Weekly News Round-Up: June 30th, 2017

New Members


New Reports
 
 
Upcoming Events
 
Webinar: First-time Fund Managers in Emerging Markets Bring a New Model to PE in Africa l Intentional Endowments Network, July 11th, 2017, 1:00 PM EDT
  • Speak to any capital provider and they will tell you the standard private equity model is not structurally sound for the African ecosystem – as evident by the too few deals, limited human capital to run portfolio companies, and constrained levers for liquidity events. So, can the Find-Fund-Support value chain be deconstructed to build a new model for investing in Africa? In this webinar, four first-time fund managers will discuss how they tweaked different elements across the Find, Fund and Support value chain to create a new model for investment in Africa.
  • On July 12, 2017, The Investment Integration Project (TIIP) and the Center for Applied Research (CAR) at State Street, in conjunction with Ceres, will co-host an event that explores the intersection between efficiency and intentionality, and how the alignment of the two leads to effective investing.
Impact Capitalism Summit - Nantucket | Big Path Capital, July 19-20, 2017, Nantucket, MA 
  • This Summit will focus on key factors that are changing the impact investing landscape. IEN will be partnering with Big Path, Ceres, and others to host a pre-Summit event focused on opportunities for investing in clean energy and climate solutions.
The SRI ConferenceThe SRI Conference l November 1-3, 2017, San Diego, CA
  • The SRI Conference – on Sustainable, Responsible, Impact Investing serves thought leaders and investment professionals working in the ESG, Shareowner Engagement, and Impact Investing space. Together, we are catalyzing the shift to a more socially equitable and environmentally sustainable future. We deliver education and inspiration — in between legendary networking opportunities.
Sustainable, Responsible, Impact & ESG Investing
 
Bloomberg Brief l Sustainable Finance
  • This week's Bloomberg Brief highlights how companies around the globe with a combined market value of more than $3.3 trillion threw their support behind Bank of England Governor Mark Carney's final report on climate change that weighs the financial risks to investors implied by global warming; Shareholder support for environmental proposals at big U.S. companies reaches record levels; UPS to boost electric and alternative fuel vehicle purchases; Men join corporate boards with less experience than women do.
Institutional Investors More Likely to Invest in Companies with Business-Driven ESG Disclosures, According to New White Paper l PR News Wire
  • 98% of institutional investors say a company with strong ESG initiatives makes for a more attractive investment, according to the newly released white paper, Is Your ESG Report Getting Noticed?, developed by Burson-Marsteller, a strategic communications and global public relations firm, and research firm PSB. The white paper revealed results of a survey conducted among institutional investors at banks, insurance companies and hedge/mutual funds that have investments of at least 10,000 shares on the stock exchange. Respondents have worked at their current company for at least one year. PSB conducted the research on behalf of Burson-Marsteller from December 2016 to January 2017.
  • Buying into companies based on environmental, social and governance factors, has become a hot trend on Wall Street, spawning a new industry that sells investors company ratings based on those factors and funds dedicated to rated companies. However, some investors and funds may rely too much on the scores of one rating firm, said Dan Hanson, a portfolio manager at Jarislowsky Fraser Global Investment Management. "The scores are in some cases being used in a way they are not really designed for," Hanson said. "It's problematic to bolt them on to an investment process." There are no set criteria for who is bad and who is good and so-called ESG ratings vary widely, meaning investors may be less protected than they think, for example, from a scandal over labor practices or board pay.
  • Taking ESG factors into account leads to a more comprehensive analyses and better-informed investment decisions, according to a report by Colonial First State Global Asset Management (CFSGAM). he ‘Responsible Investment and Stewardship Report’, which surveyed CFSGAM’s staff on their investment beliefs relating to sustainability and ESG factors, found that 80 percent believed that considering these issues might help to conduct more complete analyses and lead to better-informed investment decisions.
  • The 2016 African Investing for Impact Barometer shows that investments that seek to combine financial returns with positive social, environmental and/or governance outcomes are flourishing on the African continent. The study identified that more than $350 billion is committed to investing for impact strategies across nine countries. 
Alternative Food Production Needs Fresh Bread l The New Food Economy
  • Food is relocalizing. But powering smaller-scale ag will require a shift in financial thinking—and a new type of lender willing to fork over the dough.
A History of Impact Investing l Investopedia
  • Impact investing is the latest topic on investors’ radar screen, boasting double-digit growth and widespread acceptance among those seeking to align their portfolios with their personal values. But it’s much more than a fad, impact investing has a rich history.
Can Good Corporate Citizenship Be Measured? l The New York Times
  • A new study, developed by a team of quantitative strategists led by Savita Subramanian at Bank of America’s Merrill Lynch Global Research unit, appears to be the most expansive, looking at several hundred companies over a decade starting in 2005. The study found that investors who look at ESG metrics are less likely to buy shares in companies with volatile stocks. Those investors are also significantly less likely to buy into companies headed toward bankruptcies. And “stocks that ranked within the top third by ESG scores relative to their peers would have outperformed stocks in the bottom third by about 18 percentage points from 2005 to today,” the authors reported. But the study also found, repeatedly, that if you’re looking for stocks that outperform their peers, simply looking at ESG issues isn’t a panacea.
One Pension Fund Manager Is Going Against the Grain l Bloomberg
  • Hiroichi Yagi filled the Secom Corporate Pension Fund with stocks when his peers hid in bonds, considering it his duty to support Japanese equities. He embraced environmental, social and governance investing as a way to reduce volatility. And he signed Japan’s stewardship code for institutional investors right at the start, making Secom the only corporate pension fund outside of financial firms to accept the voluntary standards.
10 Reasons ESG Investing Is Growing l Pimco
  • According to the Global Sustainable Investment Alliance, over $22 trillion of assets were managed under responsible investment strategies globally in 2016, up 25% from two years before. This is one of many statistics showing Environmental, Social and Governance (ESG) investing moving into the mainstream. This article outlines 10 major trends contributing to the rise.
Pensions are Starting to Judge Hedge Funds on ESG l Bloomberg Professional Services
  • As many of the world’s biggest investors, including public pension funds, foundations, endowments, family offices, and sovereign wealth funds increase their focus on responsible investing, they are starting to ask whether hedge funds they invest in are incorporating sustainable strategies. “When investors like us are looking at a hedge funds investment, we look at it from a perspective of what we are doing in responsible investing more broadly,” Marta Jankovic, sustainability and governance specialist at pension fund manager APG Asset Management said at panel discussion organized by the United Nations-supported Principles for Responsible Investment in New York June 12.
Investors Focus on Making an Impact, but What’s the Strategy? l CNBC
  • Assets under management using SRI strategies grew to $8.72 trillion by 2016, a 33 percent rise over two years. SRI strategies have evolved from simply avoidance of "sin stocks" to "environmental, social and governance" investing and "impact investing."
Cities Looking to ‘Green Banks’ to Help Fund Sustainable Infrastructure l EcoBusiness
  • Cities are exploring how “green banks” can help fulfil their pledges not only under the Paris Agreement but also under the new Sustainable Development Goals (SDGs). What exactly are “green banks”?
Fiduciary Duty
 
