How solar can become the world′s largest source of electricity. “One, with the right policies in place, solar could be the largest provider of global electricity by 2050…. The second interesting bit is that IEA [International Energy Agency] has gotten much more bullish on PV [photovoltaic], even since May. The agency now sees it providing 16 percent of total global electricity by 2050 (in the 2DS scenario), up from less than 1 percent today.”
[COMMENTARY] The fact that the establishment’s energy agency, the IEA, is now so very bullish on solar should say to all the doubters that they should give up their doubts. The IEA observes that, “Based on its competitive advantage in distributed applications, PV is unbeatable by any generation technology, distributed or not.” Still, ethical investors have to be careful. In any burgeoning technology there are always winners and losers. But this is great news for the environment.
How solar can become the world′s largest source of electricity, by David Roberts, September 29, 2014, grist, USA.
Ethiquette: New interactive responsible investment Web platform. “Fabien Durif, professor at UQAM’s School of Management and director of the latter’s Responsible Consumption Observatory (RCO), and Brenda Plant, senior consultant at Ellio, proudly announce the launch of Ethiquette, a new, independent, interactive, educational Web platform dedicated to responsible investment (RI). The new tool follows in the wake of the findings of a study entitled ’Québecers and Socially Responsible Investment: Portrait for 2014’ , published in February of this year. According to this study, individual investors were found to be little aware of responsible investment (RI), and information available to them insufficient to elucidate the complexity of RI financial products.”
[COMMENTARY] This new ethical investing tool for Québecers could be most helpful to furthering ethical investing in Quebec and Canada, generally. I wish the venture every success.
Ethiquette: New interactive responsible investment Web platform, press release, September 26, 2014, Ethiquette, Canada.
Launch of Solactive CK Low Carbon Indices. “The Solactive CK Low Carbon Index family is the first in the industry to use the Sustainable Industry Classification System™ (SICS®), established by the Sustainability Accounting Standards Board® (SASB®) to categorize industries based on resource intensity, sustainability impact, and sustainability innovation potential.
A defining feature of these Low Carbon Indices is that they ensure a minimum 50% reduction in carbon intensity against the market benchmarks, as verified by South Pole Carbon.”
[COMMENTARY] These new indices represent a unique and interesting approach for sustainable investing. Congratulations to the sponsors. Though launched September 25, I couldn’t find a link to them for current values and holdings.
Launch of Solactive CK Low Carbon Indices, press release, September 25, 2014, Corporate Knights Capital and Solactive, September 25, 2014, Canada/Germany.
Socially Responsible Investments Can Match Broader Market Gains: TIAA-CREF. “A recent TIAA-CREF white paper authored by Lei Liao and Jim Campagna found that investors with a conscious don′t have to sacrifice gains to put their money where their beliefs are. Liao and Campagna analyzed the performance of several leading equity-focused SRI indexes–the Calvert Social Index, Dow Jones Sustainability U.S. Index (DJSI U.S.), FTSE4Good US Index, MSCI KLD 400 Social Index, and MSCI USA IMI ESG Index–in relation to the performance of broader benchmarks. They found ’no statistical difference’ in the SRI index′s returns when compared to the broader market.”
[COMMENTARY] Well designed studies on SRI vs conventional investment portfolios consistently demonstrate that there’s no performance loss by applying SRI screens. In fact, the majority of studies using ESG criteria demonstrate superior stock returns. TIAA-CREF has over $500 billion in assets.
Socially Responsible Investments Can Match Broader Market Gains: TIAA-CREF, by Teresa Rivas, September 25, 2014, Barron’s, USA.
Montreal Carbon Pledge Attracts Large Institutional Investors. “A group of large institutional investors have signed on to the Montreal Carbon Pledge, agreeing to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis. Overseen by the UN-backed Principles for Responsible Investment, the pledge hopes to attract $3 trillion of portfolio in time for next year′s UN climate change conference.”
[COMMENTARY] The pledge is good news for those of us interested in this issue. One concern though: how smaller listed companies have the resources to gather such information.
Montreal Carbon Pledge Attracts Large Institutional Investors, by Doug Watt, September 25, 2014, SRI Monitor, Canada.
US Sustainable Investment Association calls for US Government to demonstrate leadership in climate crisis and set price for carbon. “National governments and multilateral organizations must create the framework to enable the additional trillions of dollars in investments needed in low-carbon technologies and climate change adaptation. We urge the US government to demonstrate leadership by supporting multilateral efforts to impose a meaningful price on carbon and to stop subsidizing carbon pollution. With these policy signals, investors can fully rise to the challenge of building the low-carbon future.”
[COMMENTARY] Though I agree with the above sentiment I first believe that there has to be a global understanding of what are the real total societal costs of different types of energy production–and Britain’s Carbon Trust has hit this nail on the head.
