7.75 trillion sovereign wealth fund has strong policies on sustainability and climate change but falls short on putting these into action, according to a critical report from think tank Re-Define. Produced by Sony Kapoor, managing director at Re-Define, with assistance from Linda Zeilina, special adviser at the think tank, the report argued that the oil fund needed “to learn from its peers and significantly enhance its approach to managing climate risk and investing sustainably, based on rigorous risk/return considerations”.
New Zealand Super Fund Says Sweeping High Carbon Divestment is in Line With Paris Agreement (Subscription) l Responsible Investor
  • The New Zealand Superannuation Fund has said its sweeping low carbon announcement today – involving the divestment of 297 companies worth NZ$950m (€588m) – is in accordance with the spirit of the Paris climate agreement. The Auckland-based investor said today that its NZ$14bn global passive equity portfolio, 40% of its overall assets, is now low-carbon.

Exxon Report on Climate Risks Raises Red Flags in Fraud Investigation l Climate Liability News

  • As part of a deal to get shareholders to withdraw a resolution seeking greater transparency on climate change risks, Exxon agreed in 2014 to provide investors a report on its climate risk calculations. Exxon did produce the report, Energy and Carbon—Managing the Risks, but several experts say it was deliberately deceptive. “The bottom line is that Exxon did not have a good answer to the question of whether its assets are at risk of being stranded,” said Bob Litterman, former head of risk management at Goldman Sachs and currently chairman of the risk committee at Kepos Capital.  “To bolster its argument that its reserves couldn’t possibly be stranded, Exxon foolishly decided to make a ridiculous claim — that moving to a low-carbon economy will be incredibly expensive, eventually taking up 44 percent of the median American family income,” he said, adding that the real figure is likely less than 5 percent. Because the 44 percent figure is so far from what scientists have reported, the report is likely raising red flags in the current investigation of Exxon.
Asian Megafarms’ Sustainability Risks Could ‘Derail Investor Returns’ l Investment & Pensions Europe
  • Sustainability risks at so-called megafarms in Asia are having a “catastrophic” impact on public health and the environment and pose “significant potential to derail returns”, according to a report backed by pension fund giant APG. The report from the $3trn (€2.6trn) investor network FAIRR and specialist consultancy ARE (Asia Research and Engagement) urged investors to treat the rise of intensive factory farming across Asia with extreme caution and warned them to keep a close eye on the long-term risks of food-related assets across the continent.
  • This paper performs a descriptive analysis of carbon pricing policy implementations in twelve regions (California, British Columbia and Quebec in Canada, Ireland, Norway and EU ETS, Mexico, Chile, Japan, India, South Korea, and China ETS Pilots) that have implemented an emissions trading scheme (ETS), a carbon tax or a hybrid of both. The paper synthesizes some key findings and knowledge gaps on what is working, what isn’t and why when it comes to implementing explicit carbon pricing policies. 
  • Building on a shared commitment to driving innovation and education in energy and climate solutions, MIT President L. Rafael Reif and Iberdrola Chairman and CEO Ignacio S. Galán met on MIT’s campus to renew and significantly expand the collaboration between the Institute and the global power company. The $10.3 million, five-year collaboration aims to advance technologies and policies that contribute to the energy transition and the fight against climate change, supporting numerous efforts through the MIT Energy Initiative (MITEI) and related MIT initiatives.  
China Halts Building of Coal Power Plants l Xinhua News
  • China is holding back on building new coal-fired power plants to avoid risks from overcapacity and promote a clean energy mix. A total of 150 million kw of new coal power generation capacity will see construction halted or postponed from 2016 to 2020, the 13th Five-Year Plan period, according to a statement released Monday by the National Development and Reform Commission (NDRC) and other government agencies.
World's Cleanest Companies Defy Trump to Outperform Fossil Fuel Investments l Business Green
  • Stock value of the Clean200 list, which ranks firms according to their clean energy revenues, overtook fossil fuel benchmark on inauguration day and finishes first year with a 16.9 per cent return.
Fossil Fuel Divestment
University Fossil Fuel Divestment Total Tips £80 Billion Globally l Times Higher Education
  • UK universities have emerged as world leaders on fossil fuel divestment as the total value of funds being withdrawn by higher education institutions globally tips £80 billion. Nine UK providers today announce that they will never invest in the fossil fuel industry, bringing to 54 the total number of campuses in the country that have taken action to exclude fossil fuel companies from their investment portfolios.




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Weekly News Round-Up: August 11th, 2017

Upcoming Events
Intentionally Designed Endowment Roundtable | Sept. 8th, 2017, Berkeley, CA 
  • Building on the success of previous events, the Intentional Endowments Network, in partnership with the Center for Responsible Business at Berkeley-Haas and BlackRock, is pleased to host an Intentionally Designed Endowment Roundtable for endowment decision-makers and stakeholders from institutions interested in enhancing their leadership on sustainable investing. The event will focus on low-carbon strategies and climate solutions.
The SRI Conference l November 1-3, 2017, San Diego, CA
  • The SRI Conference – on Sustainable, Responsible, Impact Investing serves thought leaders and investment professionals working in the ESG, Shareowner Engagement, and Impact Investing space. Together, we are catalyzing the shift to a more socially equitable and environmentally sustainable future. We deliver education and inspiration — in between legendary networking opportunities.
Higher Education Sustainable Investing News

Our Commitment to a Sustainable Future l Australian Catholic University
  • Australian Catholic University (ACU) demonstrated its commitment to a sustainable future on Tuesday 25 July by securing $200 million in investor funds earmarked for projects that deliver positive social and environmental outcomes. ACU raised the funds through the sale of Sustainability Bonds to some of Australasia’s biggest institutional investors. The ACU Sustainability Bonds are the first Sustainability Bonds issued in Australia. These Sustainability Bonds benefit from a second party opinion from Sustainalytics and financial assurance provided by KPMG.
  • UniSuper, the $60 billion fund for Australia's higher education and research sector, is appointing an active strategy for its once passively managed sustainable investment option. Under this important shift management of the Global Environmental Opportunities (GEO) investment option will be internalised and the MSCI ESG Research Sustainable Impact Metrics database adopted for portfolio construction.
Sustainable, Responsible, Impact & ESG Investing
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how development banks are bucking a general downward trend in clean energy investment, pumping billions into renewables and energy efficiency; Fannie Mae sells the first U.S. commercial mortgage-backed security wholly backed by green loans; Green bond assurance rises but at the expense of disclosure; BlackRock cuts fees on ESG ETFs; and JetBlue's Head of Sustainability Sophia Mendelsohn refocuses sustainability reporting for its investors.

