Weekly News Round-Up: July 14th, 2017

Upcoming Events 

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.

PRI and Carbon Tracker Launch Events: 2 Degrees of Separation: Transition Risks for Oil & Gas in a Low-Carbon World  

  • The Principles for Responsible Investment (PRI) invite investors for several launch events for a new research entitled: "2 degrees of separation: Transition risk for oil & gas in a low carbon world". The report is produced by the Carbon Tracker Initiative in partnership with Legal & General Investment Management, AP7, FRR, PGGM, PKA, and the Principles for Responsible Investment.
The 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 the European Commission backed recommendations to curb climate risk, which may include a label for green bonds; Ten top-performing ESG funds; Proxy access topped proposals received by companies in 2017 for the third year in a row; Natixis SA issued the first green commercial mortgage-backed security; NRG mulls renewables sale.
ESG, OECD, and the Tragedy of the Commons l Aperio
  • In its paper "Investment governance and the integration of environmental, social and governance factors,"1 the Organisation for Economic Co-operation and Development (OECD) weighs in on the issue of environmental, social, and governance (ESG) factors as they relate to investment choices. The report makes some excellent recommendations on improving disclosure by companies regarding ESG issues, while also providing a useful framework for different types of investors, as measured by their commitments to broader stakeholders than just shareholders. This paper could be described as an extension of the economic concept of "the tragedy of the commons," or in more technical jargon, the problem of externalities around major environmental issues. 

10 Studies That Show How and Why ESG Investing Works l Reuters

  • This article offers a look at the circumstances under which ESG-related investing works the best, across different asset classes such as stocks and bonds.

Investing in Food and the Climate: A New Playing Field with New Tools l Non-Profit Quarterly 

  • Whether by conscience or market pressure, corporations are paying more attention to issues that matter to their markets and the in many cases pressure is coming from investors. This article explores those pressures.

When Silicon Valley and Social Responsibility Collide l Bloomberg 

  • Silicon Valley venture capital is no place for socially responsible investors. Or at least, it increasingly looks that way as accusations of sexual harassment against the industry continue to pile up. The New York Times reported last week that more than two dozen women in technology startups contend that they’ve been sexually harassed, in some cases by prominent venture capitalists who have acknowledged the harassment. If accusations of sexual harassment continue to pervade Silicon Valley, then socially responsible investors will have to decide whether to sidestep a large -- and perhaps the most promising -- portion of an already limited number of venture funds. 

The “Data Science Arms Race” Has Begun l Barron's

  • Three major trends sweeping the asset management industry -- robo advisors, sustainable investing, and smart-beta or factor investing -- have been driven by investors' penchant for Big Data. But that's just the tip of the iceberg. "Data science and the profound impact it will have on the asset management industry is a complicated topic," wrote Dan Fannon, a Jefferies equity analyst. "Its impact will be felt not only at the highest levels (corporate) but also at the most basic level with each individual active manager having to retool their investment processes and skill sets."
  • With consumer activism becoming such a powerful change agent, investors and particularly millennials who have over $3 trillion in spending power, are getting in on the act. A new investment app by Goodments has been developed that makes it easier for people to invest in "good" businesses and build a portfolio that better suits their individual values. "It does feel like it's the right time," said Emily Taylor, co-founder of sustainable investment platform Goodments. "I would never say we like Trump. But I think him being in power and a lot of the regressive policies that are coming from our own government, and also the US, is actually making people realize that they need to take matters into their own hands," Ms. Taylor said.
Q3 2017 Sustainability Newsletter l Breckinridge Capital Advisors
  • This newsletter contains articles on Breckinridge's new community outreach program, how millennials are poised to redefine investing for the better, and why climate change has enduring relevance in intelligent long-term investing.
  • To meet needs of professionals seeking knowledge about the expanding fields of Corporate Social Responsibility, Sustainability, Citizenship, Sustainable Investing and related subject matters, Governance & Accountability Institute has partnered with the Swain Center for Executive Education at University of North Carolina Wilmington to offer an online, self-paced learning course.
ESG Investors Like Gains as Much as Anyone Else l Investment News
  • The average socially conscious fund has edged out the S&P 500 the past 12 months, gaining 18.6%, according to Morningstar. Part of the reason could be the collapse in oil prices. ESG funds tend to be light on oil because of environmental concerns. The Parnassus Fund (PARNX), for example, has no energy stocks in its portfolio. And that has worked out just fine. Energy stocks have tumbled 35% since oil's peak of $105 a barrel in June 2014.

