The SRI Conference l November 1-3, 2017, San Diego, CA
Sustainable Investing Seminar l CFA Society Boston, November 13th, Boston, MA
Investing for Impact Symposium l High Water Women, November 30, 2017, New York, NY
2018 Higher Education Climate Leadership Summit l Second Nature & The Intentional Endowments Network, February 4-6, 2018, Phoenix, AZ
IEN in the News
- Written by IEN Executive Committee member, David Dinerman (Hampshire College), Tony Cortese (Green Mountain College, IEN), and Georges Dyer (IEN), this piece highlights the importance and trends of aligning endowment investing with the mission and goals of higher education institutions and considering material ESG factors. It explores some of the challenges and opportunities of doing so, provides some evidence of the benefits and ideas on how to institutionalize such investing, and helps trustees learn about the peer learning opportunities through IEN.
- As asset owners’ fervor surrounding ESG and impact investing intensifies, sustainable investing has emerged as an integral part of investment frameworks. While the motivation behind the integration of ESG within the investment decision process varies, investors are nevertheless formalizing their commitment through policy and/or increasing their allocation of assets to sustainable investing. And asset managers are paying attention.
Sustainable Investing at Endowments
- At its October 21 meeting, the Smith College Board of Trustees approved a comprehensive, holistic set of recommendations designed to support the college’s commitment to environmental sustainability while also ensuring the continued health of the endowment. The strategies were announced in an email and an FAQ to the community from President Kathleen McCartney and Board of Trustees Chair Deborah L. Duncan ’77 and were to increase impact investing, favor managers and funds adhering to environmental, social and governance (ESG) principles, avoid future direct holdings in coal, and report regularly on socially responsible investment progress.
Investor Alliance to Push for Human Rights Progress l Innovation Forum
- The recent launch of the Interfaith Center on Corporate Responsibility’s new Investor Alliance for Human Rights indicates positive progress on addressing human rights abuse in supply chains. And also the clear need for companies to work harder to bolster efforts to look after people working throughout their entire value chains, spurred on by the investment community.
Sustainable, Responsible, Impact & ESG Investing
- In this article, Lisa Woll, CEO of US SIF, offers some predictions for, and reflections about, the future of sustainable and impact investing.
When Virtue Offers Tangible Rewards l Barron's
- This article describes how Stephen Liberatore, lead portfolio manager for TIAA-CREF Social Choice Bond fund, is making money as well as social impact.
- The Responsible Investment Association (RIA) organized the week's events in an effort to bring education and awareness to RI, particularly as it relates to environmental, social and governance (ESG) issues. "Systemic risk is the next frontier for ESG," said Michael Jantzi, CEO of Amsterdam-based Sustainalytics during the panel discussion, which was led by the RIA's incoming CEO, Dustyn Lanz. Although climate change is one of the largest systemic risk factors, less than half of the largest companies acknowledge it in their annual reports.
- As the world moves toward a low-carbon future, companies of many stripes are adopting renewable and clean-energy technologies. That, of course, has implications for stocks and the portfolios that hold them. How can asset owners understand the carbon-transition risks in their portfolios? One way is to categorize funds by different types of exposure to carbon-transition risk. Using a matrix approach, asset owners may be able to better understand what long-term bets — intended or not — are embedded in their portfolios. This approach may also help investors develop more resilient investment and risk management strategies as the global energy mix evolves. This article summarizes the findings from MSCI’s Low Carbon Transition Matrix.
- Japanese pension fund executive Hiromichi Mizuno has said investment directed by ESGe issues is necessary to encourage women to participate in the labor force and build a sustainable society. Mizuno, who is the chief investment officer of Japan’s Government Pension Investment Fund (GPIF), among the world’s biggest pension funds, called for South Korea to make investment decisions for the future generations, instead of short-sighted ones that focus on quick sales results, during a breakfast forum held in celebration of the first anniversary of the Korean unit of Women Corporate Directors (WCD) on Tuesday in Seoul.
Socially Responsible ETFs Gain $1.6bn in 12 Months l Track Insight
- Investors have ploughed more than $1.6 billion into socially responsible ETFs over the last year, prompting industry commentators to predict that SRI and ESG (environmental, social and governance) ETFs will become the mainstream. Data from TrackInsight shows that global ETF investors allocated $1.69 billion over the last 12 months and around $1.14 billion year to date to these funds.
