Webinar: Investing Intentionally at the Systems Level l The Intentional Endowments Network, August 23, 2017, 1:00 PM - 2:00 PM EDT
2017 Bay Area Intentionally Designed Endowment Roundtable l Intentional Endowments Network and the Center for Responsible Business at Berkeley-Haas, September 8, 2017, Berkeley, CA
CEO Investor Forum l CECP’s Strategic Investor Initiative (SII), September 19, 2017, New York, NY
The SRI Conference l November 1-3, 2017, San Diego, CA
2018 Higher Education Climate Leadership Summit l Second Nature & The Intentional Endowments Network, February 4-6, 2018, Phoenix, AZ
Factory Farming in Asia: Assessing Investment Risks l Farm Animal Investment Risk & Return (FAIRR) Initiative
A popular investment thesis for Asia is that its rapidly industrialising animal protein companies are a smart play on rising middle-class incomes and the growing demand for meat. As this report shows, however, Asia’s meat, seafood and dairy industries face a range of badly managed sustainability risks – from emissions to epidemics, fraud to food safety, and misuse of antibiotics to misuse of labour – all of which have significant potential to derail returns. Find out how to manage these risks in FAIRR’s latest report.
Sustainable, Responsible, Impact & ESG Investing
Bloomberg Brief l Sustainable Finance
This week's Bloomberg Brief highlights how global companies are expected to purchase smaller amounts of clean energy this year, according to a Bloomberg New Energy Finance report; Vanguard Group plans to say more this month about how it votes on climate; Tesla skips the green bond label; JPMorgan Asset Management's Jamie Kramer sees growing ESG interest in the credit markets; and zombie directors are sticking around corporate board rooms.
- This article explores the growth of the sustainable investment market and the role millennials are playing in its uptake.
- Major investment firms are snapping up ESG research and ratings companies at a rapid clip — three hookups within just the past year. This article explores what this means, and if the SRI market has reached a tipping point.
- This article discusses the first ever CECP forum bringing together CEOs and large investors, which took place on February 27, 2017 in New York. At that event, six pioneering corporate leaders presented their companies’ plans for long-term value creation to an audience of over 200 longterm investors representing over $20 trillion in assets under management.
- Advisor concerns about managing volatility, generating income, growing wealth and reducing taxes fell over the past quarter, according to the latest Eaton Vance Advisor Top-of-Mind Index (ATOMIX) survey, a quarterly survey of more than 1,000 financial advisors. Managing market volatility regained its position as the top focus for advisors despite falling to 110.5 on the index, well below its peak of 129.7 in Q3 2016.
- In our last blog post we showed that green investors who keep most or all of their capital in just the largest US sustainable companies may pay a high price due to lower diversification and missed opportunity. For example, one dollar invested in just large US companies (S&P 500 Index) in 1970 would have been worth $100 on New Year’s Eve 2016. A very nice return, which could have been much better. The same dollar would have been worth $400 if invested in the Global Diversified Equity Strategy Index. Combining diverse financial assets in a globally diversified portfolio can be less risky and achieve higher returns than putting all your investment eggs in one basket (e.g. large US companies only).
- In 2017, Walden filed resolutions with two Vanguard equity index funds that requested a review of their proxy voting at portfolio companies, particularly on shareholder resolutions focused on climate change. The Walden resolution prompted Vanguard and Walden to engage in a new round of discussion, culminating in a letter from Vanguard describing its updated approach to engaging companies and voting proxies of fund holdings. Vanguard stated its intention to expand reporting on company engagement priorities such as climate change, board diversity, and corporate governance. In light of ongoing conversations as well as changes in Vanguard’s voting approach, Walden withdrew the resolution that had included several individual co-filers.
- Investors are hungrier than ever for green bonds, yet companies known for their sustainable prowess -- including Tesla Inc. -- are choosing to sit out, raising questions about just how valuable the label is. U.S. non-financial companies have been among the slowest to embrace green bonds -- debt that’s designated to only finance eligible green projects -- issuing just $4.3 billion last year, a tiny fraction of an overall U.S. corporate bond market that sold $1.6 trillion. U.S. companies are expected to issue $5.2 billion in green bonds this year, meaning a green label for Tesla’s offeringlast week would have grown U.S. corporate issuance in 2017 by more than a third, according to Bloomberg New Energy Finance data.
