Weekly News Round-Up: December 1st, 2017

New IEN Member
Upcoming Events

Sustainable Food Systems: Investment Risks & Opportunities l FAIRR Initiative, December 7, 2017, 4:15-5:45pm, New York, NY

  • The food system is under increasing pressure due to population increases and demographic shifts. Rising demand for meat is linked to a range of investment risks from deforestation, water and air pollution, to cancer, antibiotic resistance and obesity. The event will be a forum for investors to understand and discuss strategies to address the material risks and opportunities presented by protein production, and to share questions with experts in the field.   

RI Americas 2017 l Responsible Investor, December 6-7, 2017, New York, NY

  • The topics and themes for the RI Americas 2017 agenda are based around demonstrating sustainability risk and return implications for investors in the light of finding solutions to the major ESG problems of our time including: What the Taskforce on Climate-related Financial Disclosure (TCFD) recommendations mean for corporate and investor reporting, investment strategy, and climate solutions, Disruptive initiatives like the World Benchmarking Alliance, and more.
Webinar: Understanding & Applying Evidence on the Financial Performance of Impact Investments l The Global Impact Investing Network (GIIN), December 12, 2017, 10:30 - 11:30 EST 
  • As institutional investors, among others, begin to explore opportunities in impact investing, they often question the ability of impact investments to generate strong financial returns. On this webinar, co-hosted by the GIIN Research Team and the GIIN Initiative for Institutional Impact Investment, participants will hear key findings from a new report, GIIN Perspectives: Evidence on the Financial Performance of Impact Investments, which synthesizes available data across asset classes, namely private equity, private debt, and real assets, and individual portfolios to address this knowledge gap. Speakers will discuss the implications of this body of research for the industry as well as key considerations in developing a balanced portfolio.
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.
Winter Innovation Summit l Sorenson Impact, January 24-26, 2018, Salt Lake City, UT
  • 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.
Sustainable Investing at Endowments
 

Financial Report Shows Northeastern University is 'Poised for Investing in Our Future' l News at Northeastern

  • Northeastern is “poised for investing in our future,” Tom Nedell, university treasurer and senior vice president for finance, told members of the Faculty Senate on Wednesday. Nedell emphasized the university’s commitment to environmental sustainability, noting the university’s decision to direct $25 million of its endowment to investments with a focus on sustainability, including clean energy, renewables, green building, and sustainable water and agriculture. The university indicated in July 2016 that it would complete that goal in five years. To date, less than two years later, it already has invested $18 million into sustainable funds.
This Class at Brown University is an Object Lesson in Sustainable Investing l Green Biz
  • Concentrated stock portfolios continue to outperform significantly when combining sustainability and financial criteria. That's the major blinking-in-very-large-neon-lights headline from the portfolios our students at Brown University have been constructing in our classes on sustainable investing. Inspired by the student-run club at Brown University on socially responsible investing (or Brown SRIF), its own financially outperforming portfolio is available on their Facebook page. Our sustainable investing class began in spring 2016 and was the outcome of the divestment movement on campus in 2013, leading to university president Christina Paxson’s desire to do what Brown can to research, teach and invest in a positive way. Her letter to the Brown community in October 2013 was thoughtful and laid out what continues to be an unfolding strategy. A taskforce is meeting to consider further steps that the university might make in this regard, which is exciting to see.
  • The University, sitting on an endowment of $3.5 billion each year, invests at least $26 million of that into an offshore fossil fuel fund, according to information the University released to the Fossil Free Pitt Coalition in February 2016. After several protests against Pitt’s controversial investments in the fossil fuel industry, the University is creating a socially responsible investing ad hoc committee. The ad hoc committee will focus on changing Pitt’s investment priorities.
 
 
New Reports

  • Corporations have far-reaching impacts on society and economic growth through the decisions they make about their employees, products and services, operations and management practices. By considering implications of those choices on inclusive growth, corporations can contribute to economic gains that are broad-based and sustainable over time, while achieving business benefits through new market opportunities, reduced costs and enhanced investor interest.
Death of Diesel: A Scenario Analysis OF Which Automakers Will Pay Higher Emissions Fines l MSCI
  • Regulators are considering banning diesel cars in various countries and cities to lower levels of toxic nitrogen oxides. This trend has already impacted auto markets in Europe. Declining diesel vehicle sales reflect a shrinking trust in customers who fear increased restrictions on use and lower resale values.  This analysis assumed a moderate 30% decline in diesel vehicles in a company’s fleet by 2021 and modeled two different scenarios. Under scenario 1, customers buy petrol models in place of diesel models of the same carmaker. Under scenario 2, customers buy petrol models and vehicles with alternative drives instead of diesel models. We projected future fleet emissions based on fuel efficiency improvements in diesel and petrol fleets of the three previous years.
 
