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
- 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.
CEO Investor Forum l CECP’s Strategic Investor Initiative (SII), September 19, 2017, New York, NY
AASHE Conference and Expo: Stronger in Solidarity l AASHE, October 15-18, 2017, San Antonio, TX
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
Sustainable, Responsible, Impact & ESG Investing
Bloomberg Briefs l Sustainable Finance
- This week's Bloomberg Brief highlights how investors are taking their battle against dual-class listings to Hong Kong, saying that the corporate structure often favored by founder-led companies weakens governance and risks shareholder voting rights around the world; State Street adds $2.6 trillion muscle to climate disclosure; The world's largest green bond fund dedicated to emerging markets targets $2 billion by year end; and nine U.S. states plan to bolster their target for cutting carbon-dioxide emissions.
How Much do IR Teams Target ESG Investors? l IR Magazine
- Most companies don’t specifically target ESG investors, according to new research. Despite the growing pile of assets invested with ESG criteria in mind, few IR teams are actively targeting ESG-focused funds, according to a forthcoming research report from IR Magazine. The report, based on a survey of more than 350 IR professionals, finds that globally just over a fifth (21 percent) of respondents say they target ESG investors. European IROs are twice as likely as North American ones to say they target this group of investors, although it is Asia-Pacific respondents who appear the most active.
- If you are looking to invest in the stock market but also want to make a positive impact on environmental and social issues, then socially responsible investing may be for you. In the seventh installment of IG's ‘Six of the best’ series, we take a look at ETFs that facilitate socially responsible investing.
- Companies in Japan, Kenya and the US have showcased their efforts to align their business goals with the SDGs and integrate the SDGs into their strategies and plans. Other private sector initiatives focus on sustainable infrastructure, inclusive business models, and identification of impact investor characteristics.
- In this Q&A, Former Investment Association chief and FCA consultant Daniel Godfrey discusses why he believes short-termism is damaging returns and how he is launching a fund to prove it.
- Investors instinctively understand how weak corporate governance can be linked to poor financial performance. Whether it is wasting shareholder capital on expensive acquisitions, a board that is insufficiently independent to challenge a CEO's failing strategy or an audit committee that lacks the expertise to ensure the accounts are a full and fair representation of the financial health of the company, the ways in which governance failures can damage the bottom line are many and various.
- The notion that ESG analysis is a complement to – not a substitute for – fundamental security analysis is nothing new. However, ESG has now become a buzzword and a checkbox across much of the investment industry. More investment products and managers are touting the fact that ESG and other sustainability criteria are considered in the investment process to attract the growing pool of investors interested in making an impact. ESG analysis should not be easy. It is a discipline rooted in the fact that making an investment decision is about more than analyzing numbers – it is about understanding how nonfinancial factors hinder or complement company performance. But today, the vast majority of ESG’s application comes in the form of applying quantitative ratings and rankings to screen out prospective investments that do not meet predetermined criteria.
- A recently published study, Do ‘Good Guys’ Finish Last? The Relationship between Morningstar Sustainability Ratings and Mutual Fund Performance, from Eli Lilly financial analyst Anna Krukover, Steven Dolvin of Butler University and Jon Fulkerson of the University of Dayton, concludes there is no penalty for investing using a socially responsible lens. Using sustainability metrics Morningstar began providing in 2016, the team grouped mutual funds by ESG rating and tracked performance over four years. As it turns out, socially responsible funds are basically indistinguishable, return-wise – as others have previously found, albeit with less standardized data-sets than Morningstar’s.
- Impact investing appears to have been seduced by a convenient narrative. According to the prevailing view, the achievement of both social impact and market-rate financial returns is the norm—not the exception. Impact investing was originally created to improve the lives of others; that impact investing could also deliver financial returns to investors was a means to that end. But nowadays, achieving predefined financial returns has become the primary goal, with the needs of investors taking priority over the interests of the communities their funding seeks to benefit. This trend has fueled a growing mismatch between the supply of impact investment and the demand for funding from enterprises working to improve conditions for marginalized communities.