 

Investment Manager News
 
  • SwissRe is implementing environmental, social, and governance (ESG) benchmarks across its entire $130bn investment portfolio, with the switching process due to be completed in the third quarter of this year. Last year SwissRe moved to adopt ESG-based benchmarks for its actively managed credit and equity portfolios. A spokeswoman for the company said it was around 90% through the shift for the whole portfolio. Guido Fürer, group chief investment officer at Swiss Re, said adopting broad-based ESG benchmarks “has been the most meaningful and strategic step in our journey to integrate ESG considerations into the investment process”.
BlackRock Expands iShares Fixed Income ETF Offering l Business Wire
  • BlackRock is infusing the mortgage-backed bond market with a competitively priced choice to traditional mortgage bonds: a lower cost exchange-traded fund, iShares MBS ETF (MBB). The firm is transforming MBB to be a financial instrument and risk management tool of choice for investors seeking exposure to the mortgage market. BlackRock is also launching four new fixed income smart beta and environmental, social and corporate governance (ESG) ETFs to meet increasing client demand.

UBS is Backing an Investment Fund Co-founded by Bono l Business Insider

  • UBS has made sustainability one of the cornerstones of its wealth-management business. On Monday, it announced that UBS Wealth Management and UBS Wealth Management Americas have raised $325 million for The Rise Fund, an impact investment fund led by private equity firm TPG Capital. The Rise Fund was founded by Bill McGlashan, the cofounder of STX Entertainment, singer-songwriter Bono, and Jeff Skoll, a billionaire Canadian engineer. The fund has an investment cap of $2 billion.
  • Bentall Kennedy released its 2017 Sustainability Report Summary today, entitled Invest Soundly + Sustainably, showcasing industry-leading practices for sustainable investment, management and development, in real estate. The report examines many of Bentall Kennedy's properties across North America and their role in shaping communities as part of a living, breathing ecosystem challenged with combatting climate change in our increasingly fragile environment.
Christian Super Charts a Course for Institutional Impact Investing l Impact Alpha
  • Christian Super is not stopping with its 10% allocation to impact investments, which is already impressive for an institutional investor. To the more than AU$100 million out of its $1.3 billion portfolio, the Australian pension fund has committed another $50 million. The kicker: the impact portfolio has exceeded performance benchmarks at a lower risk than other asset classes (except cash).

Axa IM Signals ESG Commitment With McDonald Hire l Portfolio Adviser 

  • The Rosenberg Equities branch of the asset manager has been taking into account environmental, social and governance factors in its portfolio management process since the mid-1990’s, but said the hire comes as part of a push to achieve “full ESG integration” across the platform by the end of the year. The move toward full ESG integration “is fully in line with Axa IM’s overarching convictions and commitment to investing responsibly,” said Rosenberg Equities chief executive Heidi Ridley.

Biggest Pension Fund Craves More After Foray Into ESG Assets l Bloomberg

  • The world’s largest pension fund aims to boost and broaden its socially responsible assets after buying them for the first time this year. Hiromichi Mizuno, who helps manage $1.3 trillion in assets for Japan’s Government Pension Investment Fund as chief investment officer, said the fund wants to increase allocation to the point where it impacts results. For that to happen, GPIF President Norihiro Takahashi has said ESG assets should reach around 10 percent of its Japanese equity holdings, Mizuno said.

Green Alpha Advisors Goes Long on the 'Next Economy' l Opalesque

  • "The problem with a lot of ESG funds you see out there today," Garvin Jabusch, co-founder and CIO of Denver-based Green Alpha Advisors, says, "is that they just screen out industries like tobacco or oil and call it sustainable without thinking through what the future is." For Jabusch, many ESG strategies are too heavily correlated to the S&P 500 benchmark, which is essentially an index of the legacy economy. Big chunks of the benchmark include companies that only fit an ESG strategy if the definitions of ESG and sustainability specifically, are generous enough to support natural gas producers or heavy manufacturing companies. Jabusch contends that a true ESG strategy should be focused on the economy of the future, which means looking at companies that are positioned to deal with climate change, resource scarcity and widening inequality.
Shareholder Engagement

The Value of the Shareholder Proposal Process l Harvard Law School Forum on 
Corporate Governance and Financial Regulation

  • Early in June, the House of Representatives passed a piece of legislation, dubbed the Financial CHOICE Act, which would gut much of Dodd-Frank. One of its provisions would make it impossible for all but the largest investors to file shareholder proposals by requiring that investors must hold at least one percent of the outstanding shares for three years in order to file a proposal. This would remove a key tool that investors use to communicate with corporate boards. This article highlights some of the reasons why shareholder proposals should be limited by this Act.