'No Legal Barrier' for UK Funds on ESG Investments: Law Commission l Investments and Pensions Europe
  • Defined contribution (DC) pension schemes in the UK have invested much less than peers abroad in socially and environmentally beneficial investments because trustees seem unsure whether they are allowed to, according to a new report. The Law Commission, a non-political body that recommends legal reform where needed, has confirmed in a government-prompted report that there are no legal or regulatory barriers to pension schemes making socially responsible investments. Law Commissioner Stephen Lewis said: “Defined contribution pension schemes will be investing billions of pounds over the next decade, and it’s only right that they seek to get the best returns for their clients.”
  • The Law Commission has called on the government to clarify investment rules which can make it hard for schemes to make socially responsible investments. The report called Pension Funds and Social Investment, published last week, is in response to the government's request for the commission to look at how far pension funds may consider ESG issues.

Climate Risk, Science & Regulation
  • A panel of top financial institutions and companies has launched guidelines to push for more disclosure about the impact of climate change—highlighting rising concern about the potential investment risks posed by global warming. The task force, which was commissioned by a group of global regulators known as the Financial Stability Board and led by former New York City Mayor Michael Bloomberg, said companies should disclose in financial filings how they are planning for risks and opportunities related to climate change. It also called for companies to develop specific metrics and targets to measure performance in that area.
  • Just 5% of European pension funds have considered financial impact of climate change, despite extreme weather changes, according to a new report.  According to the European Asset Allocation Report, published by fund administration and research experts Mercer, despite a slight improvement since 2016, the vast majority of responding funds are “still not active” on climate issues.
Exxon investors want a bank-style stress test for climate change | NPR Marketplace
  • Representatives from Wespath, Bloomberg and Ceres comment on recent shareholder resolutions at Exxon and Occidental calling for more transparency and disclosure around the risks climate change poses to the companies. Nearly two-thirds of Exxon’s shareholders voted to make the company disclose its plans around possible increases in climate change regulation. Some of Exxon’s biggest shareholders — BlackRock and Vanguard — are thought to be the driving force in the climate change vote. Neither company would confirm how they voted.
General Higher Education Endowments News
 
BlackRock Tapped to Run Arizona State's $600 Million Endowment l Bloomberg
  • BlackRock Inc., the world’s biggest money manager, is making headway in investing for U.S. college endowments. BlackRock will manage Arizona State University Foundation’s $600 million endowment, succeeding Perella Weinberg Partners’ Agility unit. The transition starts July 1, the foundation and BlackRock said.
NEW BOOK: 'Endowment Management for Higher Education' Outlines Best Practices for Higher Education Investment Committees l CrossRoads Today
  • The numerous challenges of investing are both technical and human and to overcome them, endowment stewards must be as attentive to potential landmines in governance as they are to those in global markets. Endowment Management for Higher Education, written by Nicole Wellmann Kraus, CFA and Hilda Ochoa-Brillembourg, CFA, both of Strategic Investment Group, and Jay A. Yoder, CFA and published by the Association of Governing Boards of Universities and Colleges (AGB), aims to set a framework for best practices around endowment management.   
Fossil Fuel Divestment
 
Council Workers’ Largest Trade Union Votes for Divesting Pensions l Platform London
  • After two years of impressive mobilisation by UNISON grassroots members across England, Scotland and Wales, the trade union has officially taken on fossil fuel divestment policy. This week, the union’s National Delegate Conference voted unanimously to seek divestment of Local Government Pension Schemes from fossil fuels over five years giving due regard to fiduciary duty UNISON is one of the two largest trade unions in the UK, with over 1.3 million members, and the first to adopt formal divest policy.
North Dakota Insurance Commissioner Asks for End to California Coal Divestment Initiative l West Fargo Pioneer
  • The North Dakota insurance commissioner urged a California official this week to cease an initiative that calls for insurance companies to divest from coal. Jon Godfread, a Republican, sent the letter with officials from five other states to California Insurance Commissioner Dave Jones Wednesday, June 21, according to a news release. "Commissioner Jones's attempt to dissuade insurance companies from investing in the coal industry is a deeply misguided overreach," Godfread said in a statement. "Our job as insurance commissioners is to protect consumers and serve the greater public interest through the effective and unbiased regulation of the insurance marketplace." The letter asked Jones to end the so-called "Climate Risk Carbon Initiative."