Sustainable, Responsible, Impact & ESG Investing
 
Crane Board Chair, Natasha Lamb, Named one of 2017's Top 50 Most Influential l IEN Blog
  • Natasha Lamb, Chair of the Board of The Crane Institute of Sustainability -- the 501(c)(3) non-profit organization that is home to the Intentional Endowments Network -- has been named one of 2017's Top 50 Most Influential People by Bloomberg Businessweek. Visit the Bloomberg Top 50 to read more about this honor and watch a video featuring Natasha and the other changemakers helping to shape our society. 
What It’s Like to Be a Sustainable Investor Under Trump l Bloomberg
  • This article ontains interviews from several investors who focus on ESG  matters about their insights into how the U.S. administration is affecting their strategies.
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how French bank BNP Paribas said it will stop funding and advising tobacco companies over health concerns; solar capacity in developing nations surged last year; and plastic recycling faces challenging economics.
Bloomberg Brief l Sustainable Finance
  • Last week's Bloomberg Brief highlights how Norway's $1 trillion wealth fund proposed divesting oil and gas stocks; Big data could bring upside for renewables; and energy storage market seen taking off.
How Companies Are Pushing Ahead on Climate-Change Targets l Wall Street Journal
  • More of the world’s biggest corporations are taking the fight against climate change into their own hands, aiming to cut their energy costs, pre-empt regulation or burnish their reputations with investors and customers. Only 14% of the companies in the CDP study have committed to emissions-cutting goals that align with the U.N. target—an effort backed by the World Resources Institute—although another 30% have vowed to set such targets in the next two years. Some companies have resisted the trend. According to the CDP’s survey, the natural-resource and financial sectors have the greatest number of companies with no targets at all.
MythBusters: Further Proof That Impact Investments Reap Healthy Returns l Forbes
  • More evidence pointing to the potential for impact investors to make healthy returns from their investments. The Global Impact Investing Network (GIIN) just came out with a report reviewing available research on the financial performance of impact investments. Its conclusion: Across private market strategies, such as private equity, fixed income and real assets, the distribution of impact investing fund returns is similar to results for conventional markets.
Zurich Plans $5 Billion Allocation to Impact Investments l Bloomberg
  • Zurich Insurance Group AG plans to more than double its allocation to impact investments, earmarking $5 billion for a broader range of assets after devoting $2 billion to green bonds in recent years. While it didn’t specify a period, Zurich plans to buy bonds that finance social projects and the sustainable use of resources, as well as investments in private equity geared to these goals, Switzerland’s biggest insurer said in a statement on Thursday. The allocation represents about 2.6 percent of Zurich’s $190 billion portfolio, mainly consisting of debt securities.
Socially Responsible Investing: The Next Paradigm for Businesses l Live Minted
  • According to this article, the need of the hour is to start the process of moving towards sustainable investing practices and being socially responsible, instead of a knee-jerk reaction when regulatory compliance becomes mandatory. Corporates need to be at the helm of implementing policies in the true spirit and being transparent in disclosing their actions.
Societe Generale Securities Services launches ESG Reporting l Wealth Advisor
  • Societe Generale Securities Services (SGSS) has launched a new service for its clients – ESG Reporting – a system to gauge investment strategies’ impact on the environment and the society. The new ESG reporting solution allows institutional investors and asset managers to rate their investments against a broad set of ESG indicators using MSCI data and methodology. These indicators include criteria, such as CO2 emissions, board composition, and executives’ salary as well as workforce management and producer responsibility.
Sustainable Investment Joins the Mainstream l The Economist
  • The US Forum for Sustainable and Responsible Investment, a lobby group, estimates that more than a fifth ($8.7trn) of the funds under professional management in America is screened on SRI criteria, broadly defined, up from a ninth in 2012 (see chart). Growing demand has spurred Wall Street into action. Goldman Sachs now manages $10.5bn in assets dedicated to “ESG” (ie, meeting environmental, social and governance criteria) and a further $70bn in “negatively screened” assets that exclude the manifestly unvirtuous. This generational change is already visible at universities. Under pressure from students and alumni, several endowments have promised to clean up their investment portfolios. Business schools say classes related to ESG investment are oversubscribed. 
Green Firm Impax Eyes Post-Merger Future l Institutional Investor
  • In this year’s flurry of fund firm mergers, the proposal to combine the U.K.’s Impax Asset Management with U.S. peer Pax World Management, has been under the radar for many investors. But, once complete, the newly combined business will be handling some £10.3 billion ($13.4 billion) in assets, all in dedicated sustainable investment mandates. On Wednesday, the U.K. business is to publish its results to the London Stock Exchange. Chief executive Ian Simm is hoping to give shareholders an update on the merger’s progress, which he wants to close before the end of February 2018, Simm told Institutional Investor in an interview.
