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
AASHE Sustainable Campus Index 2017 l The Association for the Advancement of Sustainability in Higher Education
- The 2017 Sustainable Campus Index recognizes top-performing colleges and universities overall by institution type and in 17 sustainability impact areas, as measured by the Sustainability Tracking, Assessment & Rating System (STARS). The Index also highlights innovative and high-impact initiatives from institutions that submitted STARS reports in the 12 months prior to July 1, 2017. Of note, the top 5 performers in the investing section are all IEN members, as are 2 of the 3 additional “highlights” (page 62).
- This piece highlights how the investor engagement process helps expand impact through three key levers: deepening insights regarding individual issuers, as well as their sectors, engagement discussions with issuers enabling an investor to provide feedback, and elevating the overall standards for the entire sustainability ecosystem, which may help accelerate the allocation of capital towards sustainably managed companies.
Effective Investing for the Long Term: Intentionality at Systems Levels l The Investment Integration Project (TIIP)
- In this new report Effective Investing for the Long Term: Intentionality at Systems Level—written by Steve Lydenberg, William Burckart, and Jessica Ziegler—TIIP examines the strategies that more and more investors are utilizing to act with intentionality to balance efficiency in maximizing self-interested returns with maintaining the resilience of the environmental societal, and financial systems that are the ultimate source of this wealth creation. Also, check out a webinarIEN did with TIIP covering highlights from the paper.
- Coping, Shifting, Changing features recommendations focused on measures that companies can adopt to address the problems caused by market short-termism, and actions that investors can take to support companies in those efforts.
Sustainable, Responsible, Impact and ESG Investing
Bloomberg Briefs l Sustainable Finance
- This week's Bloomberg Brief highlights how wealthy nations are falling short on promises to help the developing world cut carbon emissions; Syria will sign the Paris climate accord; and the Climate Group's EV100 initiative aims to make electric cars the new normal.
- Diversity issues are beginning to influence manager selection decisions from asset owners and consultants, according to research from think-tank New Financial. The think tank carried out research on 100 asset owners from across the world and conducted 40 interviews with a wide range of investment market participants. It found that, although asset owners may have already been considering workforce diversity in some way as part of manager selection, the discussion was increasingly explicitly framed. Questions were more focused and came up more frequently, it said.
- The list of prominent men recently accused of sexual harassment goes on, and on, and on. So, too, do the costs of such behavior, in ruined reputations, aborted careers, and shattered companies, not to mention dollars and cents. Investors also have a lot at stake. The greatest cost, of course, is borne by the targets of predatory behavior, mostly women, many of whom have been newly empowered to share their stories publicly in recent weeks. The numbers suggest that their experiences are just the tip of an ugly iceberg. According to the Equal Employment Opportunity Commission, one in four women in the U.S. experiences sexual harassment at work. Based on a recent Wall Street Journal/NBC news poll, that figure could be closer to 50%.
- A new report, “Better Business, Better World,” identifies 60 specific opportunities, including low-income food markets, public transport in urban areas, energy storage and telehealth, that could account for 10 percent of global GDP and create 380 million new jobs by 2030. Affordable housing alone could account for 20 percent of the total. Altogether, four sectors central to the global Sustainable Development Goals – energy, cities, food and agriculture and health and well-being – offer $12 trillion in annual cost savings and revenues. It’s not just enhanced reputations: business investments in sustainable development are driven by the promise of major efficiency gains, the report says.
- Andrew Parry, head of equities & impact investing at Hermes Investment Management, said the United Nations’ Sustainable Development Goals represent the growth opportunities emerging over the next 15 years. Parry spoke on a panel at the Thomson Reuters Lipper Alpha Forum in London yesterday: “The UN SDG goals have 169 targets with a map for compliance for company activities and are the growth opportunities that will emerge over the next 15 years.” A recent ESG survey by BNP Paribas Securities Services found that 51% of asset managers and more 50% of owners intend to invest in ESG funds over the next year.
