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Established in 1994, the Victorian Funds Management Corporation (VFMC) is a Sovereign Wealth Fund responsible for managing the long-term investments of Victorian State Government entities. The fund invests in a diverse range of assets in Australian and international markets, using internal and external investment managers. As of June 30th, 2018, VFMC had over US$ 43 billion of funds under management.
VFMC considers that organizations that effectively manage material ESG issues improve risk adjusted returns. As such, the firm's investment process excludes Tobacco and cluster munitions producers. Additionally, VFMC integrates ESG factors in their internally managed portfolio and their external manager selection process. VFMC is an active owner, as such, the firm votes all of its proxies, and engages directly or collaboratively with portfolio companies on issues such as enhanced disclosure of climate change risk. Finally, the Sovereign Wealth Fund actively seeks opportunities to expand its understanding of material ESG issues by maintaining active membership of ESG-related organizations such as the UN PRI and the Investor Group on Climate Change (IGCC).
IPE: An international group of central banks and financial supervisors has called for a global standardised framework on climate disclosures, urging action from policymakers or supervisory authorities.
Institutional Asset Manager: The rise of environmental, social, and governance (ESG)-based investing will likely accelerate as a younger, more values-oriented crop of investors enter the global markets, company executives and asset managers told attendees at S&P Global Ratings' ESG Evaluation launch ceremony in New York.
Top 1000 Funds: From the outside, investment strategy at Detailhandel, the €21 billion Dutch fund for retail workers, looks relatively simple. Ninety per cent of the portfolio is passive and the fund invests the bulk of its assets in three markets. Fixed income (58 per cent), equity (32 per cent) and real estate (4 per cent) plus a 4 per cent allocation to Dutch residential mortgages and a 2 per cent allocation to alternatives.
IPE: More than 90% of investors in alternatives believe the UN Sustainable Development Goals (SDGs) will help the financial industry tackle pressing environmental and social issues, according to a survey.
IR Magazine: Leading global investors CalPERS, Japan’s Government Pension Investment Fund and the UK’s Strathclyde Pension Fund are among some of the most responsible asset allocators in the world, according to a new ESG ranking and report.
IPE: Norway’s NOK9.1trn (€942bn) sovereign wealth fund may further increase its allocation to green bonds, according to the fund’s management chief, who cited the low costs of this type of investment.
China Daily: Green bond issuances in Hong Kong have mushroomed in the past several years. Last year, the value of green bond issuances skyrocketed more than 2.3 times to reach US$11 billion, according to the Hong Kong Monetary Authority.
Eco-Business: Despite the rise of sustainability up the corporate agenda in recent years, some companies are still stuck in the late 1990s, says Maarten Biermans, the head of sustainable capital markets at Dutch multinational bank, Rabobank.
Wealth Professional: An increased focus on ESG issues is clear and Canadian investors are showing greater interest in responsible investing; but there are challenges according to Desjardins.
Founded in 2014, the Ireland Strategic Investment Fund (ISIF) is a Sovereign Wealth Fund managed by the National Treasury Management Agency. As a long-term investor in Ireland, the fund has a duty to actively contribute to the sustainability of the Irish economy for future generations by providing capital to scale companies. As of December 31st, 2018, the Ireland Strategic Investment Fund had € 8.8 billion of assets under management.
The ISIF believes that organizations that manage ESG factors effectively are more likely to endure and create sustainable value over the long term than those that do not. As such, it integrates these factors throughout the investment decision making including the voting process. As of 2018, following the Fossil Fuel Divestment Act, the ISIF is prohibited from directly investing in any company generating 20% or more of its turnover from the exploration, extraction or refinement of fossil fuel. Additionally, the ISIF screens out companies involved in the manufacture of cluster munitions and anti-personnel mines.
Harvard Business Review: Most corporate leaders understand that businesses have a key role to play in tackling urgent challenges such as climate change. But many of them also believe that pursuing a sustainability agenda runs counter to the wishes of their shareholders. Sure, some heads of large investment firms say they care about sustainability, but in practice, investors, portfolio managers, and sell-side analysts rarely engage corporate executives on environmental, social, and governance (ESG) issues.
GreenBiz: To account for the effects of a world in flux, more investors are pursuing strategies that consider relevant environmental, social and governance (ESG) factors, an approach known broadly as sustainable investing. In 2017 alone, assets managed through such an approach increased by 37 percent, according to Bloomberg.
Barron's: The financial industry has jumped on the impact investing and environmental, social or governance—or ESG—bandwagon. But Hiromichi Mizuno, the man who oversees $1.6 trillion in the world’s largest public pension fund, says true believers on Wall Street are still hard to find, so he is taking his own steps to push ESG and impact investing off the sidelines.
Top 1000 Funds: What would be the implications of a large number of global asset owners attempting to become 100% sustainable by 2030?
This is an important question and opportunity emerging out of the work we did over the past year as members of the New York State Common Decarbonization Advisory Panel whose recommendations were just released this week in a 38-page report.
IPE: The DKK113bn (€15.1bn) pension fund PenSam, which provides pensions for public sector employees, is to invest 10% of its portfolio assets linked to the energy transition by 2025, including such as renewable energy and green listed shares and bonds.
Boston Business Journal: Despite struggling with deep-seated racial tensions locally, in 1984 Boston passed legislation prohibiting the city’s investment in companies doing business with South Africa’s apartheid state. More than three decades later, social-justice advocates are once again hoping to use divestment to address racial injustice, this time occurring right here in the U.S.
