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.