Improving The Quality Of ESG Data l Financial Advisor
- On October 18, 2017, CFA Institute released updated findings in its Environmental, Social and Governance (ESG) Survey Report. This survey confirmed that, as in 2015, 73 percent of respondents take ESG into account in their investment analysis and decisions.
- David Yeh’s career spans Wall Street, global venture capital and the White House. In this Q&A, Yeh discusses how he integrates his unique insights on business, innovation and government to develop impact solutions that often address critical needs in energy, infrastructure/real assets and sustainability. He founded Capitol Hill to work with global asset managers, high net worth families and game changing startups to develop mission-driven investment and business solutions.
- The true market for ethical investing is hard to quantify given the nuances of definition and new products opening or repurposing regularly. It is dominated by institutional investors but the retail segment is growing rapidly. A lot of historical criticism has been levied at ethical investing, stemming from the premise that restricting the investment universe of active managers of ethical mandates causes them to underperform their unconstrained counterparts. The evidence suggests this is not the case. This article outlines five reasons why.
Norway Pension Fund Balances ESG with Returns l Chief Investment Officer
- As a major oil-producing country whose economic future depends on how it invests revenues from its most valuable natural resource, Norway has managed to strike a balance between meeting high standards of ESG objectives and a steady investment return. Norway’s $1.011 trillion Government Pension Fund Global has reported strong returns from oil and gas and basic materials stocks in its latest quarterly report, but also was recently named one of the top 25 responsible asset allocators in the Bretton Woods II Leaders List.
Investment Manager News
- KBI Global Investors has launched KBIGI Global Sustainable Infrastructure Strategy, part of its Natural Resources suite of strategies. The firm writes that an interest in an allocation to infrastructure has grown significantly in recent years as investors place a greater emphasis on real assets and look to achieve broader diversification.
- Aled Jones joins FTSE Russell as Head of Sustainable Investment for the EMEA region, working with FTSE Russell’s clients, especially, asset owners and asset managers, to support their ESG investment strategies. This will include input into new and evolving ESG methodologies and product development in collaboration with FTSE Russell’s research, product and business development teams. Dr Rory Sullivan has joined as Interim Head of ESG Standards and Innovation. He will be working with the team to develop research and to further define market standards and ESG methodologies, along with collaborations in the market place.
- Appleseed Capital, an investment and financial advisory firm that incorporates environmental, social, and governance (“ESG”) criteria into its investment decision-making process, has been named to the 2017 Best for the World: Changemakers Awards List. This is the first year Appleseed Capital has been nominated for the list, created by B Lab, the independent non-profit that certifies companies as B Corps based on rigorous standards for social and environmental performance, public transparency, and legal accountability. The list recognizes those Certified B Corps that have made verified, significant improvements in their business policies and standards.
Supply Chain Transparency
- In what may become a precedent-setting contract, Nike has agreed to give a watchdog group the right to inspect working conditions in overseas factories that make Husky apparel for the University of Washington. At issue was Nike’s refusal to allow a watchdog organization, the Worker Rights Consortium (WRC), to inspect the factories where it makes clothes. UW President Ana Mari Cauce agreed. In a statement, she said the UW is the first school to have such a contract with Nike, “and I’m confident it will serve as a model for other universities moving forward.” She said she believed that “UW leverage and advocacy made a significant difference in the final outcome.”
- Climate Bonds Initiative has released their second full paper "Green Bond Pricing in the Primary Market" report analysing the performance of green bonds at issue April-June 2017. The analysis is based on a total sample of 131 bonds, 19 of which are green bonds and 112 are vanilla bonds. More details on the methodology can be found in pages 13 -15 of the report. The report is a continuation of our ongoing assessment of green bonds pricing. A preliminary 'Snapshot' briefing paper examining Q4 of 2016 was produced for the 2017 Climate Bonds Annual Conference and the first Green Bond Pricing Report examining eligible green bonds from 2016 & Q1 of 2017 was released in August.