- As a value investor, GAMCO Co-Chief Investment Officer Chris Marangi puts more emphasis on the quality of a company's management and culture. And he sees a future for active management in a choppy or bear market.
- Christian Super has selected TriLinc Global (“TriLinc”) and its TriLinc Global Impact Fund (“TGIF”) as part of its impact investing strategy after an in-depth due diligence process evaluating both investment performance and impact measurement.
- Australian listed property companies Mirvac and GPT Group will sit alongside the likes of Tesla in UniSuper’s new Global Environmental Opportunities option. UniSuper, the $60 billion default fund for university staff, revealed last week that it had brought responsibility for managing its environmentally friendly international equities strategy in-house. The Global Environmental Opportunities option was previously run externally by an undisclosed passive manager.
- A survey from NEPC revealed 68% of respondents have more than 10% of their portfolios allocated to marketable alternatives, which includes hedge funds. This marks a notable increase from last year, when NEPC’s July 2016 survey found only 45% of respondents had at least 10% allocated to hedge funds. According to the Q2 2017 NEPC Endowment and Foundation poll, 65% of respondents plan to maintain portfolio exposure rather than increase (16%) or decrease (16%) it.
- Rhode Island lawmakers voted to become the fourth state in the nation to offer free community college for state residents Thursday. Lawmakers passed the state budget proposal, which included $2.8 million to fund the free tuition program for one year. Graduating high school seniors who maintain a 2.5 GPA and go to school full-time will be eligible, regardless of income.
- Some of the biggest U.S. college endowments withdrew almost $700 million of Asia-focused investments in the second quarter. Yale University executed the largest sale, according to data compiled by Bloomberg, pulling $345.2 million from the Vanguard FTSE Emerging Markets exchange-traded fund dominated by Chinese companies including Tencent Holdings Ltd. The fund returned 15 percent through the first half of the year and an additional 4.7 percent since.
- The University of California General Endowment Pool has increased its real assets target weighting by 2% and integrated real estate into the allocation. The move, revealed in a board meeting document, will give the $10.6bn (€9.06bn) investor an additional $213m to invest in real assets. The real estate portfolio was valued at $505m at the end of March this year and real assets portfolio – before including real estate – stood at $215m. The UC Endowment invests mostly in domestic real estate, although its investment policy allows an allocation to foreign property of up to 25%.
- Pennsylvania State University's endowment returned a net 12.6% for its fiscal year ended June 30, said a report issued by the university. The University Park-based endowment currently has $2.62 billion in assets, up 11.5% from the year ended June 30, 2016, when the endowment reported a return of -0.8%. The endowment's three-year annualized return as of June 30 was 4.8%, while the five-year return was 8.6% and 10-year return, 5.6%.
- The $2.7 billion common investment fund of Michigan State University, East Lansing, produced a 15.4% preliminary return for the fiscal year ended June 30, well ahead of its 12.7% benchmark return. Annualized returns for longer time periods were three years, 4.5% (benchmark, 4.2%); five years, 8.4% (8.1%); and 10 years, 5% (4.3%), a performance report showed. June 30 returns exclude performance of most private investments in the endowment for the most recent quarter.
- Virginia Tech received more than $162 million in donations and commitments in the last fiscal year. That figure tops a previous record set last year of $101.45 million. The raised money comes under the direction of the university’s chief fundraiser Charlie Phlegar, Tech’s vice president for advancement. “It was a good year,” Phlegar said in a telephone interview. “But it’s just the beginning.” Almost 35,000 donors, up from about 32,000 last year, gave money, including individuals, corporations and foundations. Phlegar said giving was up from grassroots donors, midrange donors and the wealthiest donors.