- Inequality and climate change have created a challenging backdrop for companies, meaning a failure to incorporate these principles will provide a poor return for investors. This claim was made by Jessica Ground, global head of stewardship for Schroders, who said it was vital to think about environmental, sustainable and governance (ESG) investing in terms of "risk and return". "We see it as the third dimension of investing. If you are going to be successful in allocating capital on a forward-looking way, then you are going to need to take ESG into account, and to hold these companies to account." According to data from the S&P 500, the average tenure of a company has fallen from 50 years to 15. This means that companies operating with a view to long-term sustainability will be those who last the course.
- When a Bank of America Merrill Lynch analyst downgraded Chipotle stock last week–claiming the company spends too much to pay workers and that it would have trouble cutting labor costs–it was the latest of many examples of Wall Street pressure on retailers to keep wages low. Of course, that response ignores the long-term benefits that come from fairer wages. “Wall Street’s time horizon for company earnings is very short–often one or two quarters,” says Michael Reich, a professor of economics at the University of California-Berkeley and chair of the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment. “This short-termism often penalizes companies that raise their workers’ wages or invest in their employees’ skills. Wall Street thus ignores or is unaware of how higher pay reduces employee turnover and boosts worker productivity.”
- Canadian and European funds lead the way among the most responsible asset allocators, according to a new report from non-partisan think tank New America. The recently released Bretton Woods II Leaders list of the 25 “most responsible” asset allocators was culled from among hundreds of sovereign wealth funds (SWFs) and government pension funds (GPFs) representing more than $20 trillion in assets under management. The top funds were chosen for their “high conviction in responsible investing,” and their belief that “ESG is material to long-term returns,” according to New America.
Investment Manager News
- Green Century Capital Management today announced that its assets under management (AUM) reached a new landmark, exceeding $500 million as of October 20, 2017. Green Century is the investment advisor to the first family of fossil fuel-free responsible and diversified mutual funds in the U.S. Green Century’s unique combination of three characteristics allows it to make an impact well beyond its size: Green Century invests in sustainable companies, leads a shareholder advocacy program and is owned by nonprofit organizations. Green Century has grown 435% from $114.9 million in AUM as of 9/30/12 to over $500 million as of 10/20/17. Its growth has mirrored both the rise of interest in sustainable investing and the growth of global fossil fuel divestment campaigns.
- The office is looking to add employees on its sales desk and to its sustainable-investing team.
- On Wednesday, David M. Rubenstein and the other two co-founders of Carlyle Group — William E. Conway Jr. and Daniel A. D’Aniello — announced they were handing over daily management of the firm to their chosen successors. The changing of the guard at Carlyle is part of a generational turnover at private equity firms, as the billionaires who pioneered the industry recognize that they must prepare their businesses for life after they have retired.
Bank of America Pension Opts for DIY Sustainable Strategy l Institutional Investor
- Frustrated with off-the-shelf ESG products, Bank of America Merrill Lynch’s U.K. retirement scheme is building its own sustainable investment strategy and seeking an asset manager to run the fund. The decision follows similar steps taken by major asset owners worldwide, including the Taiwan Bureau of Labor Funds and New Zealand Super Fund, according to index provider MSCI.
- The rising social and economic power of women venture is global mega-trend that venture capital is beginning to notice. Suzanne Biegel, a longtime gender lens investor and advisor, and the team over at the Wharton Social Impact Initiative have pulled together one of the most comprehensive lists of private equity, venture capital and debt funds explicitly investing with a gender lens. Download their new report to view all 58 funds.
Climate Risk, Science & Regulation
- Fires, floods and hurricanes are already costing the federal government tens of billions of dollars a year and climate change will drive those costs ever higher in coming years, a new federal study warns. The report by the Government Accountability Office, Congress’s auditing arm, urges the Trump administration to take climate change risks seriously and begin formulating a response. The study, scheduled to be released Tuesday, says that different sectors of the economy and different parts of the country will be harmed in ways that are difficult to predict. But one estimate projects that rising temperatures could cause losses in labor productivity of as much as $150 billion by 2099, while changes in some crop yields could cost as much as $53 billion.
General Higher Education Endowment News
- In what has become a familiar pattern in the last several years, published tuition and fee prices increased at a relatively low, steady rate this year -- but financial aid again failed to keep up, resulting in students paying more to attend college. Tuition and fees increased by less than 2 percent between 2016-17 and 2017-18 after adjusting for inflation, according to new College Board report released Wednesday. The reports, “Trends in Student Aid” and “Trends in College Pricing,” are released annually, showing both short-term changes and trends over longer periods of time.
- Harvard University wrote down the value of its natural resources investments by $1.1 billion in the last fiscal year, contributing significantly to its poor endowment performance. The university revalued the portfolio to $2.9 billion from $4 billion in the year through June 30, according to an annual report released Thursday. The writedown is part of an ambitious attempt to overhaul the $37.1 billion endowment and helps explain why the world’s richest school trailed in performance against its peers.