From a Carbon Trust September 23, 2014, press release, “The redefinition of the electricity cost calculation from the most prominently used Levelised Cost of Electricity (LCoE), to Society′s Cost of Electricity (SCoE), means additional factors not normally accounted for are included which presents a more complete picture on the cost-benefit of energy. Additional factors include subsidies, grid access costs, variability costs, social costs, economic benefits and geopolitical impact.”
Were this new definition adopted, many renewable and alternative energy sources would demonstrate superior long run financial returns and beneficial societal and climate impacts. Then, governments will be able to more easily regulate in ways that favour renewable and alternative energy. Until then, it’s an uphill battle to convince the likes of US Republicans!
US Sustainable Investment Association calls for US Government to demonstrate leadership in climate crisis and set price for carbon, press release, September 22, 2014, US SIF: The Forum for Sustainable and Responsible Investment, USA.
Site of interest: Climate Bonds Initiative. “The Climate Bonds Initiative is an international, investor-focused not-for-profit. It’s the only organisation in the world focusing on mobilizing the $80 trillion bond market for climate change solutions.”
[COMMENTARY] It has several high level partners, but needs more of them to get off the ground in a big way. I’m sure it will happen. The site has some useful resources for ethical investors under the tab, ’Resources.’
Climate Bonds Initiative, UK.
Rockefellers, Heirs to an Oil Fortune, Will Divest Charity From Fossil Fuels. “John D. Rockefeller built a vast fortune on oil. Now his heirs are abandoning fossil fuels. The family whose legendary wealth flowed from Standard Oil is planning to announce on Monday that its $860 million philanthropic organization, the Rockefeller Brothers Fund, is joining the divestment movement that began a couple years ago on college campuses.”
[COMMENTARY] This is significant! It brings into public awareness that despite the hoopla about shale gas and oil, the future for fossil fuels is growing dimmer. The Rockefellers are to be congratulated. Their precedent could set the stage for many others to divest themselves of fossil fuel investments. It could increase the funds moving towards alternative and renewable fuels. It’s a good day for investors oriented to sustainable investing.
Rockefellers, Heirs to an Oil Fortune, Will Divest Charity From Fossil Fuels, by John Schwartz, September 21, 2014, The New York Times, USA.
Investment giants are demanding climate action, so why aren’t corporates delivering? “As investors renew calls for climate action, a survey shows nine out of 10 investors see sustainability as a competitive advantage – so why are the firms they invest in not making faster progress?
Yesterday saw the latest intervention from many of the world’s largest institutional investors, as more than 340 companies with over $24tr (£14.7tr) of assets under management issued a fresh declaration calling for world leaders to deliver ’stable, reliable and economically meaningful carbon pricing’ and increased support for clean technologies.”
[COMMENTARY] My impression is that most company CEOs believe they’re performing better on sustainability issues, but except for some key outliers, investors don’t see it. Thus, investors want regulatory changes to force companies to be more sustainable. This is a good article for ethical investors to read.
Investment giants are demanding climate action, so why aren’t corporates delivering? By James Murray, September 19, 2014, BusinessGreen, UK.
New report (from UN Principles for Responsible Investment) shows that ESG can mitigate risk, provide value in debt capital markets. “Analysis of Environmental, Social and Governance (ESG) issues such as corruption and climate change should be considered as a natural fit for fixed income investors as it can help to manage risk and identify credit strength, according to a new report released by Principles for Responsible Investment (PRI).
The report is intended as a guide for fixed income investment managers and their clients on how to incorporate ESG into their investment strategies to gain the available information advantage.”
[COMMENTARY] That latter point, “to gain the available information advantage,” is really what will increasingly attract fund managers. Not only have we seem inordinate confirmation of higher returns when ESG analysis is applied to equities, but that same type of confirmation is coming with fixed income investments. Most ethical investors have only thought of applying ESG to their stocks. This is a prompt to them that they should also apply such values and analysis to their fixed income investments as well.
New report shows that ESG can mitigate risk, provide value in debt capital markets, September 18, 2014, KFW Group, Germany.
Shares prices boosted by corporate sustainability policies, says University of Oxford study. “The University of Oxford′s Smith School of Enterprise and the Environment and Arabesque Asset Management, a sustainable investor, carried out a so-called meta-study of more than 190 academic studies and other literature on the impact of environmental, social and governance (ESG) policies on performance.
They found that corporate sustainability helps to lower a business′s cost of capital and boosts a company′s operating performance.
In addition, 80pc of studies – 31 out of 39 – showed a “positive correlation” between sustainability and stock market performance.”
[COMMENTARY] Send this (the full report) to all those advisors and fund managers still dubious of socially responsible-ethical investing! Their claims that such investing lowers returns are nonsense.