- Green bonds are emerging rapidly as a new category within fixed income. The market has grown over the past few years and keeps on broadening in terms of countries, currencies, sectors and seniority/ranking. Bram Bosm, green bonds portfolio manager at NN Investment Parnters, gives five reasons why green bonds matter.
Investment Manager News
Global Evolution and University of Vermont Explore Link between Sustainable Investing and Development l Business Wire
- Global Evolution partnered with the University of Vermont Sustainable Innovation MBA program to offer a unique learning experience for students pursuing a career in the growing field of sustainable business and impact investing. The leading emerging and frontier markets investment manager hosted two students in a practicum project to gain hands on experience with investing in emerging and frontier markets. The students, Mike Rama and Ted Carrick, worked closely with Ole Jørgensen, Global Evolution’s Research Director, at headquarters in Denmark. Together, they developed recommendations to enhance Global Evolution’s ESG model and offering in North America, where the company is currently expanding.
- A relative newcomer, Swell Investing, opened its doors to the public in May with a focus on the United Nations’ sustainable development goals. Swell offers six different portfolios that focus on areas like renewable energy, green technology, disease eradication, clean water, zero waste, and healthy living. What makes the Newport Beach, Calif.–based firm, which was incubated by Pacific Life Insurance, different from other investment services is that each portfolio is made up of individual stocks that have passed their strict criteria—not exchange-traded funds or mutual funds.
General Higher Education Endowment and Sustainability News
- The eight endowment funds for the public school system and other beneficiaries will see a record payout of $78.2 million after July 2018, a state endowment official said. The endowment funds are overseen by the state Endowment Fund Investment Board, which is governed by the State Board of Land Commissioners, known as the Land Board. The payment is a 6.4 percent increase over this year’s distribution, due to an overall 12.9 percent return on the fund’s investments. Within the fund, equities, which make up two-thirds of the portfolio, saw a return of 19 percent, said Larry Johnson, the EFIB manager of investments.
- The $2.66 billion Michigan State Endowment reported annual gains of 15.4% for the fiscal year ended June 30. The university’s common investment fund also reported annualized trailing three-, five-, and 10-year earnings of 4.5%, 8.4%, and 5.0%, respectively. The annual earnings also beat out its 12.7% benchmark. “Our performance was driven by strong returns in our hedge fund portfolio, and active management was a significant contributor in our global equities portfolio,” Philip Zecher, the fund’s chief investment officer, told Bloomberg News. “We are still concerned that active management’s performance in the long-only, large-cap space is ephemeral.”
- Lewis & Clark is back on top as the greenest school in Oregon. The Portland college landed the No. 5 spot nationally in the Sierra Club'sannual “Cool Schools” survey — a position it held in 2014 — outdistancing the next best Oregon four-year college or university, No. 20 Oregon State. College of the Atlantic in Maine topped the rankings, followed by Green Mountain College in Vermont, Sterling College in Vermont and the State University of New York College of Environmental Science and Forestry.
Climate Risk, Science & Policy
- With a sweeping overhaul of the tax code on the horizon, two Senate Democrats believe this is the moment to broach the third rail of climate change policy: a carbon tax. The plan by the senators, Sheldon Whitehouse of Rhode Island and Brian Schatz of Hawaii, to level a $49 per metric ton fee on greenhouse gas emissions is widely acknowledged as a long shot. But the lawmakers, along with climate activists and a cadre of conservative supporters, insist the tax reform is a way to create bipartisan support.
- Ten years on from the financial crisis, it only seems appropriate to discuss another market failure of similar proportions. In August 2007 few could have foreseen how Wall Street banks would manage to move the goalposts of capitalism on a universal scale. It was then that BNP Paribas opened Pandora’s box, informing the market about the freezing of three funds exposed to US subprime-related securities due to “the complete evaporation of liquidity”. Now, when the clock is ticking to meet the Paris Agreement’s 2° goals, another market failure is brewing: carbon pricing, or perhaps lack thereof. As Ailman put it to that very same audience: “First give me a price on carbon, and then I’ll start worrying about stranded assets. . . I either need global regulatory action or some price. I don’t need a specific price but some price on carbon emissions, otherwise people will continue to burn, to pump up those assets."
