IEN Session + Workshop at the 2018 Foundation Leadership Forum l AGB, January 21-23, 2018, Los Angeles, CA
- IEN Principal, Tony Cortese will be leading sessions examining mission-aligned investing, and a post-conference peer learning workshop going deeper into all aspects of aligning ESG goals to the foundation’s mission while meeting the financial and advancement requirements of each institution.
- The Winter Innovation Summit is the premier cross-industry event in social impact, innovation, and investing. This year’s Summit will bring together policymakers, funders, nonprofits, and social entrepreneurs to explore the future of social innovation across the globe. Join us for the latest breakthroughs in social impact, innovation, and investing; ski the greatest snow on Earth; and experience the 2018 Sundance Film Festival.
2018 Higher Education Climate Leadership Summit l Second Nature & The Intentional Endowments Network, February 4-6, 2018, Phoenix, AZ
- Second Nature and the Intentional Endowments Network are pleased to host the 2018 Higher Education Climate Leadership Summit. Join your peers from February 4-6, 2018 in Tempe, Arizona for the largest national gathering of higher education presidents, chancellors, trustees, and other senior leaders committed to accelerating climate solutions.
8th Annual Practitioners Gathering l Confluence Philanthropy, March 12-15, 2018, Berkeley, CA
- The Practitioners Gathering is a four-day conference where asset owners and their advisors meet at the cutting edge of mission-related investing. The Gathering represents the most advanced foundations, investment managers, and advisors in impact investing today—and those looking to learn more. Sessions are led by funder-practitioners, investment experts, and other thought leaders.
Responsible Investment Forum New York l Private Equity International, March 20-21, 2018, New York, NY
- Building on the success of the longest-running ESG event in Europe, the Responsible Investment Forum comes to New York for its second year to bring together the most sophisticated LPs, GPs and service providers to discuss why, when, and how your firm should be implementing an effective ESG strategy.
Fiduciary Duty in the 21st Century Progress Report l Principles for Responsible Investment, United Nations Environment Program Finance Initiative and The Generation Foundation, December 2017
Disclosing the Facts 2017 l As You Sow, Boston Common Asset Management, and The Investor Environmental Health Network (IEHN)
- This week, As You Sow, Boston Common Asset Management, and The Investor Environmental Health Network (IEHN) released a 2017 special edition of the Disclosing the Facts (DTF) scorecard. While the annual DTF scorecard has historically addressed oil and gas company management of environmental and community risks from hydraulic fracturing operations, this year’s special edition focuses on the critical risk of methane emissions – a potent contributor to global climate change -- and how companies are managing methane reductions.
- The Investor Water Toolkit is the first-ever comprehensive resource to evaluate and act on water risks in investment portfolios. This ‘how-to’ guide includes links to resources, databases, case studies and other tools for all investors to use, from pension funds to endowments to asset managers. The Toolkit was developed in collaboration with more than 40 institutional investors from across the globe and is the ultimate resource on water integration written for investors by investors.
- Many investment consultants are failing to consider environmental, social and governance issues in their investment advice, warns a report by the Principles for Responsible Investment. The organization said in its report, "Working towards a sustainable financial system: investment consultant services review," that despite consultants advising on the investment practices of trillions of dollars across the globe, many are not taking ESG issues into account. Based on interviews with 22 investment consulting firms and industry experts primarily in the U.K., U.S. and Australia, as well as other data sources, the PRI found three barriers to taking ESG into consideration among consultants: market structure, industry practice, and policy and regulation.
Sustainable Investing at Endowments & Foundations
- Johns Hopkins University will divest from its separately managed holdings in thermal coal, following a vote from the board of trustees Friday. The board's vote directs the university to stop buying the stocks and bonds of companies that produce coal for electric power as a major part of their business, and to sell from its endowment or other investments any securities it directly owns from those companies, on a schedule that minimizes financial loss. The board decision responds to a student group's divestment proposal and more than two years of campus debate on whether Johns Hopkins should hold securities related to fossil fuels. Scientists have determined that burning those fuels contributes to global climate change.
