Mercer releases Climate Change Scenarios – Implications for Strategic Asset Allocation
Mercer, together with 14 leading institutional investors and industry thought leaders around the world, has been working for over a year on this market-leading research into the implications of climate change for markets and investors. The report analyses the potential financial impacts of climate change on investors’ portfolios, identified through a series of four climate change scenarios playing out to 2030. The report also identifies a series of pragmatic steps for institutional investors to consider in their strategic asset allocation.
J.P. Morgan and Rockefeller Foundation unveil impact investments research
J.P. Morgan and the Rockefeller Foundation issued a research report, Impact Investments: An Emerging Asset Class, exploring the growing market for this new asset class. Impact investments are intended to create positive social or environmental change beyond financial return. The report’s authors estimated significant market opportunity for impact investment over the next ten years. They analysed five sectors – urban affordable housing, rural access to clean water, maternal health, primary education, and microfinance – serving the population at the “base of the economic pyramid,” and estimated the profit potential to be $183 billion to $667 billion in the next decade.
CAER and Seacliff Consulting review ESG hurdles for superannuation industry
A recent report prepared by CAER in collaboration with Seacliff Consulting offers the first detailed practice-based review of the benefits and impediments that superannuation trustees encounter when looking to integrate environmental, social and governance (ESG) factors into their investment processes. The research involved in-depth structured interviews with 50 leading stakeholders in the superannuation sector in Australia, including 25 super fund representatives and 25 other stakeholders including service providers, regulators, industry bodies and asset managers.
Trucost study reveals ESG funds outperform traditional funds
Trucost and RLP Capital research finds that funds incorporating environmental, social and governance (ESG) analysis outperformed traditional funds over one and three year periods. The study compared the carbon footprints, performance and risk characteristics of the eight largest traditional mutual funds (by asset size) with the eight largest responsible funds in several key asset categories.
EIRIS report helps investors understand risks related to biodiversity loss
A month after delegates from around the world met in Nagoya, Japan, to agree on a series of measures aimed at reducing biodiversity loss and habitat change, EIRIS’ latest report explores the likely impact the summit will have on businesses and investors. The report focuses on 1,800 global companies and finds that 58% of them operate in sectors whose business activities have a considerable biodiversity impact. However, only 6% of these ‘high impact’ companies are assessed by EIRIS as having a good policy on biodiversity.
Responsible Research looks at beverages and forestry in Asia
Responsible Research is the one of the leading providers of independent environmental, social and governance (ESG) research in Asia for global institutional asset owners and asset managers. They provide ‘investment-grade’ information on sustainable business practices which is often difficult to obtain in Asia. Two of their recent reports include Beverages in Asia and Forestry in Asia. For more information please contact Claire Veuthey.
Australian Conservation Foundation’s New Economics Program is launched with two important reports
Better Than Growth and Funding the Transition mark the beginning of an ambitious three year program by the Australian Conservation Foundation to challenge accepted economic theory and practice around production and consumption. ACF is seeking like minded progressive partnerships for the New Economics Program to act as a catalyst in economic policy innovation and human wellbeing. For further information contact Micah Demmert on +61 3 9345 1182 or m.demmert@acfonline.org.au
Linking corporate environmental management and credit risk
In a paper which won the 2010 Moskowitz Prize, Rob Bauer and Daniel Hann investigate the credit risk implications of corporate environmental management for bond investors. They find that environmental practices influence the solvency of borrowing firms by determining their exposure to legal, reputational, and regulatory risks. Bond investors who want to protect themselves against environmental performance related losses require a better understanding of how the different corporate environmental activities relate to credit risk, before making their decision to lend.
2010 Carbon Disclosure Project Report for Australia and New Zealand released
ASX100 companies surveyed in this year’s CDP rank equal third globally for board and executive engagement on climate change, despite policy uncertainty. 94% of ASX100 companies surveyed report board or executive level responsibility for climate change, which is in line with the Europe 300 (94%) and ahead of the Global 500 (84%), according to the CDP Australia and New Zealand 2010.
Carbon Disclosure Project’s new water initiative released
CDP Water Disclosure, a new program from the Carbon Disclosure Project, recently launched its first report on the impact of water constraints on the world’s largest corporations, clearly illustrating the significance and immediacy of water as a corporate issue. CDP Water Disclosure sent its first annual questionnaire to 302 of the world’s largest companies asking for information on their water use and other water-related business issues. It received a 50% response rate with 122 of these responding publicly and a further 25 companies responding on a purely voluntary basis.
Eurosif’s 2010 European SRI study estimates European SRI market at €5 trillion
Eurosif released its fourth SRI study in October 2010 in Amsterdam. Despite the financial crisis, Eurosif found that the European sustainable and responsible investment market had almost doubled in the last two years. Core SRI (norms- and values- based exclusions and different types of positive screens) is estimated at €1.2 trillion and Broad SRI (simple exclusion, engagement and integration approaches) is estimated at €3.8 trillion. The study also found that bonds are now the favoured asset class among SRI investors, representing 53% of total SRI assets, while equities have dropped down to 33%.
