A round up of news stories about responsible investment from October and November 2008.
Global investors urge 9000 CEO’s to join UN Global Compact
On October 27, a group of global investors today announced a collaborative effort urging the Chief Executive Officers of approximately 9000 companies to commit to the UN Global Compact and its ten principles. The 52 investors, all signatories to the Principles for Responsible Investment, managing approximately USD 4.4 trillion in assets, collectively wrote to companies in the MSCI World, FTSE All-World and IFC Emerging Markets Indices to ask them to sign the UN Global Compact, or explain any decision not to join the initiative.
UN launches new initiative to stimulate ‘green’ market growth
The United Nation Environment Program launched a $4 million scheme on October 22, aimed at shifting the focus of the global economy towards environmentally friendly investments in order to tackle climate change and stimulate green job creation. The Green Economy Initiative intends, within two years, to provide all governments worldwide with a comprehensive guide to achieving the transition to a more environmentally friendly economy. The scheme has identified 5 key sectors likely to provide the greatest return on investment. They are: clean energy and technologies; sustainable agriculture; ecosystem infrastructure; reduced emissions; and sustainable urban planning.
Contact:
United Nation Environment Program
+25733632755 www.unep.org
EIRIS launches new toolkit for UN PRI signatories
On October 16, EIRIS, the responsible investment research firm, launched a set of products designed to help asset owners and mangers with the implementation of the United Nations Principles for Responsible Investment (PRI). The PRI, comprised of over 300 investors and totalling $15 trillion under management, is made up of 5 key principles. EIRIS’s toolkit assists owners and managers with the integration of the first three principles into their investment procedures. These centre on incorporating environmental, social and governance issues into investment analysis and decision-making processes; engaging with companies; and encouraging better corporate disclosure of environmental, social and governance issues.
On October 1, Wells Fargo & Co. announced the launch of the Wells Fargo Advantage Social Sustainability Fund. The Fund’s managers will use an inclusive screening process to invest in companies that have positive traits related to environmental, social, and governance factors, in addition to avoiding stocks—such as alcohol, tobacco, gambling, or weapons manufacturing companies—based on traditional socially responsible investing screens. The Fund will invest in approximately 30 to 50 large cap companies.
Financial centres become more transparent, but information exchange remains a problem
The Organisation for Economic Cooperation and Development’s latest report, Tax Co-operation: Towards a Level Playing Field – 2008 Assessment by the Global Forum on Taxation, launched on September 29, noted that a number of countries have improved the availability of ownership information and access to bank information for tax purposes. However, it also revealed that only a small number of offshore financial centres have expanded their network of exchange-of-information agreements. Furthermore, a number of offshore financial centres that committed to implement the standards on transparency and the effective exchange of information developed by the OECD’s Global Forum on Taxation have failed to follow through.
Contact:
Organisation for Economic Cooperation and Development www.oecd.org
European market for SRI worth €2.7 trillion
The European market for sustainable and responsible investment (SRI) was worth €2.7 trillion ($3.7 trillion) in 2007, according to figures released on October 1 by the European Sustainable Investment Forum (Eurosif), equivalent to 17.5% of the European asset management industry.
Eurosif said its survey of asset managers and asset owners in nine European countries showed that responsibly managed assets had grown by 102% between 31 December 2005 and 31 December 2007 – a compound annual growth rate of 42%. For the first time, Eurosif included statistics from Scandinavia where Norway and Sweden had the biggest SRI markets, worth €209 billion and €191 billion respectively.
Investors call on SEC to require better disclosure on climate change and other risks
On October 23, fourteen of the largest institutional investors in the US, including CalPERS and CalSTRS, called on the Securities and Exchange Commission (SEC) to require improved corporate climate risk disclosure on a broader range of environmental, social and governance risks. The letter was sent in response to the SEC’s request for public comment on its 21st Century Disclosure Initiative, which proposes to modernize the current SEC disclosure system to enhance its usefulness to investors. The investor letter also included a request for the SEC to consider how material ESG data could be integrated into registrant’s SEC filings. While many companies disclose ESG information in their sustainability reports and on their web sites, investors advised that it wasn’t always enough given the financial risks ESG factors can create.
Ethical funds unveils 2009 plan to engage major corporations on top investor concerns
On October 22, Canadian firm the Ethical Funds Company launched its 2009 focus list outlining the corporations and areas of focus for its Shareholder Action Program related to key environmental, social and governance risks. This year’s efforts will build on a track record of successful corporate engagement that has included encouraging Canada’s five major banks to consider climate risk in corporate lending; engaging Goldcorp on human rights issues at their mining sites; and facilitating ongoing dialogue with information technology companies on workplace conditions in the supply chain.
KLD Indexes and FTSE Group announce new global partnership
On October 28, research firm KLD and index provider FTSE announced they are to collaborate to create a set of environmental, social and governance (ESG) indexes. FTSE will collaborate with KLD on the conception, design and worldwide marketing of co-branded ESG indexes. Peter D. Kinder, President of KLD said, “FTSE’s global reach and expertise will enable more investors and managers to integrate KLD’s indexes into their strategies – both as benchmarks and as the basis for investment products.
Investing in climate change can help stimulate economies
A report published on October 22 titled Investing in Climate Change 2009 — Necessity and Opportunity in Turbulent Times,” written by Deutsche Asset Management ‘s Global Climate Change Investment Research team, has found that the accelerating pace of global warming will force governments to invest more heavily in climate change mitigation and adaptation despite the financial setbacks of the current market crash. It noted that an economic downturn will offer governments across the developed world a prime opportunity to boost their spending on ‘green’ infrastructure as a stimulus to avoid severe recession. The paper also found that the debate around climate change is shifting away from cost and risk towards the question of how to capitalize on exciting opportunities, with the climate change universe well-suited for public equity markets and particularly, private markets such as venture capital, private equity and infrastructure.
Financial sector supports social entrepreneurs fund
The Bridges Social Entrepreneurs Fund, launched 12 November, supported by NESTA and the National Endowment for Science, Technology and the Arts (who also acted as a catalyst for private sector investment) aims to invest in scalable social enterprises that deliver a high social impact and operate financially sustainable business models. The fund will invest up to £1 million in each venture through hands on, equity-like capital, intending to recycle financing into multiple projects, and to establish a track record of financial returns to attract additional investment into the sector. Other founder partners include Lehman Brothers Foundation Europe, 3i, private equity chief Nigel Doughty and The Apax foundation.
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