Nearly a Third of Non-Profit
Institutional Investors Say They Make
"Mission-Related" Investments, According to
Cambridge Associates Survey. "In a
survey of 159 non-profit institutional investors
around the globe, 31% say they're currently engaged
in mission-related investing -- making investments
designed to align with or advance institutional
goals or values as well as provide financial
returns. Of that group, 44% say they have increased
their mission-related allocation over recent years,
and 62% expect to grow their mission-related
allocation in the coming five years. None of the
institutions that currently make mission-related
investments expect to decrease their allocations."
We see continuing
good news that non-profit institutional investors
are increasingly aligning their investments with
their missions. It always surprised me how a charity
invested in companies that produced products or
services abhorrent to its mission. Often it was
blamed on the fund manager’s fiduciary
responsibility. However, it was often due to the
timidity of the charity in properly instructing
their fund managers in what they expected from them.
See my editorial:
Unethical Investing by Charities.
Nearly a Third of Non-Profit Institutional Investors
Say They Make "Mission-Related" Investments,
According to Cambridge Associates Survey, press
release, February 15, 2017, USA.
Ethical investment demand outstrips
adviser interest. "[UK] Fnancial
advisers may be seriously underestimating demand for
responsible investment, after research showed wide
discrepancies between adviser and consumer attitudes
to investing ethically."
This is a problem everywhere and explains why the
percentage of ethical retail fund assets is only
2-4% of all retail funds. It's an issue I've written
about numerous times over the years. This FT article
should be broadcast by all professional brokerage
and financial planning organizations.
UK Ethical investment demand outstrips adviser
interest. by James Fernyhough, February 6, 2017,
FT Advisor, UK.
Canadian RI Assets Surpass $1.5 Trillion,
up 49% in two years: Canadian RI Trends Report.
"The 2016 Canadian Responsible
Investment Trends Report reveals that Canada’s
responsible investment (RI) market is continuing to
experience rapid growth. Responsible investment
refers to the incorporation of environmental,
social, and corporate governance (ESG) factors into
the selection and management of investments. This
report provides a detailed overview of recent trends
in Canada’s responsible investment marketplace."
These are terrific results! I'm particularly
impressed with the growth of 91% growth of assets
among individual investors.
Canadian RI Assets Surpass $1.5 Trillion, up 49% in
two years: Canadian RI Trends Report, press
release, February 2, 2017, RIA Canada, Canada.
The Tipping Point: Women on Boards and
Financial Performance. "This year, we
analyzed U.S. companies over a five-year period
(2011-2016). U.S. companies that began the period
with at least three women on the board experienced
median gains in Return on Equity (ROE) of 10
percentage points and Earnings Per Share (EPS) of
37%. In contrast, companies that began the period
with no female directors experienced median changes
of -1 percentage point in ROE and -8% in EPS over
the study period (see below exhibits)."
One would think after so many studies showing
the financial benefits accruing to companies
having women on
boards, that shareholders would be demanding it. Yet
relatively few do, especially in North America. The
'old boys' network is flourishing and only
slowly breaking down.
The Tipping Point: Women on Boards and Financial
Performance, by Linda- Eling Lee, January 31,
2017, MSCI, USA.
Steps remain to fully integrate ESG.
(Article also reviews important new ESG study.)
"Across all 12 industries, the positive
effect on equity return is 6.12 percentage points
higher for ESG companies on average. And, if one
looks at only the eight industries with clearly
higher ESG returns, this difference jumps to an
average 14.08 percentage points for ESG companies
compared with their peers...
Adding ESG to fundamental analysis is akin
to presenting magnetic resonance imaging to medical
practitioners used to X-rays. It is likely a
game-changer in the way we operate in capital
markets. But we have to be careful and creative in
order to capture its full potential."
Terrific new research and great observations about
the use and issues around implementing ESG in
portfolio construction. Download
study referred to in the article.
Steps remain to fully integrate ESG, by Rodrigo
Tavares and Daniela Barone Soares, January 25, 2017,
Why green bonds are reaching record
highs. "According to a recent report by
Moody's Investors Service, the rise of green bonds
issuances in 2016 is projected to carry over into
2017 as well. The report projects that green bond
issuances will increase to over $200 billion in 2017
from $93.4 billion in 2016 if green bonds grow at
their 2016 rate."