Climate Risk, Science & Regulation
- Syria has announced that it will sign up to the Paris agreement at the COP23 climate summit in Bonn, meaning the US would be alone if it left the global pact to prevent climate catastrophe. The declaration was made by a Syrian delegate at a plenary session of the conference this morning.
- The world’s 250 biggest listed companies account for a third of all man-made greenhouse gas emissions yet few have strong goals to limit rising temperatures, a study showed on Tuesday. Coal India, Gazprom and Exxon Mobil topped the list when measuring carbon dioxide emitted by companies and by consumers using their products, it said.
- In what is often called a “2⁰C world,” falling demand for oil means that a quarter of the world’s refining capacity may not be necessary by 2030. At least, that is the assessment offered by Carbon Tracker, a London-based think tank that studies the impact of the global energy transition on capital markets. The group partnered with the Danish pension fund PKA and Swedish pension fund AP7 on this report, Margin Call: Refining Capacity in a 2⁰C World. Carbon Tracker’s researchers analyzed 492 refineries, which combined account for 94 percent of the world’s total oil capacity. The think tank says its study is likely the first analysis that gauges how the energy sector would perform as governments and companies scramble to meet international objectives to limit climate change to 2°C by ramping up investments in clean energy and technology.
Stepping Up to Carbon Transparency l Indexology
- Carbon is rapidly becoming a central theme in a sustainability-driven investment landscape. Intensifying physical, regulatory, and reputational risks—with climate change now largely recognized as a global imperative—have elevated carbon considerations to the mainstream conversation. This expansion into the financial world follows the adoption of such concerns by corporations, building products, and services in the real economy. In response to increasing interest in and demand for clear carbon exposure information, S&P Dow Jones Indices now publishes carbon metrics for all standard equity indices as a matter of course. Carbon metrics are available for core headline indices such as the S&P Global LargeMidCap, S&P 500 Low Volatility Index, and the S&P Global 1200, as well as for more environmentally-focused indices, like the S&P 500 Carbon Efficient Index.
- There has been no significant reduction in the level of fossil fuel investment by local council pensions since the Paris climate deal was agreed two years ago, according to new data. The research, compiled by environmental groups 350.org, Platform, Energy Democracy Project and Friends of the Earth, shows that councils currently have £16.1bn of their workers’ pensions invested in oil, gas and coal companies. This represents 5.5 percent of their total investments, worth £287.9bn. While the value of these investments has increased since 2015 (when the market value represented £14bn), the proportion of the pension funds invested in fossil fuels has stayed about the same.
General Endowment News
- A trove of millions of leaked documents from a Bermuda-based law firm, Appleby, reflects some of the tax wizardry used by American colleges and universities. Schools have increasingly turned to secretive offshore investments, the files show, which let them swell their endowments with blocker corporations, and avoid scrutiny of ventures involving fossil fuels or other issues that could set off campus controversy. Buoyed by lucrative tax breaks, college endowments have amassed more than $500 billion nationwide. The wealth is concentrated in a small group of schools, tilting toward private institutions like those in the Ivy League and other highly selective colleges. About 11 percent of higher-education institutions in the United States hold 74 percent of the money, according to an analysis in 2015 by the Congressional Research Service.
Paradise Papers Investigation Calls Out Reed College Investments l Portland Tribune
- In a series of investigative stories called The Paradise Papers, Southeast Portland's Reed College is named as an investor in a partnership for a Cayman Islands fossil fuels fund. The investment product, with nine other school investors, comes through EnCap, a financial firm providing venture capital to oil and gas companies. The reporting may spark new pressure on the college to consider social and environmental goals in its investment strategy. The Nov. 8 New York Times piece — Endowments Boom As Colleges Bury Earnings Overseas — is based on leaked data to the International Consortium of Investigative Journalists regarding trillions of dollars of investments in off-shore accounts.