Read the 2010 Eurosif SRI study
Socially responsible investing assets in US top $3 trillion
The US Social Investment Forum trends report, released on 9 November 2010, found despite the recent economic downturn, sustainable and socially responsible investing in the United States is continuing to grow at a faster pace than the total universe of investment assets under professional management. Nearly one out of every eight dollars under professional management in the United States today is involved in some strategy of socially responsible and sustainable investing.
Mine the Gap: water risks in the mining industry
Mine the Gap, a new report by the World Resources Institute that outlines potential water-related risks facing the mining industry and highlights important gaps in water-related disclosure. The report finds that although the mining sector is a leader in terms of water reporting, corporate disclosure often does not provide a comprehensive picture of water risk. For example, water quality data is not sufficiently reported, water consumption data lacks context, water reporting is not consistent. Contact the lead author, Amanda Sauer, at asauer@wri.org or +1 202 729-7708 if you would like to discuss the report further.
Trucost report on Universal ownership: why environmental externalities matter to institutional investors
The UN-backed Principles for Responsible Investment and UNEP Finance Initiative commissioned Trucost to calculate the cost of global environmental damage and examine why this is important to the economy, capital markets, companies and institutional investors. The study calculated that global environmental damage caused by human activity in 2008 represented a monetary value of $6.6 trillion, equivalent to 11% of global GDP. The study recommends investors should exercise their ownership rights, collaborate to encourage companies and policy-makers to reduce these environmental externalities, and request regular monitoring and reporting from investment managers on how they are addressing exposure to environmental risk.
Download report (registration, free of charge, is required to download)
EIRIS report reveals consumers want ethical lending practices from their banks
73% of the British public think that banks should have ethical lending policies in place to prevent them from investing in, or lending to, companies involved in controversial areas such as arms manufacturing, or companies with poor records on the environment and human rights, according to new research released by EIRIS. In order to assist people looking for ethical financial products, EIRIS has launched Your Ethical Money.org – the UK’s first consumer website dedicated to providing free, independent and unbiased information on all aspects of ethical finance. Learn more
German based research agency calls for stricter emission reduction targets
Oekum research recently published a position paper on emissions trading as a key component for achieving climate protection targets. In their view, to provide effective support for the goal of limiting global warming to two degrees celsius various measures are required: a tightening of the reduction targets in the EU (30% lower in 2020 compared with 1990 levels), the inclusion of all relevant sectors and GHGs and the establishment of a larger trading system incorporating the EU ETS and a North American trading system.
Electronics: “make ‘em safe, make ‘em last, and take ‘em back”
Released on 9 November 2010 storyofelectronics.org, takes on the electronics industry’s “design for the dump” mentality and champions product take back to spur companies to make less toxic, more easily recyclable and longer lasting products.
Deutsche Bank research analyses skeptic arguments
This paper examines the many claims and counter-claims being made in the public debate about climate change science. DB Climate Change Advisors asked the Columbia Climate Center at the Earth Institute, Columbia University, to examine the skeptic claims in the light of the latest peer reviewed scientific literature and to weigh the arguments of each side in the balance. The paper’s clear conclusion is that the primary claims of the skeptics do not undermine the assertion that human-made climate change is already happening and is a serious long-term threat.
Eurosif releases 2010 High Net Worth Individual & Sustainable Investment Study
This study, conducted by the European Sustainable Investment Forum, estimates the 2010 European HNWI sustainable investment market to be approximately €729 billion, representing an average of about 11% of European HNWIs’ portfolios as of 31 December 2009. This is a growth rate of 35% over the two-year period since the data was previously collected. Following its research, Eurosif predicts that by 2013 the share will have increased to 15%, just below the €1.2 trillion mark.
EIRIS recommends mandatory ESG disclosure in new sustainable stock exchanges report
This report includes recommendations for stock exchanges such as incorporating mandatory ESG disclosure standards (including comply or explain provisions where relevant) into IPO and ongoing listing rules in the same way that financial reporting is a requirement for all companies.
UN-backed report calls for levy to protect biodiversity
A UN-sponsored report on the economics of biodiversity suggests the adoption of market-based instruments, such as additional levies to enforce sustainable use of ecosystem services, including water, forests and endangered species.
Cleantech report reveals trends and incentives for investments
Cleantech Investment and Private Equity – An Industry Survey has been published by Norton Rose LLP. Key findings from the survey include the following:
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Energy efficiency is expected to attract most investment interest short term.
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Wind is expected to remain the main cleantech energy generation sub-sector – but solar currently attracting most investment.
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The USA is expected to attract most private equity driven cleantech investment.
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Europe is seen as offering the greatest incentives for cleantech investment.
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Political and regulatory support is seen as crucial for growth in the cleantech sector.
The full survey results are available to download from the Norton Rose Group website at the following link: Cleantech Investment and Private Equity – An Industry Survey (5MB).