- The Kresge Foundation announced today $16 million in impact investments to nine Community Development Finance Institutions (CDFIs) and Development Finance Agencies (DFAs) working to expand opportunity for low-income people in America’s cities through an initiative called Kresge Community Finance (KCF). More than 130 organizations submitted proposals for funding, representing more than $280 million in capital requests. The resulting investments from Kresge’s Social Investment Practice pair standardized loans, available for up to 10 years, with equity grants equivalent to 5 percent of the amount of each loan. The grants were made to highlight the need, and difficulty, of these community lenders to raise sufficient equity to grow their lending programs.
Barnard College Divestment Decision Rooted in Climate Science l Inside Higher Ed
- Barnard College has decided on a set of criteria it will use as it attempts to divest its endowment from companies that dispute climate science and climate change, it said Tuesday. The announcement comes about a year after a Barnard task force recommended the college divest from fossil fuel companies that deny climate science or that try to undermine efforts to mitigate climate change.
Sustainable, Responsible, Impact & ESG Investing
Bloomberg Brief l Sustainable Finance
- This week's Bloomberg Brief highlights how a group of 225 global investors with $26.3 trillion in assets are ready to name and shame top carbon emitters; Macron's One Planet Summit draws climate pledges; and solar companies ditch public markets.
- A growing number of U.S. asset owners have incorporated environmental, social and governance factors into their investment decisions since 2013, said Callan Associates' fifth annual ESG survey, released Thursday. Across all plan types, 37% of survey respondents reported incorporating ESG factors into their investment decision-making, up from 22% in 2013, the year the survey was first conducted. On the flip side, 60% of funds said they did not incorporate ESG factors in 2017 and 3% said they were unsure. Since the survey's inception, large plans with $20 billion or more in assets have been the highest adopters of ESG investing. In 2017, 78% of the largest plans reported incorporating ESG factors, up from 71% in 2016 and 33% in 2013. By comparison, 30% of funds with $500 million or less in assets said they incorporated ESG factors, compared to 39% in 2015 and 20% in 2013.
- Every December Green Money Journal likes to do an 'Outlook on the Year Ahead' issue. Sure to be on many SRI investor's minds are the 17 UN Sustainable Development Goals (SDGs). John Adams of the Arbor Group at UBS recently told Cliff Feigenbaum, founder of GreenMoney Journal, that they have been expanding their traditional ESG screens to include reviewing companies in comparison to the 17 SDGs. He is finding that an increasing number of large corporations are reporting their actions in reference to the SDGs, which can provide valuable insight into their performance and impact.
- The investment management industry has been highly commoditized. Technology has put pressure on management fees, and this will only continue. Moreover, industry consolidation and scale have led to most funds quasi-indexing, if not explicitly indexing. According to my estimates for every dollar actively managed, either through high turnover diversified portfolios or through low turnover concentrated portfolios, there are three dollars in indexing or quasi-indexing. In such a market there will be tremendous rewards for market participants that can provide a differentiated service. Engaging with companies to promote positive environmental and social outcomes and being able to document the impact of those engagements may well prove to be one of those differentiators.
Mike Bloomberg and FSB Chair Mark Carney Announce Growing Support for the TCFD on the Two-Year Anniversary of the Paris Agreement l TCFD
- Two hundred thirty-seven companies with a combined market capitalization of over $6.3 trillion have publicly committed to support the Task Force on Climaterelated Financial Disclosures (TCFD). This includes over 150 financial firms, responsible for assets of over $81.7 trillion. The TCFD announced the growing support at the One Planet Summit hosted by French President Emmanuel Macron celebrating the two year anniversary of the Paris Agreement. The Task Force, led by Michael R. Bloomberg and established by the Financial Stability Board (FSB), which is chaired by Bank of England Governor Mark Carney, developed voluntary recommendations on climate-related information that companies should disclose to help investors, lenders, and others make sound financial decisions.
The New Frontier in Sustainable Investing l Barron's
- Arabesque Asset Management is a relative newcomer to sustainable investing, but the young firm has made a big splash. Steered by Omar Selim, 54, who led the European firm’s 2013 buyout from Barclays(where he was a top banker), Arabesque manages $150 million, including two European quantitative funds that have outperformed their benchmarks. The board is a who’s who of the sustainable universe, including chairman Georg Kell, the founder of the United Nations Global Compact, the world’s largest corporate sustainability initiative, and Barbara Krumsiek, the former CEO of socially responsible powerhouse Calvert Investments, as well as academics with specialties including finance, neuroscience, and computing. Arabesque’s products include a tool called S-Ray, an intelligent database that monitors the sustainability of 7,000 companies around the world, combining some 200 ESG metrics, with news from more than 50,000 sources. (Arabesque charges clients for the product, but makes it free on its website with a three-month delay on the data.)