Sustainability as a Source of Growth l Investor Daily

  • Long-term social, demographic, environmental and resource challenges are creating plenty of opportunities, writes Pengana Capital’s Adam Myers in this article – as well as growing risks for sectors that deplete human and natural capital.
ROI of Sustainability is More Complex Than You Think l National Real Estate Investor
  • Benchmarking a building’s energy outputs and developing a strategy to implement more sustainable practices will result in a more efficiently operated asset, which in turn yields improved ROI through higher rents, quicker absorption and lower vacancies, and lower overall operating costs. In addition, the incremental cost of implementing more energy-efficient building systems is often negligible when you consider the many available utility rebates and government incentives. But there’s more to it: the reality is that the value of energy efficiency and sustainability can prove to be greater, more lucrative or more complex than it appears on the surface. This article explores some of the “hidden” reasons why it pays to invest in energy optimization.
In ESG We Trust -- The Risk And Rewards Of ESG Investing l Forbes
  • Sustainability is basically about identifying well-managed companies that have a long term view,” continues Thorendal, “and where sustainability aspects are part of their business model even though it is not necessarily expressed as sustainability.” For an investor, the first step of identifying these well-managed companies is integrating ESG-factors in a financial analysis. An investor should also understand how the asset managers apply ESG factors in their own analysis. This article describes what investors should look for in an investment manager. 
Resolving ESG Conflicts: Important, But Not Material? l CFA Institute
  • Institutional investors take note: “Doing Well by Doing Good” is not just a sales pitch private wealth advisers use to court millennial clients. The global economy’s interconnected nature has turned every business decision, even the nonfinancial ones, into forces that can have far-reaching and unexpected effects on investment returns. Pension plans and other large, long-term investors are acting accordingly. One such institution is CalSTRS, which oversees a portfolio of about $208 billion. At the 62nd Annual Financial Analysts Seminar, CalSTRS CIO Christopher J. Ailman discussed the importance of integrating ESG considerations into the investment decision-making process. This article discusses his talk.

MSCI Reports Strong Growth in ESG Investing l Just Means

  • ESG investing is fast becoming a mainstream area within the investment industry. An increasing number of investors are now adopting the Principles for Responsible Investment (PRI), and choosing companies that score high on ESG performance. Investors inclined towards responsible investments operate on the belief that in the long run addressing ESG issues will preserve and boost their portfolio returns. In sync with this trend, MSCI says it is experiencing increasingly strong demand for a combination of ESG and factor indices. The company has reported a $2.7 million or 24.7 percent increase in second-quarter ESG revenues to $13.7 million in its Q2 earnings presentation.
Gender And ESG -- 'More Women' Means 'More Money' l Forbes
  • In this Q&A, Richard Gröttheim, Chief Executive Officer at AP Fonden 7, and Niklas Ekvall, CEO of AP4, discuss gender diversity, good governance and how institutional investor inquires in gender diversity positively affect ESG integration.
The $500 Million Blue Haven Initiative, Unplugged (Podcast) l Impact Aplpha
  • The Blue Haven Initiative was one of the earliest family offices to commit itself to 100% mission-aligned investing. At more than $500 million, it’s one of the biggest to make that commitment. And it’s one of the first to share its challenges publicly. In this edition of the Returns on Investment podcast, the principals, Liesel Pritzker Simmons and Ian Simmons, share their investment philosophies, their favorite investments, and the myths about impact investing that they’d list to bust.
Millennials are Driving a $9 Trillion Change in Investing l Business Insider
  • Millennials are driving the nearly $9 trillion sustainable investing market, according to a survey of 1,000 investors by Morgan Stanley's Institute for Sustainable Investing.  Despite recent strides in the space, the belief that sustainable investing solutions deliver weaker returns remains prevalent.
How Impact Investors Help Small Fishermen Stay Afloat l EcoSystem Marketplace
  • Impact investors have poured more than $8 billion into projects that support sustainable land management, and now more money is also finding its way into sustainable fishing. This month, a new partnership providing equity to sustainable small-scale fishing-related enterprises in Philippines and Indonesia, has made its first investment in a Filipino fishing processing and exporting group.
Green Bonds
Green Bonds Gain Momentum l benzinga
  • With so many investors applying ESG principles to equity investments, it was only a matter of time before the bond universe got in on the act. A new fixed income exchange-traded fund, the VanEck Vectors Green Bond ETF allows bond investors to emphasize ESG virtues in the bond market. The VanEck Vectors Green Bond ETF debuted in March and could serve to illuminate investors to the potential of green bonds, a still small but rapidly growing part of the bond market. GRNB, the first ETF in the U.S. dedicated to green bonds, follows the S&P Green Bond Select Index.