Shares prices boosted by corporate sustainability policies, by Ben Martin, September 15, 2014, The Telegraph, UK.
Shareholder pressure fails to promote sustainable practices – survey. “Barely one in 10 companies feel compelled to improve their sustainability record, despite pressure from institutional investors, a study by the UN-backed Principles for Responsible Investment (PRI) has found.”
[COMMENTARY] The criticism seems to be that shareholder activism concerning corporate sustainability efforts is too diffuse, short-term in nature, and not focused on specific, identifiable actions that companies can undertake. One great finding: 80% of executives viewed sustainability as a key competitive advantage!
Shareholder pressure fails to promote sustainable practices – survey, by Jonathan Williams, September 12, 2014, IPE, UK.
Banks showing limited commitment to responsible investing. “Only 7% of banks surveyed by Sustainalytics report that the share of responsible assets is more than 5% of total assets under management. Nearly all of these institutions are from Europe, with three from North America and one from South America.
Another 96 institutions (27%) either have less than 5% of AUM dedicated to RI assets or do not disclose the value of their RI assets. Two hundred and forty-one institutions (67%) don′t provide any evidence of RI assets under management.”
[COMMENTARY] The research findings of the Sustainalytics survey are quite an indictment of western banking. In comparison with the investment industry–which is increasingly applying ESG in stock and portfolio selection–banking institutions are way behind.
Banks showing limited commitment to responsible investing, by Doug Watt, September 12, 2014, SRI Monitor, Canada.
Global water availability ’could limit fracking developments’. “A new report that looks into the potential environmental effects of fracking has revealed that drilling and fracturing shale gas wells poses a ’significant risk’ to freshwater supplies across the globe.”
[COMMENTARY] I might add a huge risk to geological stability (earthquakes) as well. All the excitement in the US about what fracking means for their gas and oil supplies could be severely hampered as the environmental problems associated with fracking become known and the industry forced to become liable for environmental and human health damages and costs. Many companies in this industry will eventually have ’stranded assets.’ That means, gas and oil assets that has to be written down, greatly impairing the financial results of many, many of these companies.
Global water availability ’could limit fracking developments,’ September 9, 2014, edie newsroom, UK.
Swiss pension fund members willing to sacrifice returns for sustainability. “More than 70% of pension fund members in Switzerland want their schemes to apply sustainability criteria when selecting investments, according to a survey commissioned by RobecoSAM.
Approximately 40% of the 1,200 participants surveyed said they would be willing to sacrifice returns in exchange for sustainable investments, with 20% of that number willing to give up as much as half the return.
More than 70% of respondents said they were convinced the application of ESG criteria would lead to more cautious investment decisions and probably even better ones.”
[COMMENTARY] Note the latter comment that plan participants actually expected possibly superior returns by investing sustainably! Too many times these types of questionnaires start with the premise that investing in sustainable, socially responsible, impact, or ethical investments, must lower returns. Now we see that not only in this survey, but in many such surveys, investors/plan participants probably expect better results from investing with ESG, etc., criteria. This is why we’re seeing asset/fund managers everywhere beginning to incorporate ESG analysis in their portfolio selection criteria. It’s about time too!
Swiss pension fund members willing to sacrifice returns for sustainability, by Barbara Ottawa, September 9, 2014, IPE, UK.
Study links high ESG ratings to positive investment portfolio performance. “Asset managers can create better-performing portfolios by excluding stocks with lower environmental, social and governance (ESG) ratings, according to new research. The study by New Amsterdam Partners used the Thomson Reuters Corporate Responsibility Ratings, which screens the ESG ratings of almost 5,000 companies.”
[COMMENTARY] Of course, one needs to understand all the screening parameters and methodologies of this study to competently remark as to its conclusions. Nonetheless, at face value and considering the reputation of the study’s sponsors, the study appears to offer further confirmation that screening companies for their ESG performance can be profitable.
Study links high ESG ratings to positive investment portfolio performance, by Tom Revell, September 5, 2014, Blue & Green Tomorrow, UK.
How to make Wall Street notice sustainability leaders. “As Joel Makower noted in August in ’Why sustainability leaders don′t impress Wall Street,’ (GreenBiz) investors seem unconvinced that strong sustainability performance delivers shareholder value. More specifically, he argues that investors don′t have the data they need to connect the dots.”
[COMMENTARY] This article harps on themes I’ve been talking about for many, many years. In particular, the lack of ESG reporting standardization, independent assessment of data, and direct relevance to corporate success and profits. Daniel Esty has done a good job in presenting this case. It’s important reading for all concerned with ethical investing.
How to make Wall Street notice sustainability leaders, by Daniel C. Esty, September 2, 2014, GreenBiz, USA.