- In this interview, Morningstar's Jose Garcia Zarate talks with Emma Wall about how passive fund providers have bowed to pressures to engage with ESG issues.
- ESG investing, once a sideline practice, has gone decisively mainstream — and this is creating real opportunities for investors. These opportunities meet the interests of a wide spectrum of clients, from fiduciaries aligning their portfolios with the realities of a rapidly changing world to clients who are increasingly looking to have their investments express their values. In this interview, the World Resources Institute’s President Andrew Steer and Fromer Head of Sustainable Investing Elizabeth Lewis discuss WRI’s objectives and investing approach with Goldman Sachs’ John Goldstein.
- The requirements described in recent interviews by leaders of the UK-based Principles for Responsible Investment (PRI) include that signatories adopt policies that describe their approach to responsible investing and that top executives oversee the work. Laggards could be delisted starting in 2020. The new rules pose a test for U.S. asset managers led by BlackRock Inc, Vanguard Group and State Street Corp. These firms lately have emphasized ESG factors but some responsible investment activists want them to push for further changes at companies whose shares they hold.
- In this Q&A, Tensie Whelan, director of the Center for Sustainable Business at New York University’s Stern School of Business, talks about the growing bottom-line case for sustainable practices.
- Andrew Parry, head of sustainable investing at Hermes Investment Management, which has £30.8bn ($41bn) in assets, said incorporating sustainability has moved from being an option to becoming an imperative. The comments come from an interview with Jake Moeller, head of Lipper UK and Ireland research at Thomson Reuters, in London last week for the Lipper Alpha Insight podcast.
BNP Paribas Goes Carbon-Friendly With New Platform l Global Custodian
- BNP Paribas Securities Services will launch a new platform bringing together investors and organizations committed to offsetting carbon emissions, in its latest environmentally-minded project. The French bank will launch ClimateSeed, which will act as a centralized platform where investors and companies looking to invest in voluntary carbon offsetting projects will be able to connect easily to other projects looking for funding.
WA Super Launches Impact Investing l Super Review
- WA Super has relaunched its Sustainable Future investment option which will focus on investments promoting global change through impact investing. The new investment vehicle would offer a diversified portfolio of high-potential, publicly traded companies whose products and services would be “geared towards solving the world’s biggest social and environmental problems.”
Investment Manager News
- Hermes Investment Management is launching the Hermes Impact Opportunities Strategy to expand its ESG range and increase sustainable investing. The impact fund will be a concentrated, high-conviction global equity portfolio of 25 to 50 securities, typically held over five to 10 years. Hermes’ main objective is to increase prosperity in society through sustainable investing, particularly in companies linked to at least one UN Sustainable Development Goal.
- This article is a Q&A with Hiromichi Mizuno, chief investment officer of Japan’s Government Pension Investment Fund, the world’s biggest manager of retirement savings, in 2014. He has since led a push to increase equity holdings and advocated for incorporating ESG factors into investing.
- A growing number of investors are responding to climate concerns by selling shares in fossil fuel producers. At $5.4tn, the value of portfolios that exclude fossil fuels has doubled in two years, and even voices in the EU Parliament are recommending divestment. The author of this article outlines why they think divesting is not the answer, and describes the benefits of shareholder advocacy.
- The growth in individual shareholder ownership ironically has created a huge gap in corporate governance and accountability. The ownership of Corporate America lies largely with employees through 401(k) plans and other retirement vehicles, except these same employee-owners cannot and do not have proxy voting rights — these are exercised by the fund providers. Given the size of retail assets that fund managers control — collectively close to $10 trillion — there is a valid concern about their voting practices not reflecting the preferences of the millions of investors in their funds. A typical fund has to vote on hundreds of proxies each year, most of them routine. The voting process is centralized and fairly automated, with default guidelines regarding how the shares are voted. The fund manager conducts analysis only on issues that materially impact a company’s financial or operating performance, and then casts a vote. This article makes the case for increased transparency and ability of shareholders to vote proxies through their managers.