Investors Beware: Your Shareholder Rights Are At Risk l Forbes

  • This article outlines how the U.S. House of Representatives recently passed the Financial CHOICE Act of 2017. Section 844 of the Act would make it nearly impossible to file shareholder resolutions by raising the ownership requirement from $2,000 worth of shares for one year to 1% of the company’s outstanding stock for three years. If you are concerned about losing your rights, contact your Congressional representatives and voice your opposition to the Financial CHOICE Act.
Green Bonds

Natixis Facilitates First “Green Bond” CMBS Deal l Commercial Property Executive

  • Noting it received “very strong interest” from major green investors across the globe, French corporate and investment bank Natixis collaborated with Ivanhoé Cambridge and Callahan Capital Properties to issue the first green tranche in a CMBS to refinance part of the acquisition loan for 85 Broad St. in Downtown Manhattan. The $72 million green-specific tranche was issued as part of the CSAIL 2017-C8 CMBS Securitization to refinance part of the $358.6 million fixed-rate, first mortgage loan provided by Natixis in the spring to purchase the 1.1 million square-foot office tower in the Financial District.

  

General Endowment News 

Regents Vote to Increase University of Texas Austin’s Share of Endowment Payout l Statesman

  • The governing board of the University of Texas System voted unanimously Thursday to boost UT-Austin’s share of the system’s annual endowment payout by 4 percentage points, or $24 million, to $338 million. The flagship campus had been scheduled to receive 49 percent, or $314 million, of the payout. Instead, it will get 53 percent, effective for the budget year that begins in September.

  

Climate Risk, Science & Regulation
 
Businesses and Investors Need to Act on Climate Now l Stanford Social Innovation Review
  • The business case for acting on climate change has never been stronger, and the need to act has never been more urgent. This article explores trends related to the economy and climate change, and three steps businesses and investors can take to move forward.
Climate Ratings for Investment Funds: Do They Show the Full Picture? l Money Observer
  • A new climate change metric, Climetrics, which aims to rate investment funds on a scale of one to five ‘leaves’, has been launched today. The ratings consist of an analysis of the underlying fund holdings (this part makes up 85 per cent), the investment policy of the fund and mandate (which makes up 5 per cent), as well as the public statements companies make and the agreements they sign up to (the remaining 10 per cent). This article explores the strengths and weaknesses of this type of rating system.

U.S. Withdrawal from Paris Climate Change Accord Seen as ’a Gift,’ Experts Say l Pensions & Investments

  • ESG investing should be part of opportunity management, panelists said during the Global Future of Retirement conference in New York late last month. The U.S. decision to exit the Paris climate change accord could turn out to be "a gift," some experts contend. President Donald Trump's decision to withdraw from the pact made at the 2015 U.N. Climate Change Conference resulted in an immediate uptick in terms of inflows into low-carbon funds, said Cindy Rose, head of responsible investing-stewardship at Aberdeen Investment Management.
Massive Iceberg Breaks Off from Antarctica l NASA
  • An iceberg about the size of the state of Delaware split off from Antarctica’s Larsen C ice shelf sometime between July 10 and July 12. “The interesting thing is what happens next, how the remaining ice shelf responds,” said Kelly Brunt, a glaciologist with NASA’s Goddard Space Flight Center in Greenbelt, Maryland, and the University of Maryland in College Park. “Will the ice shelf weaken? Or possibly collapse, like its neighbors Larsen A and B? Will the glaciers behind the ice shelf accelerate and have a direct contribution to sea level rise? Or is this just a normal calving event?”

  

Fossil Fuel Divestment 

Banks Have Cut Funding for Fossil Fuels Projects 22 Percent l Yes Magazine

  • A new report from a consortium of environmental groups shows that big banks are reducing their investment in fossil fuel projects. While this is welcome news to the movement led by tribes to get banks to divest from fossil fuels—most notably in response to the Dakota Access Pipeline—the truth behind the numbers isn’t so rosy: it isn’t enough to stop global climate change, and banks still invest in or lend money to fossil fuel companies. “The financial industry needs to be held accountable for its fossil fuel financing and that takes a lot of forms,” says Jason Disterhoft, a senior campaigner for Rainforest Action Network. “We need everybody to continue to work and make that happen.”

Unversity of Toronto President Gertler’s Retreat From Responsibility (Opinion) l The Varsity

  • The University of Toronto Asset Management Corporation’s (UTAM)recent report on responsible investment describes steps to include environmental, social, and governance (ESG) considerations in U of T’s investment decision making. This article argues that President Gertler should revisit his decision not to divest, implement the spirit and letter of the divestment policy, and stop funding an industry that is burning up the future of U of T’s students.