The Endowments Ignoring Passive l Institutional Investor
- Leading allocators are not only continuing their dogged pursuit of alpha – they’re doing it in a way that would make more timid investors weak in the knees. A small subset of allocators, including Verger Capital CEO Jim Dunn, have eschewed asset allocation in favor of risk allocation. Dunn explained on a recent podcast that “the problem with modern portfolio theory is that it’s not very modern.” His approach analyzes the factors that drive a manager’s returns and optimizes across factors rather than across asset classes. The resulting portfolio tends to look quite different from one that starts with allocations to asset classes and fills buckets and sizes managers accordingly.
Fossil Fuel DivestmentA Seemingly Symbolic Action Shifted the Climate Change Debate l phys.org
- A new study by University of Michigan sustainable enterprise professor Andy Hoffman and Temple University's Todd Schifeling, a former postdoc with U-M's Erb and Graham institutes, shows that media coverage of climate change increased during Bill McKibben's 350.org activism and that it influenced the public debate.
- About 30 members of Fossil Free GW held a silent protest during a Board of Trustees meeting Friday, urging the University to divest from fossil fuels. Members of the group gathered in the public viewing area of the meeting wearing white T-shirts emblazoned with the word “divest.” When the meeting was called to order, demonstrators stood up silently and unfurled a large banner. Protesters left the meeting after speaking with University Police Department Chief Rashall Brackney. Demonstrators walked out after being told holding the banner and standing during the meeting was creating a disruption, the group wrote in a Facebook statement.
- Last week, a delegation of Indigenous women returned from a trip to Europe where they met with leaders of financial institutions in Norway, Switzerland, and Germany, the “home bases for several of the world’s largest financial and insurance institutions supporting dangerous extraction developments,” according to the news release. The delegation was organized by Indigenous women leaders in partnership with the Women’s Earth and Climate Action Network. Jackie Fielder, who is Mnicoujou Lakota and Mandan-Hidatsa, was a member of that women’s delegation. Fielder is an enrolled member of the Three Affiliated Tribes and a campaign coordinator of Lakota People’s Law Project as well as an organizer with Mazaska Talks. Others in the delegation included LaDonna Brave Bull Allard, Michelle Cook, and Tara Houska. In this interview, Fielder talks about divestment, the delegation’s trip to Europe, and what’s next for the movement to defund fossil fuel projects that threaten Indigenous peoples.
- University of Vermont student activists called upon the board of trustees to divest from fossil fuels in a silent protest at the board meeting Oct. 20. While the budget, finance and investment committee met, Student Climate Culture and Young Progressives entered Silver Maple Ballroom with signs demanding fossil fuel divestment. The students stood, without talking, while the board went through the agenda and raised their signs when they spoke about the University endowment. The protest came after SGA passed a resolution last week backed by a number of student environmental advocacy groups.
- Brandeis University’s faculty convened for their monthly assembly on Friday afternoon and passed both a resolution to divest from fossil fuels and the first of two votes on the general curriculum changes. The resolution states, “We pledge to support the president and his team as Brandeis adopts increasingly ambitious climate action plans to help fulfill the [Paris Agreement’s] commitment to ‘take forceful action’ in support of ‘the global effort to hold warming to under 2°C.’" Senate Chair Susan Curnan (Heller) said that the Faculty Senate unanimously supported the resolution and that the resolution aims to put more commitment on the part of the faculty in supporting ambitious action planning. Several faculty members voiced concern about the final sentence of the resolution, which described the Trustees’ responsibility “to develop and implement a strategy for ending our university’s investments in fossil fuels at the fastest pace.”
- Since 2015, a student environmental organization focused on divestment from fossil fuels has worked to revitalize a fossil fuel divestment campaign at MU. In April, the Missouri Students Association passed a resolution asking that the UM System divest from fossil fuel companies. Frankie Hawkins, a representative for the coalition, said the UM System's estimated $10 million invested in fossil fuels represents about 1 percent of the system's $1.5 billion endowment pool. In a June response to the resolution, UM System President Mun Choi and Maurice B. Graham, the chair of the UM System Board of Curators, sent the coalition a letter emphasizing the importance of fossil fuels in the global economy.
- Members of the University of Cambridge gathered this week in a ‘town hall’ style meeting to discuss the issue of divestment, as part of an information-gathering exercise carried out by the University’s divestment working group. During the ticketed event, which was held at Lady Mitchell Hall on Sidgwick site, speakers proposed a range of arguments both in opposition to and in support of divestment. Twelve speakers, who had submitted speeches to the working group prior to the meeting, were invited to address the audience.
Do you like this post?