A round up of the Responsible Investing news stories from August and September 2008.
New publication on socially responsible investing
A new report by Business for Social Responsibility examines how mainstream financial institutions are incorporating environmental, social and governance (ESG) criteria. The publication, entitled “Environmental, Social and Governance: Moving to Mainstream Investing?”, outlines the five main barriers to mainstream integration of ESG criteria, among them insufficient reporting of ESG data and lack of capacity among investment professionals. The report (published August 20) also mentions potential solutions to overcoming the challenges presented by implementing ESG criteria.
Contact
Business for Social Responsibility
415-984-3233 www.bsr.org
Results of Sustainability Indexes review announced Dow Jones Indexes, SAM Indexes and STOXX Ltd. have announced the results of the 2008 annual review for the Dow Jones Sustainability and Dow Jones STOXX Sustainability indexes. 33 new companies will join the Dow Jones Sustainability World Index, while 25 firms will be deleted. Companies that have been cut include Colgate-Palmolive, Motorola and Hitachi. The annual review of the indexes (released on September 4) is based on an analysis of corporate economic, environmental and social performance, assessing issues such as corporate governance, risk management, climate change mitigation, supply chain standards and labour practices. It also identifies sustainability leaders for 19 sectors. This year leaders include ANZ Group, BT Group, Pearson and Unilever.
Dow Jones launches new sustainability indexes SAM, the sustainability investment specialist, and Dow Jones Indexes added four indexes to the Dow Jones Sustainability group on August 26. The new indexes (World 80, World ex US 80, North America 40 and United States 40) provide market participants with tools to track sustainability leaders globally, in the US and North America.
Dow Jones Indexes and Chicago Climate Exchange team up for emissions index series Dow Jones Indexes and the Chicago Climate Exchange (CCX) announced the launch of the Dow Jones/CCX European Carbon Index and Dow Jones/CCX Certified Emissions Reductions Index on August 27. The two new indexes will serve as benchmarks for participants seeking exposure to the European Union Emissions Trading Scheme and Kyoto Protocol Clean Development Mechanism. Carbon trading aims to reduce pollution by using economic incentives for companies that reduce their emissions beyond targets.
Henderson launches new sustainable fund Henderson Global Investors, the global asset management company, announced the launch of the Henderson Industries of the Future Fund on September 2. The Fund will seek to invest in companies that meet its “Industries of the Future” guidelines. The guidelines will focus investment on companies that contribute to an environmentally sustainable and socially responsible global economy. Sectors fulfilling these guidelines include clean energy, environmental services, health and sustainable transport
Investment professionals like ‘ESG’ and ‘Sustainability’
Over 350 investment professionals participated in global survey designed to identify the preferred terminology for the responsible investment sector. The survey, devised by AXA Investment Managers and AQ Research, was publicised in the Financial Times’ FTfm section and accessed by respondents through the AQ Research website. Investment professionals favour the use of the term “environmental, social & governance” (ESG) as the preferred description for the new data that is integrated into mainstream research. “Sustainability” followed closely as the next chosen description. The choices were made out of 16 phrases such as “socially responsible investment”, “extra financial” and “non-traditional”.
Contact
AXA Investment Managers
020 7003 2233 www.axa-im.com
African socially responsible investment index launched
The New Partnership for Africa’s Development (NEPAD) and Africa Investor (Ai) launched a preliminary pan-African investment index on September 17, with the aim of attracting socially responsible capital from private investors worldwide to spur socio-economic development on the continent and help achieve the Millennium Development Goals. At a Headquarters press conference, Cheick Sidi Diarra, Under-Secretary-General for the United Nations and Special Adviser on Africa, said the Ai30 Socially Responsible Investment (SRI) index – a benchmark based on global best practices for promoting good corporate governance, environmental preservation and social development and adapted to Africa’s operating environment – would be a vital tool for closing the region’s funding shortfall.
Contact
The New Partnership for Africa’s Development
+27 11 313 3716 www.nepad.org
Oil giants underestimating investor risk on tar sands
A new report by Greenpeace UK was released on September 16, warning of increasing financial risk for oil giants BP and Shell, who have invested heavily in the Alberta tar sands in Canada. The report, entitled ‘BP and Shell, Rising Risks in Tar Sands Investment’, has won the backing of several influential investment firms including Holden and Partners, Innovest, and Co-operative Asset Management. The report claims that shortfalls in the strategic reserves of BP and Shell are leading to a ‘distortion of management perspectives’, resulting in potentially catastrophic underestimates of risk.
Eurosif study reveals sustainable investments by High Net Worth Individuals
Eurosif has recently published a report on High Net Worth Individuals (HNWIs) & Sustainable Investment. The study, released on September 2 and sponsored by Bank Sarasin & Co. Ltd and KPMG International, highlights a fast-growing segment where investors are seeking returns while engaging in sustainability issues. Eurosif estimates that sustainable investments represented approximately 8% of European HNWIs’ portfolios as of December 31, 2007 and predicts that by 2012 the share will have increased to 12%, surpassing the €1 trillion mark. The sustainable investment strategy most often employed among HNWIs is thematic investment, with clean energy and water their preferred sustainable themes.
FTSE4Good announces global index review FTSE Group, the global index provider, has announced the results of the September review of the FTSE4Good global index series. Globally, 36 companies have been added and 12 companies removed from the index series. Changes to the index took place after the close of the markets on September 18. Additions and deletions to the index are based on transparent environmental and social criteria that represent global standards of good Corporate Responsibility (CR) practices. Companies entering the index series have demonstrated meeting the full FTSE4Good inclusion requirements, while those deleted no longer meet these standards. Toyota Motor Corporation has the largest market capitalization of those companies being added to the index series, and will re-enter following deleted in 2007. Other large companies entering the indices include Australian-based Westfield Corporation, First Solar and Capital One Financial Corporation from the US, and Banco Espanol de Credito of Spain. The largest number of new companies added is from the UK, followed by Japan and the US. The majority of companies deleted are from Japan, followed by Sweden and the UK.
Leading investors press SEC to consider impact on oil reserve disclosures
US and Canadian investors, environmental and non-profit groups were joined by F&C Asset Management on September 11, in a bid to encourage the US Securities and Exchange Commission to request that oil and gas companies factor in the carbon impacts of future barrels when accounting for their reserves. In a letter to the US Commission, the group argue that climate change and policies being developed to reduce carbon emissions could render certain assets uneconomic over time – particularly those which require high carbon emissions as part of their extraction processes. They therefore argue that in reporting their reserves, oil and gas companies should be required to assess the carbon impact of future barrels, not just the number of barrels a company may have.
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