Investment Manager News
Brown Advisory Launches Sustainable Bond Fund l CISION
  • Brown Advisory, an independent investment management and strategic advisory firm, announced this week the launch of the Brown Advisory Sustainable Bond Fund, which seeks to deliver attractive risk-adjusted returns over time by incorporating rigorous environmental, social and governance (ESG) research. 
Fee Cuts Make Their Way to ESG ETFs l Investopedia
  • Issuers of ETFs are not shy about cutting fees on their products in an effort to attract more assets from investors. No corner of the ETF universe is off limits when it comes to sponsors trimming fees, and that sentiment is being confirmed once again as BlackRock, Inc.'s iShares unit announced expense ratio reductions on several of its ETFs aimed at ESG investing principles. BlackRock's iShares unit, the world's largest ETF sponsor, has eight ETFs aimed at sustainable investing themes, several of which are dedicated ESG funds.
The Rohatyn Group to Acquire Grantham, Mayo, Van Otterloo & Co. Renewable Resources l Business Wire
  • The Rohatyn Group (“TRG”), a specialized asset management firm focused on emerging markets, global investment management firm Grantham, Mayo, Van Otterloo & Co. LLC (“GMO”), and GMO Renewable Resources, LLC (“GMORR”), a joint venture between GMO and the GMORR principals that invests in forestry and agriculture opportunities, today announced that they have entered into a definitive agreement whereby TRG will acquire the GMORR business from GMO and the GMORR principals. Under the agreement, the team from GMORR is expected to move, intact, to TRG. GMO, which currently owns 51% of the GMORR joint venture, with the GMORR principals owning 49%, will retain its investments in funds managed by GMORR.
TruValue Labs™ Launches ESG Momentum™ Score in Suite of New ESG Metrics l CISION
  • TruValue Labs today announced the ESG Momentum score, the first ESG indicator that leverages artificial intelligence, big data and the SASB materiality framework. The score reveals the direction, or trend, of ESG performance based on daily data. ESG Momentum was built to serve investment professionals who know that today's company valuations depend on performance in the areas of ESG.
General Higher Education Endowment & Sustainability News
University of California Endowment Revamps Asset Allocation in Turn to More Private Assets l Pensions & Investments
  • The $10.6 billion University of California endowment is embarking on a major asset allocation restructure that will cut the amount invested in equities by a third and put a new emphasis on private market investments, adding more dollars into private equity, absolute-return strategies, and real assets. The new asset allocation for the Oakland-based endowment cuts equities to 30% from 45% of the endowment, shows a webcast of the UC Regents investment subcommittee on July 11. Private equity increases to 22.5% from 11.2% and absolute-return strategies increase to 25% from 18%.
Oxford University Endowment Returns 16.4% in 2016 l Pensions & Investments
  • Oxford Endowment Fund, Oxford, England, returned 16.4% over the year ended Dec. 31, bolstering assets by 23.3% to £2.34 billion ($2.9 billion). The latest annual report, published by Oxford University Endowment Management, an Oxford University subsidiary and manager of the assets, said the fund had returned an annualized 11% over the three years ended Dec. 31 and an annualized 11.8% return over the five-year period. It returned 7.6% in 2015.
  • Sustainability professionals from around the world will gather at Yale University this September 12-15 for four days of thought-provoking lectures and interactive discussions at the Yale Sustainability Leadership Forum. The Forum’s small class size fosters an environment of idea sharing and gives participants and speakers an opportunity to interact one-on-one. Speakers are distinguished thought leaders and innovators drawn from Yale's renowned Law School, School of Management, and School of Forestry & Environmental Studies, as well as leading practitioners in government and industry.
First Colombian Institution and Two Additional Canadian Institutions Designated as Changemaker Campuses l AshokaU
  • Ashoka U announced this week that three additional institutions of higher education have joined its network of Changemaker Campuses, expanding the network’s global presence to over 40 institutions across eight countries. The new Changemaker Campuses are Colegio de Estudios Superiores de Administración (CESA), a private business school in Bogotá, Colombia; Mount Royal University, a public institution in Calgary, Canada; and Simon Fraser University, a public research institution in Vancouver, Canada.
Photons for the Future: Solar Panels Providing a Bright Future for Eastern Kentucky University Students l The Richmond Register
  • The Photons for the Future scholarship program for students pursuing a degrees in scientific fields has one of the college's (and galaxy's) biggest donors — the sun. In order to fund the $1,000 scholarships, the university will be using the monetary savings generated by the recent installation of 25 solar panels on campus. According to Patrick McKee, EKU's sustainability manager, the system which was installed last week near the newly completed second phase of the university's science building is predicted to generate approximately 10,300 kWh of energy per year.
College Presidents Endorse Carbon Pricing to Fight Climate Change l philly.com
  • Leaders of 125 cities, nine states, 902 businesses and investors, and 183 colleges and universities recently signed an open letter committing to concrete emissions reductions that align with the Paris agreement goals. These institutional commitments to reducing emissions are crucial, but to be effective, they must be part of a more comprehensive strategy that works toward systemic change. Putting a price on carbon has the potential to create meaningful policy and behavioral changes nationwide. More than 30 college and university presidents — the Leadership Circle — have announced public support for the “Put a Price on It” campaign, an initiative that advocates for carbon pricing as a fair, achievable, and powerful policy response to climate change.
Climate Risk, Science & Regulation
Scientists Fear Trump Will Dismiss Blunt Climate Report l The New York Times
  • The average temperature in the United States has risen rapidly and drastically since 1980, and recent decades have been the warmest of the past 1,500 years, according to a sweeping federal climate change report awaiting approval by the Trump administration. The draft report by scientists from 13 federal agencies concludes that Americans are feeling the effects of climate change right now. It directly contradicts claims by President Trump and members of his cabinet who say that the human contribution to climate change is uncertain, and that the ability to predict the effects is limited. “Evidence for a changing climate abounds, from the top of the atmosphere to the depths of the oceans,” a draft of the report states. 
  • Fossil fuels have two major problems that paint a dim picture for their future energy dominance. These problems are inter-related but still should be discussed separately. First, they cause climate change. We know that, we’ve known it for decades, and we know that continued use of fossil fuels will cause enormous worldwide economic and social consequences. Second, fossil fuels are expensive. Much of their costs are hidden, however, as subsidies. If people knew how large their subsidies were, there would be a backlash against them from so-called financial conservatives. A new study finds 6.5% of global GDP goes to subsidizing fossil fuels.
Climate Report Could Force Trump to Choose Between Science and His Base l The New York Times
  • The impending release of a key government report on climate change will force President Trump to choose between accepting the conclusions of his administration’s scientists and the demands of his conservative supporters, who remain deeply unconvinced that humans are the cause of the planet’s warming. A White House official said on Tuesday that it was still reviewing the draft document that was written by scientists, some of whom have said they fear Mr. Trump will seek to bury it or alter its contents before it is formally released. Sarah Huckabee Sanders, the White House press secretary, said the administration would not comment on the report before its scheduled release this fall.
Clean Energy
  • This year is proving to be the year of investing in innovative energy technology.  Mercom Capital Group reports that in the first half of 2017,  over $1 billion in venture capital and private equity funding has been invested in battery storage, smart grid and energy efficiency companies worldwide, exceeding the first-half funding benchmarks in 2014, 2015, and 2016.
Fossil Fuel Divestment
  • How are we to deal with fossil fuel companies that fight the world’s shift to renewables, fund bogus research attacking climate change and generally strip-mine local communities’ tomorrows for short-term profits today? This article discusses how Jesuit Colleges and Universities can use their faith as a lens to approach divestment and shareholder engagement conversations.
  • The investment staff of the San Francisco City & County Employees' Retirement System and its general investment consultant, NEPC, have come out in opposition to a plan to divest fossil-fuel company holdings, including industry giants like Exxon Mobil, Royal Dutch Shell and Chevron Corp. Meanwhile, the retirement board is split on how they will vote, four years after the San Francisco Board of Supervisors passed a resolution calling on the $23 billion pension fund to divest of fossil-fuel company securities.
Engagement by Three Coal Companies Staves Off Calpers Divestment
 l IR Magazine
  • Three coal companies have avoided divestment from Calpers by convincing the US pension fund they planned to make significant changes to their business models. This week Calpers announced it had divested from 14 thermal coal companies, which mine coal for electricity generation, to meet the requirements of a law passed in 2015 aimed at reducing California’s reliance on carbon. The law, which applies to both Calpers and CalSTRS, required the pension funds to divest from coal holdings by July 1, 2017 unless the companies in question had plans to increase their focus on clean energy sources. In a report describing its adherence with the law, Calpers reveals that three companies – Banpu of Thailand, Exxaro Resources of South Africa and PT Adaro Energy of Indonesia – side-stepped divestment following engagement with the fund.



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Weekly News Round-Up: August 4th, 2017

New IEN Member
  • Eastern Washington University 
Upcoming Events
Intentionally Designed Endowment Roundtable | IEN, Center for Responsible Business at Berkeley-Haas, and BlackRock, Friday, Sept. 8th, 2017, Berkeley, CA 
  • Building on the success of previous events, the Intentional Endowments Network, in partnership with the Center for Responsible Business at Berkeley-Haas and BlackRock, is pleased to host an Intentionally Designed Endowment Roundtable for endowment decision-makers and stakeholders from institutions interested in enhancing their leadership on sustainable investing.
The SRI Conference l November 1-3, 2017, San Diego, CA
  • The SRI Conference – on Sustainable, Responsible, Impact Investing serves thought leaders and investment professionals working in the ESG, Shareowner Engagement, and Impact Investing space. Together, we are catalyzing the shift to a more socially equitable and environmentally sustainable future. We deliver education and inspiration — in between legendary networking opportunities.
New Reports & Resources
Podcast: "Unlocking Endowments for Impact" | Coalesce, Campus Sustainability Accelerator  
  • What are the facts, case studies, myths, and barriers to shifting how endowments are invested? Explore the evolving field of impact investing with Georges Dyer, Principal from the Intentional Endowments Network. (Scroll down on page to access the podcast) 