This post mentions that corporations are far behind
governments in issuing green bonds as corporations
presently see no financial upside in issuing them.
Hopefully, that'll change soon.
Why green bonds are reaching record highs, by
Keith Larsen, January 25, 2017, GreenBiz, USA.
RepRisk Releases the Most Controversial
Companies 2016 Report. "RepRisk’s MCC
2016 Report spotlights ESG issues faced by
globally-active companies, and was developed as part
of RepRisk’s commitment to providing transparency
into ESG risks and encouraging companies to
systematically take into account such risks in their
strategies and processes."
Most of the companies at greatest reputation risk
are Asian. Volkswagen is the only western company in
the top ten.
RepRisk Releases the Most Controversial Companies
2016 Report, press release, January 25, 2016,
Green Bond Giant Awakened by Countries
Spending to Save Climate. "Sovereign
debt pool of $44.5 trillion starts going green."
It appears that sovereign debt issuance of green
bonds is about to take-off! Many responsible-ethical
investors will be happy about this. Nonetheless,
it'll be worthwhile to review the country's ESG
rankings before investing. Helpful in this regard
Country Sustainability Ranking, and the EIRIS
Country Sustainability Ratings.
Green Bond Giant Awakened by Countries Spending to
Save Climate, by Anna Hirtenstein, January 19,
2017, Bloomberg Markets, USA.
2017 Global 100 (Corporate Knights).
"An index of the Global 100 most sustainable
corporations in the world."
This annual index is one of the best around in its
sphere. To obtain a complete download you need to
register name and email address.
2017 Global 100, January 19, 20-17, Corporate
Major banks 'still not doing enough' to
embed climate risk in decisions. "Major
banks are largely failing to align their business
practices with international climate targets and are
still not doing enough to effectively manage climate
risk. That is the stark conclusion of a new survey
[by Boston Common Assets Management] of 28 of the
world's largest banks, which found more than 80 per
cent of those polled are not integrating the results
of environmental stress testing into their business
This is probably a case where the banks announce
their concerns about climate change, sustainability,
etc., but don't quite believe it enough to engage in
it internally. It's likely just a question of time
before they do.
Major banks 'still not doing enough' to embed
climate risk in decisions, by Michael Holder,
January 17, 2017, BusinessGreen, UK.
'Inflection point' approaching for
long-term investors, says MSCI. "In
2017, the MSCI researchers predicted the emergence
of two approaches to long-termism: new benchmarks
that 'explicitly incorporate views of the future',
and a shift towards high-conviction, low-turnover
I welcome MSCI's prediction for 2017 of asset managers
taking a greater long-term, low-turnover portfolio
view! Short-termism and rapid turnover of
investments are detrimental to long-term economic
health as they discourage needed
multi-year or even multi-decade corporate
'Inflection point' approaching for long-term
investors, says MSCI, by Nick Reeve, January 16,
2017, IPE, UK.
Church of England equips investors to
monitor climate impact. (Tool useful for all ethical
investors!) "The Transition Pathway
Initiative (TPI), created in partnership with the UK
Environment Agency Pension Fund and the London
School of Economics (LSE), was launched at the
London Stock Exchange on Wednesday. It is supported
by 13 international asset-owners, and five
asset-managers, with more than £2 trillion under
management collectively, including Aviva Investors,
BNP Paribas Investment Partners, Hermes Investment
Management, PGGM, and Standard Life Investments.
TPI intends to offer accurate data, provided
by FTSE Russell and processed by the LSE, to enable
investors to scrutinise how companies are managing
The new site created for this,
The Transition Pathway Initiative, will be a
welcome new research site to help ethical investors
everywhere assess the progress of public companies
towards climate change.
Church of England equips investors to monitor
climate impact, by Hattie Williams, January 13,
2017, Church Times, UK.
The Risk And Opportunity For America's
Corporate Pension Plans. "Stated very
simply, while more and more companies are
proclaiming their commitment to 'sustainability,'
their pension funds are virtually ignoring the
This is an important article for investors to read
and portrays a real conundrum. Pension funds are
under tremendous pressure to perform and cannot now
legitimately ignore the potential better returns
offered them by incorporating ESG criteria into
their analytical framework.