Where is the S in ESG Investing? l Financial Times
  • The Economist magazine published a piece in September that pointed to the increased consideration of environmental, social and governance factors in mainstream investing. The piece noted correctly that, for a variety of reasons, including ease of measurement, the E- and G-factors have gained more traction than the S-factor, which is often associated with employment rights. However, it is evident from recent events that mainstream investors would be unwise to discount the impact of S-factors on company performance strictly because of measurement difficulties.
CIBC Asset Management Becomes a Signatory of the United Nations-Supported Principles for Responsible Investment l Market Insider
  • CIBC Asset Management Inc. announced this week it has become a signatory of the United Nations-supported Principles for Responsible Investment (PRI). The PRI is the world's leading proponent of responsible investment, bringing together a global network of asset owners, investment managers and service providers. They are committed to integrating environmental, social and governance (ESG) factors into their investment practices, analysis and decision-making processes.
New ETF Joins Fight Against Sexual Harassment in Workplace l U.S. News
  • A new exchange-traded fund is being introduced for investors who want their money kept far away from sexual harassment in the workplace. The Impact Shares YWCA Women's Empowerment ETF is expected to launch in the first quarter of 2018, and enable people to invest with companies that promote women's interests and take strong stands against workplace harassment. "When women thrive, whole economies thrive," said Dorri McWhorter, chief executive of YWCA Metropolitan Chicago.
Commentary: Active Investing v.2.0 l Pensions & Investments
  • A wave of change is coming to the asset management industry, which at its core has not materially changed its practices, processes, and approach over the past decades. Still, a portfolio manager is in control of vast amounts of assets, following investment approaches that utilize financial information that is now standardized, common and well understood by most market actors. It should not be surprising then that long-term alpha generation has become so much more difficult. How can managers differentiate themselves and ensure they are on the winning side of the equation? This article explores three forces the authors see acting as catalysts: integrating ESG data, utilizing technological advancement, and being transparent and representing beneficiaries' preferences.
  • Millennials are increasingly interested in sustainable investing and in many cases are instilling their social and environmental values in their parents. These are two of the more recent trends observed by Matthew Koch, executive director of Morgan Stanley Wealth Management, and his colleague, head of research Nathan Lim. Koch's team manages about $1.5 billion on behalf of 55 wealthy clients – typically with between $5 million and $150 million of investable assets – and as those clients increasingly introduce their offspring to the global investment bank, investment shifts are starting to occur.
  • Investors and boards of listed companies are neither friends nor foes, but their interests align in differing ways over time, and this requires an array of engagement approaches to achieve desired outcomes. This is the conclusion of a panel of engagement experts speaking at the Responsible Investment Association Australasia (RIAA) annual conference in Sydney. Michael Jantzi, CEO of Sustainalytics noted that he thinks of engagement as a toolbox of various tools, and that those tools have been deployed in successful ways recently.
Interview with Eva Halvarsson, Chief Executive Officer, AP2 l Climate Action
  • Climate Action caught up with Eva Halvarsson, Chief Executive Officer, Second Swedish National Pension Fund (AP2), on scaling up low carbon investment and her participation in the first Sustainable Investment Forum Europe.
FTSE Russell Launches Two New Index Series To Support ESG Integration Into Passive Investment l Mondo Visione
  • FTSE Russell, the global index, analytics and data provider, announces the expansion of its Sustainable Investment index offering with the launch of the FTSE Global Climate Index Series and the FTSE ESG Index Series. The new index series build on the launch of the award-winning FTSE All-World ex CW Climate Balanced Factor Index, the first FTSE Russell index to combine a smart beta factor approach alongside climate change considerations.
Real Estate 
Real Estate’s Growing Commitment to Sustainability l The Investor JLL
  • The global real estate industry continues to make significant advances in its sustainability performance, according to GRESB’s latest survey results. The 2017 GRESB Real Estate Assessment – which featured 850 real estate entities across 62 countries – gauged the ESG performance of participating organizations. The sector’s average score this year rose to 63, up three points on the 2016 results, with participants reducing their “like-for-like” energy consumption by 1.1percent, carbon emissions by 2.2 percent, and water consumption by 0.5 percent.
  • Toyota Financial Services (TFS) issued its first-ever euro-denominated unsecured Green Bond today, expanding its industry-leading commitment to the sale of environmentally friendly vehicles.  The €600 million bond will be used to fund the acquisition of new retail finance contracts and beneficial interests in lease contracts for Toyota and Lexus vehicles that meet specific clean air criteria, including powertrain, fuel efficiency and emissions.  There are currently nine vehicles in the Toyota and Lexus lineup that qualify. 
Supply Chain Management
 
