Factory Farming: Assessing Investment Risks 2016 Report l Farm Animal Investment Risk and Return (FAIRR)
- This report explores the industrialization of the world’s livestock production, a relatively recent trend, and assesses the potential risks that a range of environmental, social and governance (ESG) issues present to that model. The full report is linked above. To read a summary, click here.
- This state of the industry report documents the scope and variety of systems-level and related approaches undertaken by 50 asset owners and managers. It describes the activities they have executed, the tools they have used, the progress they have made and what research and support is necessary for further progress. It includes profiles of the specific policies and practices of these asset owners and managers that detail the tactics adopted by individual organizations and the variety of best practices that are being developed.
Sustainable / ESG Investing
Bloomberg Brief l Sustainable Finance
- This weeks Bloomberg Brief highlights some sustainable investors expectation that Donald Trump's victory in the U.S. presidential election could be a long-term positive for socially and environmentally conscious portfolios, as well as how big banks without a stance on coal financing are finding a need to take one, the UN climate talks at COP 22 in Morocco are seeking to build on Paris summit progress, and carbon pricing initiatives will play an increasing role in the efforts to curb global warming.
- Last week, brokerage and investment firm FOLIOfn purchased the SRI-minded advisor First Affirmative Financial Network. In October, Eaton Vance agreed to buy Calvert funds, another SRI investment manager. And last year, Goldman Sachs bought ESG investing firm Imprint Capital, which touts more than $550 million of assets. Interest in ESG investing extends beyond millennials to include a wealthier demographic: baby boomers. And as investors turn to low-cost index investing, ESG managers are obliging them with passive ETFs.
- Last month the UNDP and Impact Hub organized the first Social Good Summit in Geneva, bringing together impact investors, international organizations and entrepreneurs to discuss how to scale up and finance impact-driven ventures to accelerate the implementation of the Sustainable Development Goals (SDGs). International organizations can play a pivotal role by aggregating data and supporting the screening and monitoring of projects, with their extensive presence on the ground and large network of experts.
Just How Green is ESG investing? l Portfolio Advisor
- According to the specialist research provider Eiris, more than £15bn was invested in UK ethical/socially responsible retail funds in 2015, up by 11% year on year. But as with all growing markets, there have been red flags. In September, BlackRock and Vanguard were accused of hypocrisy when they voted against a resolution to force ExxonMobil to assess climate risk to its business, by dint of the fact that they were signatories to the UN’s Principles of Responsible Investment. These charges of hypocrisy highlight a huge disconnect between ESG the ‘buzzword’ and ethical investing in practice.
- This article features investment insights from Matt Christensen, Global Head of Responsible Investment at AXA Investment Managers, as he explores seven key trends for the future of responsible investing.
- A new report urges investors to look beyond the peripheral politics of ESG investing and think instead about the very real “systems-level” risks presented by issues such as climate change, human rights abuses and economic inequality.
- CFA Institute, whose eponymous exams are a requirement for many professional analysts and money managers, is planning to update its 2017 curriculum to include more focus on corporate ethics, risk management and environmental, social, and governance (ESG) issues after feedback from its investment management practitioners.
- Impact investing has entered the mainstream. This has been driven by increasing awareness among investors of the important role they can play in order to help address the world’s many environmental and social challenges. As we move forward, we will no doubt see a wider range of investment vehicles, as well as more diverse impact targets. While still in its infancy, measurement will also become increasingly sophisticated and standardized.
- According to a United States Treasury survey, millennials are investing in organizations that prioritize the greater good more than any previous generation. In a World Economic Forum study, 5,000 millennials surveyed in 18 different countries indicated that the overall top priority for any business should be “to improve society.” This article explores why.
Climate Risk, Science & Regulation
- A new analysis is helping investors understand and manage climate change risk in their investments. The research, by Sustainability Accounting Standards Board (SASB), analyzed 79 industries and found that 72 industries are adversely impacted by climate change, which is the equivalent $27.5 trillion, or 93 percent of U.S. equities by market capitalization. Meanwhile, a different report by CDP tracking corporate climate action revealed that an impressive 85% of companies have set emissions reductions targets, but that very few have a firm plan on how to achieve those goals.
- Exxon Mobil announced on Oct. 28 that it may have to take the largest asset write-down in its history. The company said that 4.6 billion barrels of oil and gas assets – 20 percent of its current inventory of future prospects – may be too expensive to tap. Some took Exxon’s statement as evidence that the fossil fuel industry is not doing enough to inform investors about climate change risk. This begs the question of what level of additional mandatory disclosure is needed to improve the “total mix of information available” for investors on which to base decisions.