Book: EarthEd: Rethinking Education on a Changing Planet | Island Press

  • Earth education is traditionally confined to specific topics: ecoliteracy, outdoor education, environmental science. But in the coming century, on track to be the warmest in human history, every aspect of human life will be affected by our changing planet. Emerging diseases, food shortages, drought, and waterlogged cities are just some of the unprecedented challenges that today’s students will face. How do we prepare 9.5 billion people for life in the Anthropocene, to thrive in this uncharted and more chaotic future? Answers are being developed in universities, preschools, professional schools, and even prisons around the world.
Endowment Sustainable Investing News
Divested from Fossil Fuels Since 2011, Hampshire College Reports Endowment Investment Returns | Huffington Post
  • President, Johnathan Lash and Investment Committee Chair, Dick Hurd report on how and why Hampshire has aligned endowment investments with mission and sustainability outcomes -- and how investment returns have performed as a result: "Organizations can align their investment strategy with their educational and social mission, without forfeiting financial returns. The Daoist philosopher Lao Tzu observed that “the best way to teach is to be.” Students learn not just from professors but from the entire culture of their school. Every decision by faculty and administrators, whether on standards for free speech, curriculum, design of buildings, or how to invest endowment funds, has an impact." 
Sustainable, Responsible, Impact & ESG Investing
Sustainable Finance | Bloomberg Briefs
  • A record volume of green bonds were issued in the first half of 2017, Bloomberg New Energy Finance’s monthly report shows. Corporate bonds with a clean energy focus are on the rise; Tesla burned through a record amount of cash before bringing out its most affordable model yet; Procter & Gamble says Nelson Peltz is confused about its business as a fight escalates.
  • Swiss Re, the world’s second-largest reinsurer, is 90 percent of the way through the process of shifting its entire $130 billion liquid asset portfolio towards ESG indices. It expects to complete the transition by the end of the third quarter of 2017. Risk-averse reinsurers's finances are being hit more often by the impact of climate-linked catastrophes, such as floods and hurricanes. That is prompting more frequent conversations in the corporate world around this challenge: How to help mitigate the risks that climate change poses in certain sectors and regions. Swiss Re's decision to tie its portfolio to ESG principles is, at least in part, motivated by a need to stay on top of what companies and sectors are actually doing.
Good returns don't require 'bad' investments | Houston Chronicle 
  • Good guys don't necessarily have to finish last when it comes to investing. For years, conventional wisdom said that do-gooders who only wanted to invest in responsible corporations would have to sacrifice rates of returns. Brokers claimed that if you cut out all the big companies that polluted waterways, produced harmful products or engaged in questionable management practices, you were going to leave money on the table. Two independent financial data analysis firms, though, found that focusing on environmental, social and governance factors - what the industry calls ESG - can actually outperform portfolios loaded with bad boy corporations.
  • On May 18, 2017, CAIA’s Boston Chapter held a panel discussion at the InterContinental Boston on “An Alternative Approach to Responsible Investing.” Moderated by Bill Kelly, CEO, CAIA Association, panelists included leading ESG investing experts Tim Brennan, Treasurer & CFO, Unitarian Universalist Association; Jeff Finkelman, CFA, Research Associate, Impact Investments, Athena Capital; and Lee Gardella, Managing Director, Head of Risk Management, Adveq Management.
Pension funds turn up ESG dial | Euromoney
  • Blue states lead lagging US on environmental, social and governance (ESG) investing; pension funds hold investment managers accountable.
More Evidence of Solid Performance From Sustainable Funds | Morningstar
  • Investors in funds that incorporate environmental, social, and governance factors into their process appear not to suffer a performance penalty.
Sustainability Gets A Trump Bump | Barron's
  • The Trump administration may want to gut the Environmental Protection Agency and roll back transgender rights, but increasing numbers of investors are pushing back by searching out companies with the best environmental, social and governance records, says Morningstar.

Investors want more women, minorities on corporate boards | Boston Globe
  • Big investors including the Massachuetts pension fund and State Street Global Advisors are pushing companies they invest in to diversify their boards. What do Amazon, Facebook, and Netflix have in common? Not a single person of color sits on their corporate boards. For that reason alone, the Massachusetts pension fund refused this year to support the slate of board nominees recommended by each company.
  • A new, first-of-its-kind investment mechanism could bridge the gap by unlocking private financing to stimulate investor demand for reducing deforestation. The Forests Bond will provide investors the opportunity to invest in a traditional financial product that offers the unique option of receiving interest payments in the form of environmental impact — in this case, verified carbon credits generated through REDD, an initiative that rewards landholders for protecting forests, thereby reducing carbon emissions that worsen climate change.

Investment Manager News
Rockefeller Foundation Backs Nonprofit ETF Startup | US News
  • The Rockefeller Foundation is helping to finance a startup hoping to build exchange-traded funds for nonprofit organizations and direct the profits back to their causes, officials from the group said with a plan to announce the initiative later on Tuesday.The foundation awarded a $300,000 grant to Impact Shares Corp, a Dallas-area organization that aims to offer charities the ability to create ETFs that will be sold to the public.
  • The Money Management Institute (MMI) has partnered with Morningstar in a joint initiative, the MMI/Morningstar Sustainable Investing Initiative, to help educate advisors about the sustainable investment opportunity, notably the incorporation of environmental, social and governance or ESG factors, and how to better implement these strategies in their practices.
General Endowment News
Higher ed institutions among nonprofits with largest endowment expansions | EducationDive
  • The Chronicle of Philanthropy reports that nonprofits are increasingly growing their substantial endowments, with a significant portion of that growth occurring at colleges and universities: Harvard University added $11.1 billion from 2010 to 2015, a 44% increase, while Princeton University saw its endowment grow 90% in the same period with the addition of $10.5 billion.
Colonial Williamsburg's CEO blamed past decisions for its dire state | The Virginian Pilot
  • It was an announcement by Reiss in late June – laying out just how far Colonial Williamsburg had fallen, losing $277 million in five years and draining its endowment of more than $600 million in a decade – that surprised even longtime observers, donors and locals.