The Risk And Opportunity For America's Corporate
Pension Plans, by Dr. Bob Eccles, January 10,
2017, Forbes, USA.
630 Companies And Investors Tell
Washington: Continue Accelerating the Low-Carbon
Economy. "The company signatories,
which include DuPont, Gap Inc., General Mills,
Hewlett Packard Enterprise, Hilton, HP Inc., IKEA,
Johnson & Johnson, The Kellogg Company, Levi Strauss
& Co., L’Oreal USA, NIKE, Mars Incorporated, Pacific
Gas and Electric, Schneider Electric, Sealed Air,
Starbucks, VF Corporation, Unilever, among others.
These signatories collectively take in nearly $1.15
trillion in annual revenue, are headquartered across
44 states, and employ about 1.8 million people."
Most American CEOs know that a
sustainability/ESG focus assists profits, stock
prices, and competitiveness. There is no turning
back, especially as renewable energy becomes cost
competitive with fossil fuels -- even without any
630 Companies And Investors Tell Washington:
Continue Accelerating the Low-Carbon Economy,
press release, January 10, 2017, Ceres, USA.
Is Your Mutual Fund Company Taking
Climate Change Seriously? "The vast
majority of climate scientists (97 percent) believe
climate change is real, but what about your mutual
fund company? We examined how the nation’s
(America's) largest mutual fund companies voted on
climate-related shareholder resolutions in 2015 and
2016. The results are revealing."
This is an interesting chart for investors in many
countries as the same companies often have fund
management activities in numerous countries. Also,
it might affect your own investing activities. Thank
you Ceres for gathering this information.
Is Your Mutual Fund Company Taking Climate Change
Seriously? By Rob Berridge, January 6, 2017,
Transparency or Greenwashing? Disclosing
Environmental, Social and Governance Risk Factors.
"To help senior finance leaders in understanding
how ESG risk disclosures affect the perception of,
and potential investment in, their organizations,
Financial Executives Research Foundation (FERF)
interviewed subject matter experts from a variety of
The research provided in this report illustrates how
far ESG has come!
Transparency or Greenwashing? Disclosing
Environmental, Social and Governance Risk Factors,
report, January 5, 2016, FEI Daily, USA.
Navigating the Sustainable Investment
Landscape. "A survey of over 100
investment professionals shows that institutional
investors – including pensions, foundations,
universities, and NGOs – are increasingly
considering the material importance of social,
environmental, and governance factors in
constructing their portfolios... Despite the
enthusiasm and more capital flowing, WRI found key
gaps in the market that prevent even the most
motivated asset owners from deploying capital
This is an informative paper to read, particularly for
institutional investors new to sustainable investing.
Navigating the Sustainable Investment Landscape,
by Elizabeth Lewis, Ariel C. Pinchot and Giulia
Christianson, December 2016, World Resources
Fossil Fuel Divestments Now Represent
$5.2 Trillion. "A network of local
governments, pension funds, faith organizations,
philanthropies and wealthy individuals representing
$5.2 trillion in assets have committed to — and in
some cases already started — divesting
from fossil fuel companies, according to a
The odds of President elect Donald Trump inspiring a
major reversal in the fossil fuel divestment
movement get slimmer everyday. In time he'll come to
understand that the world is moving past fossil
fuels and that industry is entering old age.
Fossil Fuel Divestments Now Represent $5.2 Trillion,
by Brian Kahn, December 12, 2016, Climate Central,
The Just 100 -- America's Best Corporate
Citizens In 2016. "Social impact is
woven into the mission statements of nearly every
major company on the planet. But which companies
actually practice what they preach? FORBES has
partnered with Just Capital, a nonprofit created by
billionaire investor Paul Tudor Jones II, to
determine which ones are the best corporate
citizens--the Just 100.
In all, some 1,000 companies were scored and
ranked within their industries according to ten
metrics: worker pay and benefits, worker treatment,
supply chain impact, community well-being, domestic
job creation, product attributes, customer
treatment, leadership and ethics, environmental
impact and investor alignment."