- Under pressure from investors, prosecutors and global regulators, ExxonMobil Corp. agreed on Monday to strengthen its analysis and disclosure of the risks its core oil business faces from climate change and from government efforts to rein in carbon dioxide emissions from fossil fuels. That will require Exxon to face squarely the implications of reduced oil demand if the world makes good on the pledges of the Paris climate agreement to cut carbon emissions practically to zero fast enough to avoid the worst effects of global warming. In a one-paragraph filing to the Securities and Exchange Commission, the oil giant said it would stop resisting motions filed by dissident shareholders seeking this kind of risk disclosure.
- Climate activists said on Tuesday they would take a tough shareholder resolution off the table at Exxon Mobil Corp after the company agreed to provide new details about how climate change could affect its business. But top U.S. oil and gas producers may still face dissension at their springtime shareholder meetings as investors look for more of them to provide additional details on a range of climate topics such as greenhouse gas reduction plans.
- The 2017 US proxy voting season was historic: the world’s two largest asset managers backed shareholder resolutions on climate-risk disclosure. BlackRock and Vanguard, with $10 trillion in AuM between them, are becoming more transparent about their voting. They will play a crucial role in the future of ESG.
Green Bonds: How to Fund Climate Change Initiatives l The McGill International Review
- As the OECD’s fourth Green Investment Financing Forum convened in Paris on the 24th and 25th of October 2017, much of the discussion centred around expanding investment in green bonds. Green bonds are financial instruments that account for a growing investment market. With the same risks and returns as regular bonds, they offer a good opportunity to invest in pro-environment projects. In the past couple of years, demand for green investment opportunities has skyrocketed. Forums, similar to that of the OECD, bring public and private banks together to discuss how to bring more investors into green banking. Green bonds provide an opportunity for investors to support climate change initiatives, as well as provide more opportunities for green projects to get off the ground given sufficient financial resources. The advent of green bonds are becoming increasingly important upon the implementation of the Paris Climate Agreement, and as deadlines to reduce carbon emissions loom closer.
Climate Risk, Science & Regulation
- The sustainability nonprofit organization Ceres joined forces with investors and partner organizations worldwide today to help launch a new five-year global initiative led by investors to engage with the largest corporate greenhouse gas emitters in North America and around the world to act on climate change. The effort is backed by more than 225 global investors, including nearly 70 North American investors, with USD $26.3trillion in assets under management at the time of launch.
World Bank to End Financial Support for Oil and Gas Exploration l Nation of Change
- The World Bank will end it’s financial support for oil and gas exploration and production after 2019. In response to the growing threat posed by climate change, the World Bank announced that it “will no longer finance upstream oil and gas” after 2019. The world bank has been lending $1 billion a year for oil and gas projects in developing countries (about 1-2% of the company’s $280 billion portfolio), but was under increasing pressure from lobby groups to divest. In addition to ending financial support for upstream oil and gas, the bank announced that 28% of its lending will be allocated to climate action by 2020, as outlined in its Climate Action Plan, developed after the Paris accord. The announcement was made on Tuesday at the international One Planet Summit in France to mark the 2 year anniversary of the Paris Agreement.
- Two years ago today, French foreign minister Laurent Fabius banged a gavel at the COP-21 climate change conference in Paris, signaling a consensus between 196 parties from around the world on addressing climate change. More than 200 global institutional investors have pledged to engage with 100 of the world’s largest corporate greenhouse gas emitters to get them to curb emissions. The investors will ask companies to take action to reduce emissions across their value chain, consistent with the Paris Agreement’s goal of limiting global average temperature increases to below 2°C above pre-industrial levels.
Under Trump, E.P.A. Has Slowed Actions Against Polluters, and Put Limits on Enforcement Officers l The New York Times
- An analysis of enforcement data by The New York Times shows that the administration has adopted a more lenient approach than the previous two administrations — Democratic and Republican — toward polluters like those in East Liverpool. The Times built a database of civil cases filed at the E.P.A. during the Trump, Obama and Bush administrations. During the first nine months under Mr. Pruitt’s leadership, the E.P.A. started about 1,900 cases, about one-third fewer than the number under President Barack Obama’s first E.P.A. director and about one-quarter fewer than under President George W. Bush’s over the same time period.