- Vanguard Group on Monday said it has urged companies to disclose how climate change could affect their business and asset valuations, reflecting how the environment has become a priority for the investment industry. Under pressure from investors, Vanguard and other fund companies have pushed to pass several high-profile shareholder resolutions on climate risk at big energy firms like Exxon Mobil Corp and Occidental Petroleum Corp during the spring proxy season. Vanguard manages about $4 trillion and is often the top shareholder in big U.S. corporations through its massive index funds - giving it a major voice in setting corporate agendas.
- This week, the NYT published the results of their peer-reviewed analysis in the journal Environmental Research Letters. To their knowledge, this is the first academic, empirical analysis of Exxon Mobil’s 40-year history of climate change communications. (The research was funded by Harvard University Faculty Development Funds and by the Rockefeller Family Fund, which also helped finance the reporting by Inside Climate News and the Columbia University Graduate School of Journalism, which published its examination of Exxon Mobil with The Los Angeles Times.) Their findings are clear: Exxon Mobil misled the public about the state of climate science and its implications. Available documents show a systematic, quantifiable discrepancy between what Exxon Mobil’s scientists and executives discussed about climate change in private and in academic circles, and what it presented to the general public.
- Exxon Mobil Corp. spent the last 40 years undermining public concern over climate change, even as its own scientists determined man-made global warming was real and a serious threat, according to Harvard University researchers writing in a peer-reviewed journal. “Exxon Mobil contributed to advancing climate science -- by way of its scientists’ academic publications -- but promoted doubt about it in advertorials,” the Harvard researchers wrote in the journal Environmental Research Letters. “Given this discrepancy, we conclude that Exxon Mobil misled the public.” The findings could add fuel to lawsuits brought against the world’s largest oil explorer by market value.
- Brazilian regulators are planning to strengthen rules to prevent exporters such as Petrobras and Vale SA from selling aging ships to buyers who offload the vessels in South Asia’s controversial coastal scrapyards. Earlier this month, authorities decided to develop a legal framework to ensure former Brazilian ships don’t end up with recyclers notorious for using dirty and dangerous methods, federal environmental watchdog Ibama said by email. Brazilian companies could face fines of as much as 10 million reais ($3.2 million) if Ibama finds they violate international standards by letting their vessels end up in substandard shipbreaking facilities in India, Pakistan and Bangladesh.
- Ten international banks have put up just under €1bn for an offshore German wind farm operated by Canada’s Northland Power. Toronto-listed Northland, which has former Canadian Prime Minister and Finance Minister John Turner on its board, said the 252MW Deutsche Bucht project in the North Sea has reached financial close. It comes after it finalized the acquisition of the project from Highland Group. Around 75% of the project’s costs will be provided from a €988m non-recourse construction and term loan and related loan facilities from 10 international commercial lenders, it said – adding the financing was “oversubscribed”.
- In this article, an investor outlines key factors about what they see for the future of specific stocks and outline why investors need to perform their respective criteria for due diligence before investing in particular stocks.
Fossil Fuel Divestment
- Fund managers should not remove fossil fuel-based assets from their portfolios altogether. By doing so, they risk overlooking advances in technology and regulation that could re-energise these once overvalued assets, says Mellon Capital. According to managing director and head of equity portfolio management Karen Wong, managers risk losses if advances in carbon capture technology reach a tipping point that would allow us to “burn more fossil fuel without any accompanying rise in global temperatures”. These advances could help wring out any trapped value in otherwise “stranded” assets and, crucially, cause investors who had divested to miss out. Stranded assets are those that have become obsolete or non-performing due to some unanticipated or premature write-down, devaluation or conversion to a liability.
- Positive social change always comes from those outside the halls of power. In the history of social change on Washington University’s campus, progress has come from the determined efforts of students, campus workers and faculty. This opinion piece comes from alumni who all worked against fossil fuel interests at Wash. U., and who support the work of Fossil Free WashU to divest the endowment from fossil fuels.
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