  • US clothing importers are cleaning up their sourcing acts largely in response to investor choices, with some 85% of institutional investors saying that nonfinancial information is critical to their buy decisions. Investors are also aware that spending decisions are also undergoing a generational shift, with ageing baby boomers transferring some US$30 trillion in wealth to more socially and environmentally conscious millennials.
 
 
 
Climate Risk, Science & Regulation
We Are Still In and We're More Committed than Ever l Forbes
  • In this piece by Ceres President Mindy Lubber, she describes how and why, now that COP23 has concluded, she is grounded in a renewed affirmation of where we stand -- as both Americans and as global citizens -- and is more energized than ever to move faster and more boldly into the future.
Shell, to Cut Carbon Output, Will Be Less of an Oil Company l The New York Times
  • Bowing to pressure from shareholders and the Paris international climate accord, Royal Dutch Shell pledged on Tuesday to increase its investment in renewable fuels and to cut its carbon emissions in half by 2050. Shell and other big oil companies have moved only sporadically over the last decade toward greater production of wind and solar energy. Now there are signs of a commitment to take climate change more seriously. In comments to investors, Ben van Beurden, Shell’s chief executive, said that from 2018 to 2020, the company’s new-energies division would spend up to $2 billion a year on renewable energy sources like wind, solar and hydrogen power and on electric-car charging stations.
Who Will Pay For Nature? How To Catalyze Private Investment In Sustainability l Forbes
  • As more and more world leaders call for action on climate change, a difficult challenge arises: How do we pay for it?It will take an estimated $5-7 trillion per year over the next 15 years to solve climate change and to meet the other U.N. Sustainable Development Goals ("SDGs"), from ending extreme poverty to ensuring clean water and sanitation for all. That’s a staggering amount of money. Annual government grants today only punch in at $142.6 billion. Philanthropy produces about $400 billion per year in the U.S., though only a small percentage of this goes to environment or sustainability issues. That leaves a huge financing gap. Closing that gap is likely the most important thing an environmental CEO can focus on.
  • November 4th marked one year since the Paris Agreement, which seeks to implement measures against climate change, took effect. A range of measures are steadily being implemented at a pace almost unthinkable two years ago, when the agreement was adopted. The United Nations’ adoption of economic, social and environmental sustainability targets just before the agreement was reached also seems to have had a positive impact. This article contains interviews with three people plugged into the business world to get their take.
How Companies Are Pushing Ahead on Climate-Change Targets l The Wall Street Jounral
  • Among just over 1,000 of the world’s biggest publicly listed companies, accounting for about 12% of total greenhouse-gas emissions, 89% have plans to cut those emissions, according to a survey from the CDP, a nonprofit platform for corporate environmental disclosures. That is a 16 percentage-point increase since 2011, said the CDP, formerly known as the Carbon Disclosure Project. Earlier this month, a group led by former New York Mayor Michael Bloomberg and California Gov. Jerry Brown presented a climate pledge under which 1,400 businesses have set emissions-reduction targets. This article explores more business that are setting goals and cutting their own carbon emissions.
The Energy 202: Trump Expected to Sign Bill Calling Climate Change a "Direct Threat." l The Washington Post
  • Since taking office, President Trump has failed to make good on some high-profile campaign promises, such as appointing a special prosecutor to investigate Hillary Clinton and banning all Muslims from entering the country (not from lack of trying, however). But one area in which Trump has achieved tangible success is slashing energy and environmental regulations. Trump said he would withdraw the United States from the Paris climate agreement, and he began doing so. He said he would undo the Clean Power Plan and other Obama administration rules, and he began doing that, too. So it may come as a surprise to hear that before the end of the year, Trump is expected to sign a bill saying that “climate change is a direct threat to the national security of the United States.”
Moody's Warns Cities to Address Climate Risks or Face Downgrades l Bloomberg

 

  • Coastal communities from Maine to California have been put on notice from one of the top credit rating agencies: Start preparing for climate change or risk losing access to cheap credit. In a report to its clients Tuesday, Moody’s Investors Service Inc. explained how it incorporates climate change into its credit ratings for state and local bonds. If cities and states don’t deal with risks from surging seas or intense storms, they are at greater risk of default.

