Webinar: How Investors Integrate ESG: A Typology of Approaches l ICCR, Sustainalytics, May 8, 2017, 1:00 PM EDT
- A new report examining how investors integrate ESG factors into their portfolios finds that investors are leveraging a diverse set of integration strategies. Based on an analysis of the investment practices of 70 institutional investors with total assets under management of $19.9 trillion, the report presents the first-ever typology for classifying the approaches that investors are taking to integrate ESG factors into their investment processes. Download the research here.
- This full day program will deliberate on best practices in impact investing, and how they generate measurable social, environmental and economic results through bridging the gap between purpose and profit. Georges Dyer will be speaking on a panel titled "The Power of the SDG: How It Might Align Performance and Scale Risk Control."
Opportunities For Action
- Shareholder democracy is being profoundly threatened by Section 844 of the proposed Financial CHOICE Act 2.0. This new legislation, which could be voted on as early as May 2, would fundamentally impair investors' rights to file shareholder resolutions. The new rule would permit only a tiny fraction of the globe’s wealthiest investors (those who own more than 1% of more of a company’s stock) to file shareholder proposals. Sign this petition to protect shareholder rights.
Higher Education Carbon Pricing Endorsement Initiative l Our Climate
- Our Climate, joined by the presidents of Dickinson College, Pitzer College, Swarthmore College, Vassar College, and Wesleyan University, are inviting other college and university presidents to sign a letter calling on national and state elected officials to put a price on carbon.
- Building on a January letter to the new leadership in DC, Second Nature has worked with partners to create a new public site for this letter that demonstrates its alignment with over 1,000 business leaders under the banner of Low Carbon USA. If your institution would like to participate, please submit via the form on the linked website.
Sustainable, Responsible, Impact & ESG InvestingIntentional Endowments Network Builds Momentum | IEN
- Endowments are getting serious about factoring ESG considerations into their investment process. Just over a year ago the Intentional Endowments Network (IEN) -- a peer network that supports endowment investment practices that address ESG and sustainability factors to enhance both financial returns and align with institutional mission and values -- launched its membership program with 77 Founding Members...“The Intentional Endowments Network has been instrumental in advancing our progress on ESG and sustainable investing at the San Francisco State University (SFSU) Foundation,” said IEN Founding Member Robert Nava, Vice President of University Advancement at SFSU.
Bloomberg Brief l Sustainable Finance
- This week's Bloomberg Brief highlights how one month after the U.S. presidential election, sustainable ETFs saw a surge in asset inflows. Now 100 days into Donald Trump's presidency, they face a test about how they will perform; Lender ING Groep NV is diving into bank loans that link borrower interest rates to ESG ratings; Putnam Investments taps Katherine Collins to lead its sustainability team; The costs of divesting fossil fuel stocks; and the fearless girl statue earns millions in free media for State Street.
- A new report examining how investors integrate ESG factors into their portfolios finds that investors are leveraging a diverse set of integration strategies. Based on an analysis of the investment practices of 70 institutional investors with total assets under management of $19.9 trillion, the report presents the first-ever typology for classifying the approaches that investors are taking to integrate ESG factors into their investment processes.
- The global investment firm Cambridge Associates has unveiled its real asset impact-investing benchmarks in real estate, infrastructure, and timber. The new benchmarks “focus on the financial performance of the private funds, categorizing them by year and size,” says Jessica Matthews, managing director at Cambridge Associates. But the firm also parses its benchmarks and promise to deliver “a deep-dive analysis” on intended impacts.
- When the index provider FTSE first started integrating environmental and sustainability factors into indices back in 2001, the landscape for ESG investments looked drastically different. Just over 15 years later, Tony Campos, who leads FTSE Russell’s ESG business in the Americas, said interest in integrating ESG factors into investment decisions has evolved from something only a small group of investors cared about into a phenomenon that has become widely accepted by many companies and asset owners. In this article, he describes what he ha learned about the. space.
- Columbia Threadneedle has 14 ETFs on the market today commanding more than $1 billion in total assets. Among them are three ETFs that launched last year, and merge environmental, social and governance (ESG) investing with a dividend focus. It’s equity income meets socially responsible investing, if you will. In this article, Ed Kerschner, Columbia’s chief portfolio strategist, walks through the process behind blending these two investing themes in search of one single outcome: finding sustainable income.
l Chief Investment Officer
- The NYC Comptroller’s Office, on behalf of the New York City Pension Funds, said it is seeking index managers who can proactively account for, and focus on, various types of indexes, including low-carbon investments, and environmental, social, and corporate governance (ESG) factors. “Climate change is real, the science is real, and the threat to both our planet and the global economy is real,” said Scott Stringer in a statement. “When we invest in companies that recognize the irrefutable realities of global warming, we’re making smart investment decisions and boosting returns.”
- Modern Portfolio Theory (MPT), one of the cornerstones of traditional portfolio management, is “ill-equipped” to model environmental, social and governance (ESG) risks, according to a new report from the Organisation for Economic Cooperation and Development. MPT was introduced by economist Harry Markowitz in the 1950s, for which he was awarded the Nobel Prize, but the OECD backs the view that it’s “unsupportive” of the integration of ESG into investment governance.