- According to this article, Companies’ disclosure of business risks from climate change could become mandatory in a few years as pressure from investors gathers pace.
- House and Senate negotiators have agreed to spare the electric-vehicle tax credit and wind production tax credit in their compromise package, according to a Republican familiar with the process. As part of the $1.5 trillion House tax bill, the $7,500 electric-vehicle tax credit would have been eliminated and a the wind production tax credit would have been curtailed. The Senate bill didn’t do either, and that is part of the package set for release, said the person, who asked not to be identified discussing the details before the bill is unveiled.
Turning Passion into Action: A Conversation with AAAS Donors Lawrence Linden and Robert Litterman l AAAS
- Lawrence Linden and Robert Litterman have supported many AAAS initiatives through their personal giving. They recently talked with Juli Staiano, AAAS’s Chief Philanthropy Officer, and Caitlin Jennings, the Web Content Manager for AAAS MemberCentral, about why they give back to science. This transcript has been edited for clarity and concision.
- The Boston University Board of Trustees approved a Climate Action Plan on Thursday that will dramatically cut greenhouse gas emissions across both the Charles River Campus and the Medical Campus and fund broad infrastructure improvements in preparation for flooding or heat surges in the coming decades. The board voted overwhelmingly to adopt the plan, which includes capital improvements estimated to cost about $141 million over 10 years. The plan is the result of a yearlong analysis by the University’s Climate Action Task Force, an 18-member group of faculty, staff, and students.
- The development of oil, gas, and coal energy must stop in order to avoid the worst ravages of global warming, 80 top economists said Thursday ahead of a climate summit in Paris. “We call for an immediate end to investments in new fossil fuel production and infrastructure, and encourage a dramatic increase in investments in renewable energy,” they wrote in a declaration. The December 12 One Planet Summit organized by French President Emmanuel Macron – with 100 countries and more than 50 heads of state attending – will focus on marshaling public and private money to speed the transition toward a low-carbon economy, especially in developing countries. But boosting renewable energy such as solar and wind is not enough, the economists warned. “President Macron and world leaders have already spoken out about the need for an increase in finance for climate solutions,” they wrote. “But they have remained largely silent about the other, dirtier side of the equation: the ongoing finance of new coal, oil and gas production.” Many new fossil fuel projects already in the pipeline “will need to be phased out faster than their natural decline,” they added.
- A secretive right-wing lobbying group failed to pass a resolution this week that called upon the Environmental Protection Agency (EPA) to withdraw its 2009 finding that greenhouse gases are endangering the planet. Members of the American Legislative Exchange Council’s (ALEC) Energy, Environment and Agriculture task force discussed the resolution at a summit in Nashville on Wednesday. Its backers wanted to send a strong message that they oppose the EPA’s so-called Endangerment Finding, which essentially compels the agency to regulate carbon dioxide and other greenhouse gases as dangerous pollutants under the Clean Air Act.
- Credit-rating giant Moody's is not convinced that President Trump's exit from the Paris climate change agreement and his rollback of Obama-era climate regulations will completely insulate coal power plants and coal mines from efforts to cut greenhouse gas emissions. Moody's released the results of a new climate risk assessment for power plants on Tuesday that shows coal assets are at particular risk of closing, despite changes in U.S. policy under Trump.
General Endowment News
- In 2017, the University’s endowment reached an all-time high, making it one of the best years for investment returns in Penn’s history. While experts say this spike in returns will have little impact on University spending, the controversy that erupted over a series of leaked documents known as "The Paradise Papers" in November placed the financial maneuvering of various elite universities in the spotlight — Penn included. Now in December, the University continues to face many unanswered questions about its investments and how they will hold up against shifting federal guidelines. To understand how Penn is moving into 2018 as a financial entity, this article provides a guide to the year’s most important milestones in University finances.
- This article discusses how, for higher education, there is virtually nothing good in this tax legislation, but that doesn't mean that everything that adversely affects us is wrong or an inappropriate part of a larger bill. It outlines at least two distasteful provisions that our representatives and senators should remove before the bill becomes law.
