Weekly News Round Up: September 16th, 2016


Value-Chain Analysis:Partnership for a Carbon Efficiency Strategy | Saïd Business School, University of Oxford (April 2016)  

  • This case study examines the challenges and lessons learned during the 10 months of development of a $100 million Carbon Efficiency Strategy, offering these experiences to other innovators as they consider creating new financial products that balance financial returns and social outcomes with the added dimension of a carbon-specific focus. The case explores these issues by looking at how the value chain of relationships across the unique communities of BNY Mellon, MCM, and McKnight merged to develop and take to market a new product designed to promote the reduction of carbon emissions exposures in investment products, while providing a financial return to the satisfaction of all the partners.
Adapting Portfolios to Climate Change | Blackrock Investment Institute (September 2016) 
  • Investors can no longer ignore climate change. Some may question the science behind it, but all are faced with a swelling tide of climate-related regulations and technological disruption. Drawing on the insights of BlackRock’s investment professionals, we detail how investors can mitigate climate risks, exploit opportunities or have a positive impact. Climate-aware investing is possible without compromising on traditional goals of maximizing investment returns, we conclude. We then reflect on steps that stakeholders in the climate debate are considering, including the use of carbon pricing as a cost-effective way to reduce emissions. 
  • The Sierra Club's annual ranking of the greenest colleges and universities (which includes evaluation of endowment investment practices).  Top 10: College of the Atlantic, SUNY College of Environmental Science and Forestry, UC Irvine, Colby, Stanford, Arizona State, Loyola University Chicago, UC Davis, UConn, Green Mountain College
Sustainable & ESG Investing
  • Investors and consumers are making more decisions based on ethical considerations and companies will have to change their behavior to catch up with them, an expert warns. Investment strategies based o​n​ ESG factors is one of the biggest trends to hit the financial industry in decades, says Andreas Feiner, founding partner of asset management firm Arabesque, which invests according to strict ESG criteria.
  • ESG Managers Say They're Stuck in a Benchmark 'Trap' - Commonly-used performance benchmarks, such as the S&P 500 Index and the MSCI World Index, exert tremendous influence over stock selection for fund managers, but for socially-conscious investors with long-term active strategies, the pressure to beat an existing index can feel constricting. ALSO: NYC Pension Considers Divesting Private Prisons. Norway’s Wealth Fund Dumps Duke Energy. Is This the Tipping Point for Electric Cars?   BlackRock Sees Climate-Friendly Spending Needs Rising. Coalition Presses SEC to Increase Tax Disclosures. Clean Energy Gave More Capacity With Less Investment, IEA Says.     
HSBC pension CIO: Being Small is not a Barrier to ESG | Professional Pensions 
  • HSBC Bank Pension Trust chief investment officer challenged the perception that ESG funds have a very narrow range of investments. "People think of ESG funds as excluding loads of things. It is more about engagement rather than exclusion."
Shareholder Engagement
2016 Proxy Mid-Season Review | Harvard Law School Forum on Corporate Governance and Financial Regulation
  • Heidi Welsh of Si2 reports on the ESG shareholder engagement trends this year: The total number of environmental and social policy shareholder resolutions filed in 2016 dropped to 431, down from 465 in 2015. But 239 went to votes, more than ever before, and the final tally included nine majority votes (including two not opposed by management). However, the number of withdrawn proposals dropped to the lowest level of the decade, suggesting that proponents and companies are simply not agreeing as much as in the past. 
Climate Risk, Science & Regulation
  • Amy Jaffe, of UC Davis and senior advisory to the UC Office of the CIO, provides a history of the United States' battle to regulate carbon emissions as well as a breakdown of the most probable regulatory approaches - and makes the case for why a price on carbon may not be far off. 
  • Market regulators and economic officials in the U.S. and abroad are busy discussing possible new rules for reporting climate-related risks that companies face. As environmental and energy policies continue to evolve, new costs for business could include taxes on carbon emissions and expanded use of so-called carbon markets, in which emissions allowances are traded.
  • August 2016 was the warmest such month on record, according to preliminary data released by NASA on Monday. This further ensures that the year will beat 2015 for the title of the warmest year on record. August also ​tied July for the distinction of being the hottest month of any month on record, according to a NASA statement released on Monday. 