Sustainability & Climate Risk, Science and Regulation
By Tomorrow, We Will Have Consumed More Resources So Far This Year Than the Planet Is Capable of Regenerating | EcoWatch
  • We humans use a lot of stuff — so much stuff, in fact, that we consume more in a year than the planet is capable of regenerating. That wasn't a problem until a few decades ago. Back in 1987 the "overshoot" date for Earth's resources was December 19, less than two weeks before the end of the year. Thirty years later, however, that date has moved up—and up—and up. Last year what has now been dubbed "Earth Overshoot Day" had moved all the way up to August 8.
The Uninhabitable Earth | New York Magazine
  • A comprehensive look at the severity of the threats posed by climate change: "It is, I promise, worse than you think. If your anxiety about global warming is dominated by fears of sea-level rise, you are barely scratching the surface of what terrors are possible, even within the lifetime of a teenager today. And yet the swelling seas — and the cities they will drown — have so dominated the picture of global warming, and so overwhelmed our capacity for climate panic, that they have occluded our perception of other threats, many much closer at hand. Rising oceans are bad, in fact very bad; but fleeing the coastline will not be enough..."
  • Even if humans could instantly turn off all our emissions of greenhouse gases, the Earth would continue to heat upabout two more degrees Fahrenheit by the turn of the century, according to a sophisticated new analysis.
In Sweltering South, Climate Change Is Now a Workplace Hazard | New York Times
  • Adolfo Guerra, a landscaper in this port city on the Gulf of Mexico, remembers panicking as his co-worker vomited and convulsed after hours of mowing lawns in stifling heat. Other workers rushed to cover him with ice, and the man recovered. But for Mr. Guerra, 24, who spends nine hours a day six days a week doing yard work, the episode was a reminder of the dangers that exist for outdoor workers as the planet warms.
Clean Energy
The Booming Wind Energy Industry Might Finally Break Its Massachusetts Hex | Huffington Post
  • The company behind North America’s first offshore wind farm unveiled plans this week to bring seaward turbines to Massachusetts. If the Bay State regulators give Deepwater Wind their blessing to build a massive wind farm in the waters between Massachusetts and Rhode Island, the burgeoning wind industry could finally break the curse of Cape Wind, the failed 24-square-mile project first proposed off Cape Cod 16 years ago. Renewable energy skeptics have long used Cape Wind’s failure as proof that turbines were too costly, dangerous and unpopular to serve as a top power source for the country.  
Fossil Fuel Divestment
  • It’s been a rough stretch for Wells Fargo. The bank has been in the news quite a bit lately over a series of fraud scandals and revelations about their questionable business practices, leading major cities like New York, Philadelphia, and Chicago to pull funds from the bank. At the same time, a grassroots movement is growing to use divestment to hold Wells Fargo and other big banks accountable for their investments that prop up the dirty fossil fuel projects that threaten our communities and our climate.



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Weekly News Round-Up: July 28th, 2017

IEN in the News

U.S. Impact Investing Alliance Launches to Scale the Practice of Impact Investing l U.S. Impact Investing Alliance

  • The U.S. Impact Investing Alliance (“Alliance”) this week announced the launch of its expanded network of impact investing leaders dedicated to advancing this growing market. The Alliance was founded last year by representatives from philanthropy, business and finance to champion the potential of impact investing by increasing awareness of impact investing in the U.S., fostering deployment of and demand for impact capital across asset classes globally, and by partnering with policymakers and other stakeholders to build the impact investing ecosystem. The Alliance is also launching an Industry Advisory Council of leading impact investing network organizations. The Intentional Endowments Network is one of the organizations leading this Council.

New Reports
The ESG Integration Paradox l Harvard Law School Forum on Corporate Governance and Financial Regulation
  • Michael T. Cappucci is Senior Vice President at Harvard Management Company. This post is based on a recent paper by Mr. Cappucci. If investment managers followed the old saying “whatever is worth doing is worth doing well,” then more would have best‐in‐class ESG programs. It used to be that asset owners could identify which investment managers “got” ESG investing principles simply by asking whether they had a written ESG policy. Today, most investment managers have something to say about ESG issues, and written ESG policies are becoming ubiquitous. Yet, as anyone who has ever looked at investment managers’ ESG policies can attest, the existence of a written document is not a reliable indicator of a firm’s commitment to or performance on sustainable long‐term goals.
  • On July 13, 2017, PRI launched guidance on incorporating ESG provisions in private equity fund terms. The publication, Incorporating Responsible Investment Requirements into Private Equity Fund Terms (the Guidance), followed a year-long consultation period with PRI signatories, expert counsel, and industry associations. The Guidance aims to demystify the concept of ESG provisions, outline the terms of these provisions and work towards a consistent industry approach on this aspect of responsible investment. The Guidance identifies current and emerging best practices, as well as possible limitations. In particular, the Guidance offers practical solutions to LPs and GPs that are considering how they may integrate responsible investment into fund terms.
Employment Opportunities

FAIRR Investor Engagement Officer

  • We are looking for an enthusiastic candidate with 3-5 years work experience to join our small team to support FAIRR’s collaborative investor engagement work with global food companies. The role will provide support and coordination for FAIRR’s existing engagements and assist in the development of new work-streams. This is an exciting opportunity to join an innovative and growing organization with huge ambition. 