Republican Tax Bill Would Kill Deductibility of Student Loan Interest l Trib LiveNew Divestment Tool: NGO Urgewald Launches Comprehensive Coal Database "Global Coal Exit List" l Business InsiderSyracuse University Student Association Members Argue About Syracuse University Divestment From Private Prisons l Daily Orange
- The tax deduction for student loan interest would be eliminated as part of the sweeping tax changes proposed by House Republicans on Thursday. The changes also call for levying a 1.4 percent tax on the investment income earned by private colleges and universities that have sizable endowments. The tax would not apply to state schools. More than 12 million Americans deducted student loan interest on their tax returns in 2015, the most recent year available, according to Internal Revenue Service data.
- Some of the most prominent American universities are assailing a proposal to tax their endowments, which have climbed in some cases into the tens of billions of dollars under tax protections envied by other fundraising institutions. The tax plan released this week by Republicans in the U.S. House of Representatives comes amid growing legislative scrutiny of the finances of higher education. It calls for a 1.4 percent tax on endowment income at the wealthiest private universities. For many colleges and universities, the proposal is a bid to raid resources used to provide financial aid, support teaching and research and carry out community service.
- Republicans' first amendment to their tax reform bill would ease off a proposal to institute a new tax on large college endowments. Almost six hours hours into the House Ways and Means Committee's markup of the Tax Cuts and Jobs Act, Chairman Kevin Brady, R-Texas, offered an amendment that would limit "carried interest" for hedge funds, change the treatment of international profits and make other substantive alterations to the bill in addition to the endowment tax. The panel later passed it on a party-line vote. Under the amendment, which Brady described as a package of "modest refinements," the 1.4 percent excise tax on university endowments proposed in the bill would apply only to schools with endowments of at least $250,000 per student, up from $100,000.
Fossil Fuel Divestment
- At the UN Climate Summit this week in Bonn, the German environment NGO Urgewald and its partners published the "Global Coal Exit List" (GCEL), a comprehensive database of companies participating in the thermal coal value chain. While most coal databases used by the finance industry only cover around 100 companies, the GCEL provides key statistics on over 770 companies whose activities range from coal exploration and mining, coal trading and transport, to coal power generation and manufacturing of coal plants.
- The Church of England should “show moral leadership” and immediately sell its investments in the oil giant ExxonMobil, according to a group of bishops and other clergy. ExxonMobil is accused of misleading the public for decades over the dangers of climate change – the oil company denies the allegations – and has funded climate change denial, making its presence in the church’s £7.9bn investment fund of particular concern, the group argues. Investment funds worth more than $5tn have already committed to divest from fossil fuels. Archbishop Justin Welby, the leader of the Church of England who worked for a decade in the oil industry before becoming a priest, described climate change as a “moral crisis” on Saturday. “Climate change is pushing us toward disaster,” he wrote in the New York Times. “It is not a distant danger – it is already with us. As we continue to burn fossil fuels, its effects will only grow.”
- Cambridge’s divestment movement had a busy day on Thursday as they staged a protest at an Engineering careers event, shortly before the second town hall meeting was held on the issue. Protesters from Zero Carbon Society Cambridge interrupted an ‘Engineering, Science & Technology Event’ hosted by the Careers Service in the University Centre (UC) on Thursday afternoon. Shortly after 2pm, roughly a dozen demonstrators entered the main hall of the UC, shouting and chanting. The protesters, dressed largely in black and with black paint on their hands, proceeded walk towards the Shell and BP stalls, before lying down in front of them. They continued chanting for approximately ten minutes, as University security staff arrived at the scene.
Private Prison Divestment
- At Monday night’s Syracuse University Student Association meeting, assembly members argued about a movement urging SU to divest from companies that invest in private prisons. Janice Dowell, an SU philosophy professor, asked SA to write a resolution encouraging the university to divest from certain companies. Chief of Staff Andres Laguna presented an analysis of a meeting with Dowell. Some SA members said Andres should not have presented the subject because it was not an SA issue. Others said he was subjective and that he should have done more research.
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