  • Oil and gas companies such as ExxonMobil face heightened scrutiny as oil prices continue to languish below $50 per barrel and losses continue to mount. The risks and opportunities presented by the energy transition envisioned by the Paris Agreement highlight the need for corporate boards and executives to ask themselves whether their business models are still fit for purpose.
  • Coal consumption fell in each of the 57 colleges and universities that used the fuel in 2008, with 20 of these institutions cutting it out of their energy mix completely, according to the Energy Information Administration (EIA). Many of these institutions are part of the American College and University Presidents' Climate Commitment.
  • A chart of the changes in Earth's climate and temperature ​from 20,000 BCE to present day.
Fossil Fuel Divestment
University of ​Orego​n Foundation to U​nexpectedly W​ork ​T​owards D​ivesting l Daily Emerald​ 
  • ​The ​U​niversity of ​O​regon (UO)​ Foundation, an independent entity from the university, is responsible for overseeing all endorsements for the institution. Out of its $719 million budget in 2015, UO Foundation has spent 1.5 percent on fossil fuel infrastructure, according to Climate Justice League. According to the announcement, this will no longer be the case.“We intend to let those carbon-based investments –which were initiated many years ago– expire without renewal, ending our investment in carbon-based fuel sources,” the statement read.  
Yona: Do The Right Thing | The Dartmouth
  • Leehi Yona, Darmouth Class of 2016 writes in this opinion piece: "Global warming is the greatest issue of our generation, and, without a doubt, the single most pressing issue affecting future generations of Dartmouth students. Where is Dartmouth’s leadership in this challenge? ...On Monday, Dartmouth Alumni for Climate Action delivered a letter to Hanlon and the Board of Trustees in support of fossil fuel divestment. With over 500 signatories spanning 57 class years, the letter is one of the largest alumni letters published. It requested, among other demands, a decision on divestment by spring 2017."
Queensland University of Technology to Di​vest ​F​rom F​ossil ​F​uel I​nvestments l Green Left Weekly
  • After a two-year campaign by students and staff, the Queensland University of Technology (QUT) Vice Chancellor Peter Coaldrake has committed to divest the university’s $300 million endowment fund of its shares in coal, oil and gas companies.
Otago Uni (New Zealand) Votes to Divest from Fossil Fuels | Scoop Education 
  • University of Otago Council voted to exclude fossil fuels from their investment portfolio. Fossil Free Otago Uni, with the support of staff and the student body, has been calling for the University’s Ethical Investment Policy to explicitly exclude fossil fuel investments from the University Council’s investment portfolio since early 2015.
  • About 100 students rallied on Marsh Plaza Wednesday afternoon to urge BU’s divestment from fossil fuel companies. Chanting and singing, they marched afterward to the BU Castle, leaving a box of pro-divestment ballots they’d signed for the University’s trustees, who were meeting on campus.
  • College endowments are poised to take the worst slide in performance since the 2009 recession. Funds with more than $500 million lost a median 0.73 percent in the year through June 30, according to the Wilshire Trust Universe Comparison Service. 
Lawmaker Has Broad Vision for College Endowment Bill | Bloomberg BNA 
  • Rep. Tom Reed (R-N.Y.) continues to expand the scope of the bill he is working on to require the wealthiest colleges to put part of their endowment income toward helping working-class families with tuition. The legislation would require the richest schools—those with endowments topping $1 billion—to put a percentage of endowment income, potentially 25 percent, toward grants for working-class families. The bill may also include new Form 990 disclosure requirements and address lush compensation packages for employees who manage endowment funds.
Endowments’ Battle to Maintain Real Value | Pensions & Investments
  • Endowments are not immune to the challenges facing other institutional investors in a low yielding, volatile market. Even the high-yield haven of alternatives is losing its shine, with the illiquidity premium on offer diminishing as money continues to flood into the asset class, arguably driving down returns.
As I See It: Protecting Oregon State's Endowment | Corvallis Gazette Times
  • A local OSU donor makes the case for protecting endowments from taxation and high fees from investment managers given their importance in supporting students and incubating industries (such as Stanford's support of the Silicon Valley tech industry). 

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