- UKSIF has published a guide for DB pension fund trustees on their fiduciary duties, highlighting the fact that the Pensions Regulator now requires trustees to consider ESG where it is financially material. Sponsored by HSBC GAM, the guide explores the range of ESG factors which may be financially material to investors, including 14 ESG themes, and follows a 2015 meta-study by Arabesque (an UKSIF member) and the University of Oxford drawing a clear correlation between consideration of ESG factors and outperformance.
- How asset owners are balancing their fiduciary duties with pragmatic responses to the demands of activist stakeholders was the topic of a recent roundtable, hosted by Investment Magazine and sponsored by Mercer. Framing ESG integration as a risk management tool means that even if some stakeholders don’t like certain investment decisions, they understand the framework in which they were made. This article describes the discussions that took place in the roundtable.
- Proxy voting comes with a cost, in paper and in legal bills, and it looks quixotic to the folks who run corporations. Here’s a radical idea: have fund companies flow through voting power to their customers. On your account profile screen you'd have the option of directing proxies for all the shares you indirectly own to some player with the time and motivation to rattle directors' cages, for example, the Sierra Club or the Interfaith Center on Corporate Responsibility.
Higher Education Sustainability News
Gund Family Donates $6 Million to Create Institute for Environment at UVM l The University of Vermont
- A $6 million gift from the Gund family – with a challenge to raise even more from other donors – will create the University of Vermont’s first university-wide sustainability institute and accelerate UVM’s longstanding commitment to the environment. Designed to catalyze interdisciplinary research at UVM, the new initiative also will connect scholars with government, business and societal leaders to address urgent sustainability issues around the globe.
Wealthy universities fear GOP will end their tax breaks | Campus Reform
- America’s wealthiest universities appear intent on protecting tax breaks for their endowments in response to mounting conservative criticism of the multi-billion-dollar loophole. At the beginning of 2015, just two universities with endowments valued at $1 billion or more (“wealthy” universities) reported lobbying Congress on the tax treatment of their endowments, but by the first quarter of 2017, that number had risen to 18 amidst escalating criticism of the hefty exemptions.
Climate Risk, Science & Regulation
- Businesses recognize that the Paris agreement provides the best solution to date for tackling climate change. Climate change challenges the security and economic well-being of the United States, in addition to threatening grave environmental and humanitarian challenges worldwide. Rising seas, changing weather patterns, and the northward migration of tropical diseases will harm U.S. businesses and individuals. Some of these costs will be born directly by business. Other costs will be born indirectly for example as a result of tax increases to repair and harden our transportation infrastructure. Denying the reality of climate change does not make these costs go away; the costs just get bigger the longer we drag our heels.
Fossil Fuel Divestment
- The divestment movement has quietly notched some big wins lately and is channeling momentum from last week’s People’s Climate March into a Global Divestment Mobilization week, May 5-13. The mobilization, a project of 350.org, will publicize “the moral urgency to divest from fossil fuels” and seek to broaden the movement’s global impact.
Divestment's Price Tag: Higher Tuition, Fewer Services at Universities, Lower Payments for Pensioners l PR Newswire
- Numerous reports have explored the transaction costs and returns of fossil fuel divestment for universities and pension funds to undertake, but little research has calculated how this impact affects the people that matter most: students, faculty, and retirees. A new report commissioned by the Independent Petroleum Association of America quantifies the price of divestment for these groups.
- On Monday, the Independent Petroleum Association of America issued a new report arguing that fossil fuel divestment is costly for students, pensioners, and stakeholders. In the last few years, multiple reports from financial and legal experts, such as Corporate Knights, the Center for International Environmental Law, Trillium Asset Management, and Mercer, reveal that major university endowments and pension funds, such as those of Harvard University and New York State, have or will incur billions in losses from continued investments in fossil fuels.
Lehigh University Students’s Call for Divestment Goes Unanswered l The Brown and White
- This fall, Lehigh’s Green Action club protested on the UC Front Lawn urging the board of trustees to reduce the amount of fossil fuel companies Lehigh invests in. While the protests gained attention and momentum from students and faculty, the investment in those companies has remained the same.
- This year, a full-throated campaign has taken hold at UB. Most recently, the executive committee of the Faculty Senate at UB agreed to bring to the full Senate a strongly worded resolution that asks the foundation to divest from all fossil fuel stocks and corporate bonds within five years and to reinvest the money in clean energy and "socially responsible alternatives."
- Divest Whitman, organized an event, framed around Whitman College and Fossil Fuels renewing their "wedding vows" -- similar to a ceremony held three years ago, but with a politically charged guest list including Donald and Ivanka Trump, Director of the EPA Scott Pruitt, and Trump advisor Kellyanne Conway.
Investment Manager News
Calvert Foundation Launches ESG Private Debt Marketplace l Financial Advisor
- The Bethesda, Md.-based Calvert Foundation is launching a new private financing marketplace for impact investing. Capital Aggregation, announced on Wednesday, marks the birth of a new business line for Calvert Foundation that pools funds from institutional and accredited investors in the form of syndications and participation in fixed-income transactions, enabling investment at scale into organizations designed to create social and environmental impacts.
- Katherine Collins was named head of sustainable investing at Putnam Investments.The position is new. Ms. Collins is responsible for overseeing the firm’s ESG investment approach, which is expected to include managing focused strategies for institutional clients. Ms. Collins was CEO of Honeybee Capital, a research firm focused on ESG investment issues.
- Jonathan Bailey joins Neuberger Berman from Boston-based think tank Focusing Capital on the Long Term (FCLT Global) to head up the investment manager's ESG team.
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