- Across America, states, cities, businesses, universities, and citizens are taking action to fight climate change, grow the economy, and protect public health. America’s Pledge brings together private and public sector leaders to ensure the United States remains a global leader in reducing emissions and delivers the country’s ambitious climate goals of the Paris Agreement.
- Norway’s 7.75 trillion sovereign wealth fund has strong policies on sustainability and climate change but falls short on putting these into action, according to a critical report from think tank Re-Define. Produced by Sony Kapoor, managing director at Re-Define, with assistance from Linda Zeilina, special adviser at the think tank, the report argued that the oil fund needed “to learn from its peers and significantly enhance its approach to managing climate risk and investing sustainably, based on rigorous risk/return considerations”.
- The New Zealand Superannuation Fund has said its sweeping low carbon announcement today – involving the divestment of 297 companies worth NZ$950m (€588m) – is in accordance with the spirit of the Paris climate agreement. The Auckland-based investor said today that its NZ$14bn global passive equity portfolio, 40% of its overall assets, is now low-carbon.
Exxon Report on Climate Risks Raises Red Flags in Fraud Investigation l Climate Liability News
- As part of a deal to get shareholders to withdraw a resolution seeking greater transparency on climate change risks, Exxon agreed in 2014 to provide investors a report on its climate risk calculations. Exxon did produce the report, Energy and Carbon—Managing the Risks, but several experts say it was deliberately deceptive. “The bottom line is that Exxon did not have a good answer to the question of whether its assets are at risk of being stranded,” said Bob Litterman, former head of risk management at Goldman Sachs and currently chairman of the risk committee at Kepos Capital. “To bolster its argument that its reserves couldn’t possibly be stranded, Exxon foolishly decided to make a ridiculous claim — that moving to a low-carbon economy will be incredibly expensive, eventually taking up 44 percent of the median American family income,” he said, adding that the real figure is likely less than 5 percent. Because the 44 percent figure is so far from what scientists have reported, the report is likely raising red flags in the current investigation of Exxon.
- Sustainability risks at so-called megafarms in Asia are having a “catastrophic” impact on public health and the environment and pose “significant potential to derail returns”, according to a report backed by pension fund giant APG. The report from the $3trn (€2.6trn) investor network FAIRR and specialist consultancy ARE (Asia Research and Engagement) urged investors to treat the rise of intensive factory farming across Asia with extreme caution and warned them to keep a close eye on the long-term risks of food-related assets across the continent.
- This paper performs a descriptive analysis of carbon pricing policy implementations in twelve regions (California, British Columbia and Quebec in Canada, Ireland, Norway and EU ETS, Mexico, Chile, Japan, India, South Korea, and China ETS Pilots) that have implemented an emissions trading scheme (ETS), a carbon tax or a hybrid of both. The paper synthesizes some key findings and knowledge gaps on what is working, what isn’t and why when it comes to implementing explicit carbon pricing policies.
- Building on a shared commitment to driving innovation and education in energy and climate solutions, MIT President L. Rafael Reif and Iberdrola Chairman and CEO Ignacio S. Galán met on MIT’s campus to renew and significantly expand the collaboration between the Institute and the global power company. The $10.3 million, five-year collaboration aims to advance technologies and policies that contribute to the energy transition and the fight against climate change, supporting numerous efforts through the MIT Energy Initiative (MITEI) and related MIT initiatives.
- China is holding back on building new coal-fired power plants to avoid risks from overcapacity and promote a clean energy mix. A total of 150 million kw of new coal power generation capacity will see construction halted or postponed from 2016 to 2020, the 13th Five-Year Plan period, according to a statement released Monday by the National Development and Reform Commission (NDRC) and other government agencies.
- Stock value of the Clean200 list, which ranks firms according to their clean energy revenues, overtook fossil fuel benchmark on inauguration day and finishes first year with a 16.9 per cent return.
- UK universities have emerged as world leaders on fossil fuel divestment as the total value of funds being withdrawn by higher education institutions globally tips £80 billion. Nine UK providers today announce that they will never invest in the fossil fuel industry, bringing to 54 the total number of campuses in the country that have taken action to exclude fossil fuel companies from their investment portfolios.