This is a great new approach in determining the
value of corporate actions accross a spectrum of
stakeholder concerns. It should be well accepted in
the responsible investing community.
The Just 100: America's Best Corporate Citizens In
2016, by Steve Schaefer, November 30, 2016,
2016 Global RepTrak®
by Reputation Institute. "Reputation
Institute’s Global RepTrak® 100 uncovers
the world’s most reputable companies in innovation,
governance, citizenship and more. Download the
report or view the recorded presentation of the
results to discover which companies are leading the
way in the reputation economy this year."
Reputation Institute's reports are always worthwhile
for ethical investors to review.
2016 Global RepTrak® by Reputation Institute,
December 2016, USA.
Investors in the Americas show soaring
demand for green investments but barriers still
remain: HSBC survey. "According to the
research, investors in the Americas are seeking more
green investment opportunities, with nearly three
quarters (74%) planning to increase their climate
related or low carbon exposure... the report
revealed that the vast majority of investors in the
Americas (82%) believe a lack of credible
opportunities is the largest obstacle to making
green investments. Furthermore, 79% of the same
investors cited moderately or highly inadequate
disclosures as a top barrier to making green
With stock exchanges demanding more ESG disclosure
from listed companies and investors demanding the
same, the onus on companies to produce better and
more detailed sustainability reports grows strongly.
Investors in the Americas show soaring demand for
green investments but barriers still remain: HSBC
survey, press release, December 8, 2016, HSBC,
Sustainability reporting in stock exchanges 'comes
of age'. "As many as 21 stock
exchanges across the world could introduce
sustainability reporting standards in the coming
months. They would join the 17 exchanges that
currently recommend listed companies to report on
environmental, social and governance (ESG) issues —
going a step further by providing model guidance to
I hope that US President-elect Donald Trump soon
realizes that sustainability pays. The rest of the
world realizes it. It's great news that stock
exchanges everywhere are creating sustainable
reporting standards for their listed companies.
in stock exchanges 'comes of age, by Anya
Khalamayzer, December 7, 2016, GreenBIz.com, USA.
EU Workplace Pensions Now Required to Incorporate
ESG Issues. "The new directive will cover
European workplace retirement plans, which is
estimated to be a market of around 125,000 plans
with €2.5 trillion investment. The new directive
needs to be passed by the European Council (which is
expected to take place in early 2017), following
which there will be a 2-year period granted for
Member States to transpose it into national law."
Assuming the European Council passes the directive,
this will be a terrific step forward setting a
precedent for pension plan and other investment
regulatory authorities everywhere.
EU Workplace Pensions
Now Required to Incorporate ESG Issues,
by Latham & Watkins LLP, December 6, 2016,
2016 ET Carbon Rankings Report.
"The 2016 ET Carbon Rankings report represents an
in-depth analysis of the greenhouse gas emissions
data gathered to produce the public ET Carbon
Rankings. In addition to providing further context
to the Rankings and their application for low-carbon
and fossil-free indexes, it assesses the current
state of Scope 3 emissions disclosure and the
emissions reduction potential across the most
This is an illuminating report on the carbon
rankings of the world's largest public companies.
2016 ET Carbon Rankings
Report, December 2016, ET Carbon
Green bonds: New study shows extraordinary growth
and signals potential in financing Europe’s climate
and environment goals. "In 2012 USD 2.6 billion of
green bonds were issued globally. By 2015 total
issuance had multiplied to USD 41.8 billion. It rose
to USD 74.3 billion by end of November 2016.
European and Chinese issuers make up the largest
share of the climate-aligned bonds market globally.
In Europe, France and UK are the biggest issuers."
the above figures suggest, there's a huge latent
market for green bonds. As most of us know, we're
still at the early stages of their issuance.
Green bonds: New study
shows extraordinary growth and signals potential in
financing Europe’s climate and environment goals,
press release, December 2, 2016, European
The league table of countries with the
most 'caring' investors. "Europeans are
less concerned about environmental issues when it
comes to selecting investments than Asians or
Americans, according to a major study of attitudes
in 28 countries."
The results of this survey are surprising! However,
upon reflection, perhaps they're understandable.
The league table of countries with the most 'caring'
investors, by Andrew Oxlade, December 2, 2016,
CITY AM, UK.
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