FAIRR Senior Communications Officer

  • This role is an exciting opportunity for an enthusiastic senior communications professional to lead the global expansion of a fast-growing initiative that is reshaping the views of the investment risks and opportunities within both the global food system and the intensive livestock production sector.  Experience of business/ financial communications and issues management will be essential as will previous experience international media activity. An interest in sustainable food or animal welfare issues is an advantage.  
Endowment Sustainable Investing News
  • Reaffirming its commitment to social justice and environmental sustainability, Loyola Marymount University announced it has signed onto the United Nations-supported Principles for Responsible Investment. The action places LMU among just a handful of university signatories across the country, and more than 1,700 investors, financial firms, and other institutions, who have agreed to the global network’s guidelines for incorporating environmental, social, and governance factors into investment decisions.
  • The Northland College Board of Trustees voted Friday to fully divest Northland College’s endowment funds from fossil fuels in the next five years. Approximately 2.9 percent of the College’s $28 million endowment—about $823,000—is currently invested in fossil fuels, according to the Carbon Underground 200, an annually updated global listing of the top 100 public coal, and the top 100 natural gas and oil companies. These investments will be replaced with more socially responsible investments with no new endowment funds invested in fossil fuel companies.
Sustainable, Responsible, Impact & ESG Investing
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how State Street Corp. followed through on its Fearless Girl pledge to vote against directors at companies that don’t have women on their boards; Snap and Blue Apron excluded from indexes for no-vote shares; Morningstar acquires 40 percent ownership stake in Sustainalytics; International Brotherhood of Teamsters gets a say-on-pay win at McKesson Corp.; and Darrin Williams, CEO of Southern Bancorp, sees growing Wall Street interest in community development financial institutions. 
10 Studies That Show How and Why ESG Investing Works l Reuters
  • Earlier this year, Reuters laid out the top 10 reasons Wealth Advisers and Managers are following investor demand to ESG. The next question: how do ESG, or environment, social, and governance investments, perform? When do these strategies work, and why? Here’s a look at the circumstances under which ESG-related investing works the best, across different asset classes such as stocks and bonds.
Ethical Funds Show That Doing Good Can Be Profitable as They Beat Rivals by Backing Firms Loved by Millennials l This is Money
  • Fund managers trying to woo younger investors are backing firms that do good in the world. Ethical funds are undergoing a major overhaul as asset managers try to work out what is important to the next generation of investors. Catherine Howarth, chief executive at Share Action, a charity which promotes responsible investment, says: ‘There is a generational shift taking place in investing. Ethical funds in the 1980s were focused on avoiding arms, pornography and tobacco, but millennials are more interested in labour rights and the environment. ‘Funds need to reflect the priorities of a new generation.’
Is the “Trump Bump” in SRI Sustainable? l WealthManagement.com
  • Donald Trump's election gave a sharp boost to demand for socially responsible investment funds, just as several large asset managers moved into the field. “The political climate has buttressed interest in sustainable investing in a way we would not have imagined prior to the election,” says Joe Keefe, president and CEO of Pax World Management, which launched the first socially responsible mutual fund in the U.S. in 1971, a year after the first Earth Day. It remains to be seen if the new money flowing into these funds can continue at the same pace.
Short Sellers Less Active in ESG Stocks l Fund Strategy
  • Short sellers are less active in companies that perform strongly on ESG factors as ESG ETFs attract record inflows. North American companies that rank in the top 10 per cent based on ESG ratings have 1.8 per cent shares on loan, less than half of that seen worldwide, IHS Markit analysis shows. Research analyst Simon Colvin says there are still plenty of short targets among firms ranked highly for ESG, but that this is likely company specific.
Trump Will Not Derail the March of Sustainable Investing l Economic Voice
  • The US withdrawal from the Paris Climate Agreement has initiated a debate about whether the reversal in US policy will halt momentum within the sustainable economy. Although undoubtedly a disappointing development and one that will impact a number of industries, we argue that it will not derail the structural shift to a low carbon world. In our view, there are four powerful factors that will continue to drive innovation and development: policy and regulatory pressure; investment flows; technology; and demographic trends.
Passive Managers are Increasingly Interested in ESG l FT Adviser
  • Passive managers are no longer treating stewardship responsibilities as a ‘box-ticking’ exercise, but are actively looking to influence investee companies and help improve environmental, social and governance (ESG) standards across the board. They vote and engage directly with firms on prominent issues such as executive pay, board diversity and climate change. As a result there has been a clear shift in recent years, primarily driven by large asset owners. Institutional investors are increasingly aware of the positive impact that ESG integration and active ownership practices can have on investment performance. Regulators have contributed further with the adoption of stewardship codes in several countries, including the UK, Switzerland and most recently Japan.
ESG in Emerging Markets Depends on Better Data and Disclosure l Financial Times
  • During the past few years, data collection and monitoring of developed market companies have become significantly more prudent and accurate, while emerging market corporates have been left behind. In terms of ESG, emerging markets are suffering from a perception deficit compared with their developed market peers. The most obvious reasons they score poorly are limited data availability and lack of disclosure, resulting in artificially low ESG rankings.
Why Impact Investing Needs to Go Mainstream l Knowledge at Wharton
  • In this interview, Durreen Shahnaz, who set up Impact Investment Exchange (IIX), discusses impact investing and the recent $8 million Women’s Livelihood Bond.
  • A recent survey of 320-plus institutional investors found broad support for ESG-related themes, with 80% of respondents stating that companies have not considered environmental and social issues as core to their business and that generating sustainable returns over time requires a sharper focus on ESG issues. Expect hedge funds and other activist investors to get in the ESG game as well as they look for new measures to improve corporate performance and rally support for campaigns. The bottom line is that the market is demanding more attention to these issues, primarily because shareholders believe they play an integral part in a company’s overall performance.
Why the World’s Largest Asset Managers are Pushing Long-Term Thinking l Green Biz
  • Recently, the CEOs of the largest global asset management firms put portfolio company executives on notice that their current short-term focus can be a barrier to long-term growth. This isn’t just a philosophical discourse, the “Big 3” asset managers — Vanguard, BlackRock, and State Street — with combined assets under management of more than $11 trillion, mean business. They are encouraging publicly traded companies to adopt and regularly disclose long-term strategic plans and governance practices. This alignment and congruence among leading investment managers, and their leaders’ public communications in support of long-termism, is thought by many to be unprecedented. How should forward-looking CEOs and boards respond?
Investment Manager News
Morningstar Underlines its Commitment to Responsible Investment with Sustainalytics Stake (Subscription) l Responsible Investor
  • If Morningstar wasn’t quite a member of the sustainable investment fraternity before, it definitely is now with its acquisition of a 40% stake in Sustainalytics. In fact, at a stroke the NASDAQ-listed household name positions itself at the heart of the sector and the deal consolidates the partnership between the two firms on ESG fund ratings. As RI has reported, the methodology for these ratings has caused alarm in the sustainable investment sector – but the inconvenient truth (for some) is that Morningstar has now demonstrated beyond any doubt that it is here for the long haul.
  • The Inspire Corporate Bond Impact Equal Weight Index – consists of about “250 investment grade, intermediate term corporate bonds issued by some of the most inspiring large cap “blue chip” companies in the U.S., as determined by Inspire’s revolutionary Inspire Impact Score methodology.” The constituents of the fund are expected to leave a positive impact on the investment world, giving the portfolio a socially responsible angle. The index is equally weighted, rebalanced quarterly and calculated on a total return basis in U.S. dollars.
Thomson Reuters And S-Network Introduce ESG Best Practices Ratings & Indices-Rebranding And Methodology Changes To Existing Indices Reflect Market Evolution And Growth Of ESG Investing Strategies l Mondovisione
  • Responding to changes in the way Thomson Reuters collects ESG data and the growth of socially responsible investing (SRI), Thomson Reuters in partnership with global indices provider S-Network has announced changes to the methodology for the Thomson Reuters Corporate Responsibility Ratings and Indexes, which effective immediately have been rebranded Thomson Reuters/S-Network ESG Best Practices Ratings & Indices.
PKA Will Lead the Search for Sustainable Returns l Finans Watch
  • The Danish pension fund PKA has acquired a taste for socially minded investments, and is now pushing for more investments to be made more available for investors. Among the investments is DKK 400 million focused on bank loans to women in third-world countries which Maj Invest is behind.
Independent Broker-Dealer Vanderbilt Revamps to Focus on Impact Investing l Investment News
  • An independent broker-dealer with roots dating back 52 years, Vanderbilt Financial Group is growing a new reputation for itself by committing to the socially responsible investing space. Its dedication to the investing strategy and a focus on prioritizing impact within the firm culture has helped it expand its adviser headcount at a time when many independent broker-dealers are exiting the business. Of the $3 billion in client assets, about $1.5 billion is in sustainable investing.
General Higher Education Sustainability & Endowment News
  • The MIT Office of Sustainability (MITOS) has announced the recipients of the first-ever Campus Sustainability Incubator Fund, with $200,000 awarded between four multi-departmental projects, all of which use the MIT campus as a test bed for research in sustainable operations, management, and design. The four project teams are lead by Kripa Varanasi of the Department of Mechanical Engineering, Randy Kirchain and Jeremy Gregory of the Concrete Sustainability Hub, Lisa Anderson of the Department of Chemical Engineering, and Danielle Dahan of the Center for Energy and Environmental Policy Research.
Lessons From University Endowments l All About Alpha
  • In a recent article for The Journal of Investment Consulting, John Mulvey and Margaret Holen look at the practice of asset allocation among large U.S. university endowments. They focus on asset category definitions in the hope of throwing some light on “the movement to define asset categories with reference to their target performance or underlying return drivers rather than traditional investment vehicle-types.” In the introduction to their paper, Mulvey and Holen observe that college and university endowments have led the way ahead of other institutions in the move into hedge funds and private equity funds. In 2000, the average endowment portfolio was 23% in alternative assets; in 2014, the corresponding number was 51%. Among endowments with more than $1 billion in assets under management, that number was 57%.
The High Price of Cutting State Funding to Colleges l Market Watch
  • Policy makers and experts often hotly debate the reasons behind rising college costs. New research indicates that state disinvestment in higher education may be at least partly to blame. For every $1,000 in funding per student that states cut from public universities, students paid about $257 more a year on average between 1987 and the present, according to a forthcoming study in the journal, Economics of Education Review. But students attending college more recently are even more likely to shoulder a larger burden of cuts to state funding. Before 2000, students paid about $103 more a year on average for every $1,000 per student cut by states. After 2000 that number increased to about $318 more a year, the study found.
Climate Risk, Science and Regulation
The Market Will Kill Oil Before the Government Does l Bloomberg
  • European governments are making a big splash, pledging an assault on traditional cars to help clean up polluted air in cities. The latest strike came Wednesday in the U.K., which says it will ban the sale of diesel- and gasoline-powered cars by 2040. Those plans might not be quite as ambitious as they first seem. Consumers, automakers, and even some oil companies are already preparing for a battery-powered future.The U.K. government’s plan to tackle record levels of air pollution was announced two weeks after French President Emmanuel Macron announced a similar plan to cut smog and become a carbon neutral nation. 

