Weekly News Round-Up: September 2nd, 2016

Endowments & Sustainable / ESG Investing

North Central College joins Billion Dollar Green Challenge | Naperville Sun 
  • A solar array to be installed on the North Central College's Naperville campus this fall will be funded by an endowment aimed at reducing the institution's carbon footprint. Only two of the 62 institutions that have joined the BDGC are in Illinois; the other is the University of Illinois at Urbana-Champaign. North Central has committed $1.8 million of its unrestricted endowment toward sustainability projects.
  • As environmental issues have become more important to the younger generation, student voices for progress are receiving a louder bullhorn at U.S. universities. Overall, millennials have increasingly expressed certainty that environmental progress is important. Breckinridge has participated in the sustainable groundswell across U.S. university campuses by teaming up with the Sustainable Business Lab (S-Lab) at the MIT Sloan School of Management. Students in the S-Lab accepted Breckinridge’s proposal to perform a joint study on the impact of ESG factors on fixed income.

General Sustainable / ESG Investing

Where are the World's Greenest REITs? | Bloomberg Brief Sustainable Finance 
  • REAL ESTATE: Some sustainable investors, such as Dutch Pension Fund PGGM, are starting to assess carbon risk in their real estate portfolios. See where REITs have the lightest carbon footprint. ALSO: BlackRock launched its first sustainable U.S. fixed-income fund; outlook for commercial solar demand; Pepsico exceeds water reduction goal; EU's Apple ruling heralds twilight of easy European tax deals; Are big tobacco or fossil fuels hiding in your ethical fund?
How ETFs Are Incorporating Sustainability | Morningstar 
  • As interest in sustainable investing has increased, U.S. exchange-traded products have moved to offer more diversified options. For years, the vast majority of ETPs in the space were alternative energy and water portfolios, virtually all of which were launched between 2005 and 2009. While the two largest diversified sustainable investment options have been around for a decade, the diversified set now totals 20 funds, with 17 launched in just the past two years, nine of them so far in 2016, reflecting growing demand for sustainable investment products as well as more general investor interest in passive portfolios.

Socially Responsible Investing (SRI) - Better Returns for Being “Good” | ETFdb.com 

  • Socially responsible investing has come a long way since its humble beginnings as an esoteric management style with only a few ardent supporters. Today, it’s a multi-trillion dollar behemoth that has finally begun to show its mettle both in portfolio returns and in acting as an agent for positive change. It’s something that investors should at least be familiar with as it continues to gain supporters across the age and asset spectrum.

 

Climate Risk, Fossil Fuels, & Clean Energy 

Columbia University's ACSRI releases internal fossil fuel divestment proposal | Columbia Spectator 
  • Columbia's Advisory Committee for Socially Responsible Investing released an early draft of its internal fossil fuel divestment proposal on Wednesday, marking the first time the committee has made public details of how they would recommend divesting the University from certain fossil fuels. The proposal states that the committee may recommend that Columbia divest from companies that mine fossil fuel reserves called “tar sands,” and gives the University community until the end of September to submit their feedback.  
  • Investors’ efforts to fight climate change by reducing their exposure to carbon emissions are being undermined by the widespread use of unreliable data about fossil fuel pollution. Only a limited number of companies disclose carbon emissions data at the moment. As a result, investors have to rely on estimated data to assess which companies pollute the most with fossil fuels and which have low carbon emissions. But these estimates are often inaccurate and misleading, according to MSCI.
  • Aug. 18 marked the opening of the Five Points Solar Park, a 60-megawatt solar power installation built to supply renewable energy to the University of California. The power supplied by the new solar farm represents roughly 14% of the total UC system’s electricity usage, and is a key step toward the university’s goal of reaching carbon neutrality by 2025. An additional 20-megawatt installation is set to come online by mid-2017, for a total of 80 megawatts, the largest solar purchase by any university in the U.S. The full output from these two power projects will be going to UC under a 25-year power purchase agreement with project developer Centaurus Renewable Energy.
 
 
Fiduciary Duty
  • Changes made to the Ontario Pension Benefits Act and Regulation, which came into force on January 1, 2016, now require a pension plan’s statement of investment policies and procedures to include information as to whether ESG factors are incorporated and, if so, how those factors are incorporated.  The changes have raised more questions than there are answers for plan administrators.  The primary question is whether there is a legal requirement to take ESG into account or must the administrator simply consider whether, or not, to incorporate ESG?
  • A recent decision by the federal Department of Justice to scale back and eventually end the use of private prisons indirectly impacted New York City’s pension funds, reducing holding values by millions of dollars and leading to renewed calls from activists for the city to divest from the for-profit corporations that operate these prisons.
  • Helping endowments manage their investments has grown into an almost $100 billion business that’s attracted stiff competition from banks, consultants and boutiques. Almost 80 investment firms have sprung up to target foundations, family offices and colleges, up from just a few a decade ago