Tomorrow’s Corporate Reporting
The Chartered Institute of Management Accountants, PricewaterhouseCoopers and Tomorrow’s Company are setting up a global study on how to improve corporate reporting. They are now launching the first phase, which includes a call for evidence. View blogs on this subject The call for evidence is available here- if you would like to give evidence please do so at evidence@tomorrowscompany.com.
CAER’s UK partners EIRIS release report on ESG risks in emerging nations
Research published by EIRIS, the London based non-profit responsible investment research specialists, shows that amongst leading emerging market economies, China, Egypt and Vietnam perform the worst in terms of Environmental, Social and Governance (ESG) indicators. The 2010 version of the EIRIS Country Sustainability Profiles for investors in sovereign wealth bonds includes a comparison of those emerging market countries that will play a key role in driving global economic development over the decades ahead. The countries analysed for the comparison were Brazil, China, Egypt, India, Indonesia, Mexico, Pakistan, Philippines, Russia, South Korea, Turkey and Vietnam. The three best performing emerging market countries were South Korea, Brazil and Mexico.
Launch of Climate Spectator
Climate Spectator is Australia’s first website dedicated to how climate change, and the responses to it, affect all facets of business, investment and technology including the massive flows of investment expected in coming years and decades, the changing business models, the new technology, and the creation of new markets and investment propositions.
The site is updated daily with new analysis and commentary from leading figures in the industry, as well as news updates throughout the day on events and announcements affecting cleantech, carbon prices, smart energy, policy and science.
Sign up for the daily Climate Spectator email newsletter
TED series presents Sam Daley-Harris: “Poverty, Purpose, Pitfalls, and Redemption”
Sam Daley-Harris is founder of RESULTS, a citizen lobby on ending global poverty, and founder of the Microcredit Summit Campaign. In May 2010 he gave an inspiring talk at TEDx NJ Libraries titled: “Purpose, Poverty, Pitfalls, and Redemption”.
State Street updating study on ESG data
State Street is in the process of updating its own 2008 study which looked at the environmental, social and governance ratings offered by 11 commercial suppliers. It says the original study found that ESG-related issues have gradually exerted a stronger influence on economic performance over time. The update, taking in the financial crisis, is being conducted with the Sydney Advanced Research Centre in response to demand from Australian investors.
Low-Income communities and the Great Recession
A new study, entitled Low-Income Communities and the Great Recession: Financial Trends in CDCUs, 2009, presents data on trends in lending, savings, operations, and balance sheets of 208 Community Development Credit Unions across the United States. In 2009, these institutions served more than one-million members with aggregate assets exceeding $5 billion. The study compares CDCU performance to that of all federally insured credit unions, and also includes analysis by region and asset size. Electronic copies of report are available by contacting Rafael Morales, Communications Officer at the Federation.
New Legislation in US to prevent exposure to harmful toxics in personal care products
For the first time in 70 years, the United States Congress is poised to close the gaping holes in the outdated federal law that allows chemicals linked to cancer, birth defects, learning disabilities and other illnesses in the products people use on their bodies every day. Major provisions of the legislation would:
- Phase out ingredients linked to cancer, birth defects and developmental harm
- Create a health-based safety standard that includes protections for children, the elderly, workers and other vulnerable populations
- Close labelling loopholes by requiring full ingredient disclosure, including the constituent ingredients of fragrance and salon products, on product labels and company Web sites
“Companies on a Mission”: Entrepreneurial Strategies for Growing Sustainably, Responsibly, and Profitably
Michael V. Russo’s book, “Companies on a Mission” explains that mission-driven companies appreciate and leverage traditional strategic principles—with a twist—to win in the marketplace. By clearly and pragmatically laying out this argument, Russo crystallizes for enlightened businesses what Michael Porter made clear for mainstream firms years ago. The book shows that a mission-driven approach creates significant barriers to imitation by larger, established rivals. Mission-driven firms build their brands on authenticity. Only you are you. Moreover, authenticity builds customer loyalty. Wealth Management in a post-GFC world from Network for Sustainable Financial Markets.
This report presents 15 recommendations to remodel the wealth management industry in a fashion better aligned with generating sustainable, best practice outcomes for industry, consumers and society. Its focus is multi-jurisdictional, spanning both developed and emerging markets and reflects the continuing globalisation of the industry and its consumer base. The recommendations are designed to assist industry and the market to move to a naturally self-regulating and more sustainable model. (June 2010)
Sustainalytics report reveals Dutch multinationals have positive impact in developing countries
According to the 2010 Business Impact Report, 20 Dutch multinationals have made a positive impact on more than 8.2 million people in developing countries. This highlights that the private sector plays a larger than expected role in contributing to the Millennium Development Goals (MDGs). The Sustainalytics and NCDO (Netherlands National Committee for International Cooperation and Sustainable Development) study revealed that these companies contributed to the MDGs through job creation, commercial activities as well as community involvement. (June 2010)