 

  • Technology and big data will change how electric grids are organized and water is transported, creating upside for sustainable investors that may not be priced in today, says Lara Banks, a managing director at Makena Capital Management, which oversees about $19 billion. Banks, who oversees portfolio management and manager selection for natural resources at the Menlo Park, California-based firm spoke to Emily Chasan on Nov. 6. Comments have been edited and condensed.
Cargill’s Solar Investment Strengthens Cocoa Production in Ghana l Food Ingredients First
  • Cargill has taken steps to modernize renewable energy infrastructure in Ghana by investing in innovative solar energy at a plant in the West African country.  By investing in renewable energy, Cargill says it is living up to its responsibility to find ways to continuously decrease the environmental impact of its businesses.
 General Endowment News
 
To Tax Or Not To Tax University Endowments l NPR
  • In this interview, NPR's Lulu Garcia-Navarro talks to Grinnell College President Raynard Kington about the proposed excise tax on endowment income. The small Iowa school has a very large endowment.
University of Buffalo Foundation Invests in Fracking as UB Talks Sustainability l Buffalo News
  • The University at Buffalo Foundation used an offshore fund to invest in fracking and fossil fuels, even as university officials sought to portray UB as a national leader in climate-change and sustainability research. The foundation invested through EnCap Flatrock Midstream, a venture capital firm that focuses solely on North American oil and gas extraction and production. The foundation, a private entity that manages contributions on behalf of the public university, had investments totaling more than $940 million in 2016-17, although it's not clear how much of that was in the fossil fuel industry.
Harvard Moves to Outsource Real Estate Management to Bain Capital l The Harvard Crimson
  • Harvard Management Company is moving to outsource the management of its real estate assets to Bain Capital—the largest Boston-based private equity firm—according to a Bloomberg News report published last week. HMC, which manages Harvard’s $37.1 billion endowment, has been considering spinning off its real estate team since January. At the beginning of 2017, N.P. Narvekar, the firm’s CEO, wrote in a letter to Harvard affiliates that the “the team responsible for managing HMC’s direct real estate investments is expected to spin out and become an external manager by the end of calendar year 2017.
  • The global campaign to divest from fossil fuels may have just picked up its most significant ally to date – the largest sovereign wealth fund in the world. Norway’s trillion-dollar sovereign wealth fund has proposed dropping investment for oil and gas companies. The plan, backed by the central bank, still needs approval by the finance ministry, but it would see the fund gradually divesting itself of oil and gas stocks over time. Currently, fossil fuel investments account for about 6 percent of the fund’s assets, or $37 billion.
Brandeis University Students Rally for Divestment l The Justice
  • In a call to action, students marched from the Rabb Steps to the administration buildings last Wednesday, the same day the Board of Trustees was meeting, and urged University President Ron Liebowitz to engage with the Board and discuss fossil fuel divestment. Organized by Brandeis Climate Justice, a group of about 40 students and faculty members held up signs that read “Climate Justice = Social Justice,” “Don’t invest in death” and “‘There is no such thing as an innocent purchaser of stock’ — Louis Brandeis.” Making their way to lower campus, they chanted “UMass did it, so can we, let’s make Brandeis fossil-free!” and “Hey, Brandeis, step off it! There’s poison in your profit!”
Why Canadian Pension Plans Must Divest of Fossil Fuel Investments l The Conversation
  • According to this author, oil-and-gas assets are unreliable commodities primarily controlled by international interests. Because the industry is not Canadian-controlled, it has no stake in working in the best interests of Canadian communities. In this article, they argue that when Canadian pension plans divest and refocus on sustainable investing, local economies will experience an increase in needed capital investment to grow and develop, setting an example for the world.
University of Cambridge Protestors Seek to Clear the Air Around Divestment l The Varsity
  • Cambridge Zero Carbon Society staged a protest on Wednesday in front of King’s College Chapel, with around a dozen protesters calling on the University to withdraw its investments in fossil fuel companies. Campaigners dressed in black set off smoke grenades and shouted through megaphones. The protest was part of a coordinated ‘National Day of Action’, alongside similar societies at other universities including East Anglia, Leeds, Manchester, Oxford, UCL, Bristol and Plymouth.