- Investing in sustainable infrastructure is key to tackling the three central challenges facing the global community: reigniting growth, delivering on the Sustainable Development Goals, and reducing climate risk in line with the outcomes of Paris.
- Last month the 39th Assembly of the International Civil Aviation Organization (ICAO) agreed on a strategy to reduce greenhouse gas (GHG) emissions from international aviation.ICAO’s strategy has the ambition and the potential to make significant contributions to global GHG emissions reduction efforts and to make international aviation more sustainable.
- ExxonMobil's recent warning to investors that it might slash the estimate of its Canadian tar sands reserves could undermine investor confidence in the company's future. But the shift appears unlikely to affect the oil giant's climate impact any time soon. In a financial disclosure filed Oct. 28, Exxon warned shareholders that after nearly quadrupling its reserves in the oil sands over the past decade and defending its assessment of their worth, it may be forced to erase most of those deposits from its books.
- OPEC is hedging its bets regarding peak oil demand, and has included a scenario in its plans that account for it arriving in just over a decade, should the Paris climate agreement targets be fully implemented. “In particular, possible climate policies following COP21 have the potential to reduce energy consumption levels and alter the energy mix substantially,” according to OPEC’s recently released World Oil Outlook.
- Countries' creditworthiness could be increasingly affected by climate change, with African and South Asian sovereigns most susceptible to the economic effects of global warming, ratings agency Moody's said this week. By contrast, Western Europe, North America and Australia as well as the huge landmasses of Russia and China were least vulnerable, Moody's found. "Climate change is expected to become an increasingly dominant factor in our analysis of the credit profiles of those sovereigns that are most susceptible to its effects over the coming decades," it said in a new report.
- This week Japan ratified the 2015 Paris Climate Change Agreement, four days after the global pact officially entered into force. The delay in ratification could limit Japan's ability to influence negotiations on the finer details of the agreement. Those talks were set to formally begin during the COP-22 meeting in Morocco that started on Monday.
- Climate taxes on meat and milk would lead to huge and vital cuts in carbon emissions as well as saving half a million lives a year via healthier diets, according to the first global analysis of the issue. Surcharges of 40% on beef and 20% on milk would account for the damage their production causes people via climate change, an Oxford University team has calculated. These taxes would then deter people from consuming as much of these foods, reducing both emissions and illness, the team said.
General Higher Education Endowment & Sustainability News
- Northwestern University (NU) stood out from other richly endowed colleges by reporting positive investment returns, but the distinction rests mainly on a technicality. NU's fiscal year ends Aug. 31, two months later than that of many universities. That allowed the Evanston school to capture much of the market's third-quarter rebound and realize a 1.9 percent annual gain for its $9.6 billion portfolio.
Ball State University Shaves 20 Years of Climate Neutrality Goal l Ball State University
- Ball State University Interim President Terry King in consultation with his Sustainability Working Group has formally endorsed a change to the university’s Climate Neutral Commitment date; moving the neutrality target from 2050 to 2030. This change of target date results, in part, from the university’s installation of a district-scale geothermal (closed-loop, ground-source) heat-pump-chiller heating and cooling system.
- CNBC reports on the falling stock market news of Donald Trump's election, as futures dropped more than 900 points during last night's preliminary returns. Uncertainty about Trump's plans for international trade and domestic regulation have foreign markets like Mexico in flux while traders suggest that a better picture will emerge in the coming days. Colleges and universities, which have already seen dramatic lows in returns on endowment investments, may see increased losses in the months leading up to Trump's inauguration.
Fossil Fuel Divestment
- This opinion piece by a current student at Kenyon College urges the Board of Trustees to reject divestment and instead take an active management approach to investing the College's endowment.
- A new petition calling for the East Sussex county council to divest its pension fund from fossil fuels was launched by one of its members last week. The petition calls for the East Sussex Pension Fund to divest from as coal, oil and gas investments.The pension fund has an estimated £172m invested in fossil fuels which the campaigners believe is unsustainable.
- Last week members of Divest Whitman placed signs outside Memorial Hall that form a timeline of the different divestment movements throughout Whitman’s history. The most recent sign read, “In 2015, students, faculty, and staff sat in Memorial Hall to support a 1% cap on fossil fuel exposure.” An op-ed by two students involved in the movement can be read here.
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