- The new chief of Harvard University’s endowment pushed to slash the value of some investments last year, dragging down returns, and people familiar with the matter said he would have cut deeper except for pushback from other board members.
Fossil Fuel DivestmentHow Bill McKibben’s Radical Idea of Fossil-Fuel Divestment Transformed the Climate Debate l The Conversation
- Exhibiting a phenomenon in the social sciences called the “radical flank effect,” McKibben and 350.org have dramatically altered the climate change debate in the United States. The authors of this article used text analytics software to sift through 42,000 news articles about climate change between 2011 and 2015 and map the influence of the radical flank. They found that the divestment campaign expanded rapidly as a topic in worldwide media. In the process, it disrupted what had become a polarized debate and reframed the conflict by redrawing moral lines around acceptable behavior. The researcher's evidence suggests this shift enabled previously marginal policy ideas such as a carbon tax and carbon budget to gain greater traction in the debate. It also helped translate McKibben’s radical position into new issues like “stranded assets” and “unburnable carbon,” the idea that existing fossil fuel resources should remain in the ground.
How Divesting of Fossil Fuels Could Help Save the Planet l The Conversation
- This article discusses the findings of a group of researchers at the School of Environment, Enterprise and Development (SEED) at the University of Waterloo. They recently conducted an analysis that suggests divestment announcements have a statistically significant negative impact on the price of fossil fuel shares. The study aggregates the impact of more than 20 announcements across 200 publicly traded fossil fuel companies. The results suggest that share prices dropped on the days that institutional investors announced they were divesting of fossil fuels.
- Campaigners call for an end to fossil fuel finance and subsidies to avoid dangerous global warming at a meeting to mark two years since the signing of the landmark agreement.
Norway Faces Dilemma Over Oil Fund Without Oil l Financial Times
- The divestment of all petroleum companies would be a momentous change for Norway’s $1tn investment fund, itself fuelled by the country’s oil and gas revenues. But the recommendation last month from the world’s largest sovereign wealth fund that it sell its oil and gas stocks is forcing top Norwegian policymakers to grapple with the question of what the fund and the country wants to stand for.The oil fund’s advice for it to be allowed to sell out of petroleum stocks was grounded not in climate change arguments but financial ones. The fund’s own research found it could reduce Norway’s sensitivity to oil prices by selling petroleum stocks, without reducing returns.
- A group of 100 MPS, including Labour's Jeremy Corbyn and the the Green Party's Caroline Lucas, have called for a £612m pension fund to divest from fossil fuels, while leading chief financial officers have endorsed the recommendations of the Task Force on Climate-related Financial Disclosures.
If the Government Won’t Lead on Climate Change, American University Can (Opinion) l The Eagle Online
- In this opinion a piece, a current AU student discusses how, if the U.S. won’t make climate change a priority, it is even more important and immediate for American University to invest in the environment., and understand how our small activities affect the overall picture.
- Forty members of Fossil Free Yale and graduate student union Local 33 demanded that Yale disclose its fossil fuel investments and divest from fossil fuel at a protest outside Woodbridge Hall Friday afternoon. Representatives from the two groups delivered signatures from more than 1,000 Yale community members to University President Peter Salovey’s office. In addition to demanding that the University disclose investments and divest from fossil fuels, FFY and Local 33 called on Yale to make environmentally sustainable investments and sign the “We are Still In” declaration. Signatories of the declaration commit to the goals outlined in the Paris Agreement and denounce President Donald Trump’s decision to withdraw the United States from the accord.
- One of the world’s biggest financial services companies is both dumping investments and ending insurance for controversial US oil pipelines, taking fossil fuel divestment to a new level. Axa is also quadrupling its divestment from coal businesses and increasing its green investments fivefold by 2020. The moves were announced at the One Planet Summit in Paris, called by the French president, Emmanuel Macron, to accelerate the use of global finance in fighting climate change.
- This article outlines fossil fuel divestment updates in the Portland, Oregon area.
- About 20 companies including Unilever, EDF and Iberdrola joined an international alliance of 26 nations on Tuesday pledging to phase out coal to combat global warming. At a climate summit hosted by French President Emmanuel Macron in Paris, new members of the “Powering Past Coal Alliance” agreed that traditional coal power should be phased out by 2030 in rich nations and by 2050 in other parts of the world.
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