Just How Far Can California Possibly Go on Climate? l New York Times

  • Over the past decade, California has passed a sweeping set of climate laws to test a contentious theory: that it’s possible to cut greenhouse gas emissions far beyond what any other state has done and still enjoy robust economic growth. Now that theory faces its biggest test yet. Last August, the State Legislature set a goal of slashing emissions more than 40 percent below today’s levels by 2030, a far deeper cut than President Barack Obama proposed for the entire United States and deeper than most other countries have contemplated.
Corn Could Be Major Victim of Climate Change l Bloomberg
  • The weather has always been an unpredictable element of agriculture, but climate change is expected to make matters significantly worse. Determining how much worse has historically been a challenge. A new study, however, says climate-induced drought could hit several of the world's major corn producing regions all at once. The Met Office, the U.K.'s national weather service, used a novel approach to determine the probability of severe water stress in three major corn-producing regions that are responsible for 40 percent of global production . Instead of relying on observed historical data—which the researchers found to seriously underestimate the impact of climate change—the new study used a model focusing on water stress. The authors noted the limitations of the study, including its reliance on a single climate model, and they advise researchers to utilize multiple models in the future.
Clean Energy
Toyota Eyes Mass EV Output in China as Early as 2019: Report l Reuters
  • Toyota Motor Corp is likely to begin mass production of electric vehicles (EVs) in China as early as 2019, the Asahi daily reported on Saturday. The model will be based on the C-HR sport utility vehicle and manufactured for Chinese market only, the report said without citing sources. The pace of production is to be decided after taking into account the regulations and the subsidies, the report said, adding that annual output could start with more than several thousand units.
U.K. Joins France, Says Goodbye to Fossil-Fuel Cars by 2040 l Bloomberg
  • The U.K. became the latest European country to mark the end of the line for diesel and gasoline fueled cars as automakers such as Volvo race to build electric vehicles or face the consequences of getting left behind. In London, the government said it will ban sales of the vehicles by 2040, two weeks after France announced a similar plan to reduce air pollution and become a carbon-neutral nation. For some in the auto industry, the plans are too much too soon while environmental campaigners say exactly the opposite.
  • The University of Virginia continues to expand its portfolio of carbon-free power-generation sources and achieve key sustainability targets with another partnership announced today with Dominion Energy. Under a 25-year agreement, the University will purchase the entire output of a proposed 120-acre solar facility in Middlesex County. The solar facility, developed by Coronal Energy, will be constructed and owned by Dominion Energy. It will produce an estimated 15 megawatts of alternating current, or about 9 percent of the University’s electric demand.

Fossil Fuel Divestment
  • According to this article, divestment is the right thing to do and, given the accelerating renewable energy revolution and regulation of greenhouse gases, the smart thing to do.The author argues it’s time to tell your financial services provider and company pension fund trustees you no longer want to be invested in destroying your future.




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Weekly News Round-Up: July 21st, 2017

New Resources & Opportunities
  • After years of talking about it, investors are finally starting to put their money behind this approach. According to US SIF, U.S. investments incorporating ESG principles, in whole or in part, increased from $1 trillion to approximately $9 trillion between 2012 and the beginning of 2016. This report explores the multiple factors driving this growth.

Job: Senior Associate, Sustainable Investing l World Resource Institute

  • WRI’s Sustainable Finance Center focuses on shifting public and private capital toward low carbon and climate-resilient development and away from activities that harm people and the environment. As Senior Associate, you will help lead and manage the Sustainable Finance Center’s research agenda, with a special focus on our work greening private finance.
Upcoming Events
  • 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.
The SRI Conference l November 1-3, 2017, San Diego, CA
  • The SRI Conference – on Sustainable, Responsible, Impact Investing serves thought leaders and investment professionals working in the ESG, Shareowner Engagement, and Impact Investing space. Together, we are catalyzing the shift to a more socially equitable and environmentally sustainable future. We deliver education and inspiration — in between legendary networking opportunities.
Sustainable, Responsible, Impact & ESG Investing
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how Bain Capital is betting that mission-led investing can deliver returns on par with its standard private equity pools; Vanguard's votes on climate change are up for their own vote; Big oil is waking up to EVs; and Deloitte is beginning to shift away from traditional approaches built around gender, race, or sexual orientation.
Aiming to Do Good, Not Just Well l The New York Times
  • If you want to invest in companies that are not just making a profit but are also doing good in the world (or, at least, doing no harm), you may find yourself overwhelmed by confusing choices. This kind of investing is known as ESG investing, or sometimes simply as “socially responsible investing.” These labels encompass a wide array of options and criteria, which have been used for years among mutual funds and exchange-traded funds, or ETFs, focused on companies in the United States. This article explores the recent uptick in the space as well as fund offerings.
  • Beginning in 2013, the ESG research team at MSCI, a provider of market indexes, repeatedly flagged Volkswagen for its risk exposures and management practices. In September 2015, the U.S. EPA accused Volkswagen of installing computer software in 482,000 American vehicles to conceal nitrogen oxide emissions up to 40 times above the legal limit. The company subsequently acknowledged that up to 11 million cars worldwide had been fitted with a similar “defeat device.” From April to October 2015, VW stock sank by 64%, wiping out $40 billion in market value. That episode, combined with other corporate calamities, has driven investors toward U.S. companies that meet positive standards for sustainability, social impact and sound governance.
Ford Foundation, ACA Convene Push for Impact Investing in Nigeria l Business Day
  • Ford Foundation and the African Capital Alliance (ACA) have held an advocacy convening to sensitise corporates and high net worth individuals in Nigeria about the need for impact investing in sustainable development and capacity building in Africa’s biggest economy. Impact investing connotes investments in firms, funds, and organisations, with the dual purposes of generating social and environmental impact and earning financial return; it entails leveraging private capital for social good.
  • Human trafficking, essentially modern slavery, is a large and growing practice, although most people are unaware of its existence and extent. Pope Francis has called it a plague on humanity. The NGO Human Rights First notes that Human trafficking is the world's fastest growing criminal enterprise, earning exploiters an estimated $150 billion annually. Elaborating on this, Amy Sobel, Vice President, Anti-Human Trafficking Campaign, says that modern slavery is occurring in the vast supply chains that fuel our global economy, causing human tragedy and damaging some of the world's most trusted brands. An article, Inside the Scarily Lucrative Business Model of Human Trafficking, in Time shows that it is a very profitable business. This article explores how companies can lead the fight against this industry.
  • In recent years, investors have shown a greater interest in ESG disclosures. This heightened interest is likely due to an increased awareness of how disclosing this information can impact the financial sustainability of companies. ESG issues, ranging from climate change to diversity to board effectiveness, can show investors how forces outside of normal market variables can affect a company’s operations and revenues. This blog examines issues related to climate risk disclosures.
Does the HLEG Need to Define Sustainability? l Investment & Pensions Europe
  • The European Commission-appointed High Level Expert Group (HLEG) on sustainable finance should come upwith a definition of sustainability in time for its final report, it has been suggested. Commenting on the group’s interim report – published last Thursday – Filip Gregor, head of responsible companies at law firm Frank Bold, said defining sustainability was “indispensable for developing effective policies”. Such a definition was missing from the HLEG interim report, and the group should be encouraged to address it in its final report, he said.
  • Investing for good can also be a good investment. A number of the mutual funds that take environmental, social and corporate governance (ESG) into account when making investing decisions have proven to be stellar performers. Two of our top 10 ESG funds—selected using a formula that takes 1, 3 and 5-year total returns into account—beat the S&P 500 over all three periods. Investors are taking notice: Investments in these funds are up33 percent in the U.S. since 2014, to $8.7 trillion. That’s 22 percent of all professionally managed U.S. assets. Harvard Management Co., which oversees Harvard University’s $36 billion endowment fund, recently announced plans to make sustainability the driving factor in selecting new investments for its natural resource portfolio.

Best ESG Communications: Why PKN Orlen Won l IR Magazine

  • With investors upping their focus on ESG issues, companies are rethinking their communications approach to better explain the links between financial and non-financial performance. For those looking for inspiration, a good place to start is the integrated annual report from Polish oil major PKN Orlen: the company won best ESG communications at the IR Magazine Awards – Europe 2017. ‘The main strategy was to create a single, transparent document with all necessary information, so that [readers] would find all the data they require from one source,’ explained the company in its awards submission. ‘It contains a number of interactive tools facilitating access to contents, an interactive GRI Indicators Table, a glossary of economic and industry-specific terms, and an online survey.
Morningstar, MMI Launch Sustainable Investing Initiative l Wealth Management
  • The Money Management Institute (MMI) announced today a joint initiative with Morningstar called The MMI/Morningstar Sustainable Investing Initiative, aimed at educating advisors about sustainable investing and how to better incorporate it into their practices.  “Clients are clearly interested in discussing ESG with their financial advisors," said Jon Hale, Morningstar’s Head of Sustainability Research. "But the majority of advisors need more professional education and practical insights on incorporating sustainable investing into their practices to feel comfortable having those conversations."
Sustainable Development Goals (SDGs) News
The Impact of the SDGs on Sustainability Reporting l Ethical Corporation
  • This 9 page briefing outlines the role the SDGs have to play in sustainability reporting and how leading brands are incorporating them into their reporting and communications strategy. 
  • Businesses and companies are continuing to make contributions to the SDGs.The UN Global Compact has established a Corporate Action Group for ‘Reporting on the SDGs,’ which is part of a comprehensive Tool Box to help companies achieve sustainability and contribute to the SDGs. In addition, the UN Industrial Development Organization (UNIDO) is partnering to make cities more sustainable, the insurance industry is helping to advance the SDGs, the Partnership for Action on Green Economy (PAGE) is encouraging investments in the green economy, and Dutch fund managers are developing a standard for SDG investments.
  • A report published by the UN Development Programme (UNDP) Innovation Facility finds that innovation and emerging technologies are increasingly changing how international organizations are investing to realize the Sustainable Development Goals (SDGs). The report showcases how UNDP’s innovation investments have led to more effective development solutions and to new service lines to government partners.
General Higher Education Endowment News
Endowment Managers Still Upbeat on Economy, Survey Says l The Chronicle of Philanthropy
  • Managers of nonprofit endowments were upbeat about the state of the U.S. economy in 2017’s first quarter but slightly less so than in the final quarter of last year. This article explores the results of NEPC's Endowment & Foundation Q1 2017 Survey.
  • According to David Swensen, the head of Yale's endowment, exchanges such as Nasdaq and New York Stock Exchange pay brokers billions of dollars to send trades to their venues. Wall Streeters and government officials are calling on the SEC to ban so-called rebates because they view them as inefficient for markets.
Historically Black Colleges Try to Catch Up as Rich Schools Get Richer l Bloomberg
  • The wealthier a school’s endowment, the more money it has both to attract students and to provide them with the funding and academic services to get them to graduation. Howard’s endowment means it has just under $58,000 for each of its 10,000 students. By comparison, Nashville’s Vanderbilt University has about $300,000 per student. Of the 90 schools with billion-dollar endowments, not one is an historically black colleges and universities, also known as HBCUs.
Climate Risk, Science & Regulation
With Thursday’s Vote, Climate Finds ‘Bipartisan Majority’ Support in Congress l Citizens' Climate Lobby
  • Last week, dozens of House Republicans joined Democrats to vote down an anti-climate amendment and sent a strong message that the military should prepare for and fight climate change. This article explores the details of the vote.
California Legislature Extends State's Cap-and-Trade Program in Rare Bipartisan Effort to Address Climate Change l LA Times
  • California lawmakers voted Monday evening to extend the state’s premiere program on climate change, a victory for Gov. Jerry Brown that included unprecedented Republican support for fighting global warming. In a break with party leaders and activists in California and Washington, eight Republicans joined with Democrats to continue the cap-and-trade program, which requires companies to buy permits to release greenhouse gases into the atmosphere. The legislation would keep the 5-year-old program operating until 2030, providing a key tool for meeting the state’s ambitious goal for slashing emissions. Cap and trade also generates important revenue for building the bullet train from Los Angeles to San Francisco, another priority for the governor.
Clean Energy
  • This article explores NRG's attempt to transform itself from brown to green — how it started, where it went off the rails and, now, how it is ending.
Fossil Fuel Divestment

Cape Town Commits to Divestment l 350 Africa

  • The town of Cape Town has committed to divest from fossil fuel assets and companies in favour of greener and cleaner investments. In a press release, the mayor stated: "We are going to instruct investors looking after our money not to put our money into fossil fuel-related companies or for it to be used to fund the development of dirty and unsustainable projects. We want our investments to be aligned with our principles of resilience and sustainability."
CU Divestment: Growing Momentum l Boulder Weekly
  • In 2015 the University of Colorado’s Board of Regents voted against divesting its endowment, citing their preference for “institutional neutrality” in social and political matters. The vote came as a response to student activism, which has continued since. This year brought another wave of protests — in April the student group Fossil Free CU held a week-long sit in at the Chancellor’s office. Regent Linda Shoemaker, the board’s vice chair, says that a fall 2017 vote is possible. But she is doubtful about it passing, pointing to the fact that no fundamental changes have occurred in the Republican-controlled board since 2015’s 7-2 decision upholding the existing investment plan. Lior Gross, one of Fossil Free CU Boulder’s leaders, is more hopeful. “We are in the best position we’ve ever been to get a win from the regents and to get a vote for divestment,” Gross says, pointing to recent community support. “It’s not that I’m optimistic, it’s that I know that we can’t have a livable future if we continue to operate this way.”




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