Forbes: The International Finance Corp (IFC) estimates that investor demand for impact investing, or investing with the goal of environmental and social impact in addition to financial return, could be $26 trillion. This is over 50 times the Global Impact Investing Network’s most recent estimate for the minimum size of the impact investing market of $502 billion in assets under management.
Big Law Business: Goldman Sachs asked a federal judge to force more than 1,000 women from a gender discrimination class action to arbitrate their claims, but attorneys for the women say they shouldn’t be kept out of court.
Financial Post: Moody’s Corporation (NYSE: MCO) announced today that it has acquired a majority stake in Vigeo Eiris, a global leader in Environmental, Social and Governance (ESG) research, data and assessments. The acquisition furthers Moody’s objective of promoting global standards for ESG for use by market participants.
Founded in 1908, Wespath is a non-profit agency serving the United Methodist Church. It supervises and administers retirement plans, investment funds and health and welfare benefit plans for active and retired clergy and lay employees of the Church. As a faith-based organization, Wespath seeks to promote the values of the United Methodist Church as expressed in the Social Principle by integrating environmental, social and governance factors in the selection of investments across asset classes and into the selection of external managers. The organization had over $ 21.9 billion of assets under management as of December 31st, 2018.
Wespath is actively involved in shareholder and public policy advocacy, proxy voting, portfolio screening and community investing (notably through their Positive Social Purpose Lending Program that has cumulatively invested over $2 billion in affordable housing, and community development in underserved communities of the United States). Wespath's exclusion policy is guided by ethical considerations, as such, the organization avoids investments in companies whose activity involves the production, distribution, and marketing of alcoholic beverages, tobacco products, adult entertainment, weapons, gambling, and privately-operated correctional facilities. Additionally, Wespath has adopted a Human Rights Guideline which excludes the sovereign debt of any country demonstrating prolonged and systematic pattern of human rights abuses according to Freedom House's annual survey: Freedom in the World. Finally, Wespath is a founding signatory to the UN PRI and an active member of the Interfaith Center on Corporate Responsibility.
Advisor's Edge: The firm published a report that models three different scenarios, examining the impact of average warming of two, three and four degrees Celsius over three timeframes (to 2030, 2050 and 2100). For both investors and the planet, limiting warming to 2°C is ideal, the report found.
Quartz: Legal & General Investment Management is one of the world’s largest investors, with more than £1 trillion in assets. LGIM announced that it has built its own energy-transition model to guide companies it invests in to align with climate goals set under the Paris climate agreement.
Pensions & Investments: The report, "Getting physical: Scenario analysis for assessing climate risks," uses new tools and data to articulate the potential impact on different U.S. asset classes, including municipal bonds, utilities, commercial real estate and commercial mortgage-backed securities.
FS Super: Over time the analysis, supported by independent research, determined that climate change is an investment risk and, as a prudent investor, that needed to address that risk. This paper sets out the strategy, how they have implemented it and some of the frameworks they have used.
African Development Bank Group: The African Development Bank successfully priced a dual tranche NOK 500 million 3-year fixed Social Bond and SEK 1.25 billion 5-year fixed Green Bond transaction. The three-year tranche is the very first Social Bond issued in the Norwegian market. It was also the first ever NOK transaction issued by the Bank and the third Social Bond issued under its Social Bond framework.
IPE: The green bonds market has grown from nothing to about $500bn (€443bn) outstanding in just a decade. Hundreds of issuers have offered thousands of deals now coming from about 50 countries. This is a global phenomenon.
IPE: Climate Action 100+ (CA100+), the engagement focused collaboration with the strapline ‘global investors driving business transition’ now numbers 323 investors and appears to be hitting its stride.
The Wall Street Journal: S&P Dow Jones Indices, a unit of S&P Global Inc., is launching an environmental, social and governance version of its S&P 500 index to meet increasing investor demand for sustainable-investment vehicles based on U.S. equities, the company said.
GreenBiz: The $5.2 billion water technology Xylem disclosed the execution of a new $800 million loan meant to finance ongoing investments in its business. It’s not the size of the loan that’s significant — it’s the terms that guide how it will be paid back.
John Wilson McConnell, a Canadian businessman and philanthropist, founded the McConnell Foundation in 1937. The Montreal-based organization seeks to address social, cultural and environmental challenges through the use of impact investing and philanthropic grants. As of December 31st 2017, the Foundation had CA $650 million of assets under management.
The Foundation focuses on the following areas: Sustainable Food, Health, Arts and Culture, Entrepreneurship, Environment, Affordable Housing, Civic Assets, Energy, Water and Indigenous Communities. By 2020, the McConnell Foundation seeks to invest 10% of its assets in impact investments. The organization invests for impact in two ways: Mission-Related Investments (investments aligned with the Foundation's mission and expected to have market or above-market returns) and Program-Related Investments (investments that further specific program objectives and that have a tolerance for below-market returns).
Bloomberg: Global socially responsible investments grew by 34 percent to $30.7 trillion over the past two years, lifted by Japanese pension funds, retail investors everywhere and broad, growing concern about climate change.
Financial Times: The global impact investment market is worth more than half a trillion dollars, according to the most comprehensive study to date of one of the fastest-growing areas of asset management.
Opalesque: The Core Characteristics, which have been developed with input from leaders across the impact investing industry, will help investors understand the essential elements of impact investing, define the credibility of their practices, and consider the quality of the practices of potential investment partners.
UNDP: The potential of social impact bonds (SIBs) to contribute to an estimated US$2.5 – 3 trillionin annual investment for the UN’s Sustainable Development Goals (SDGs) has attracted increased attention over recent years.
IPE: ESG is on everybody’s lips these days but there are still no generally accepted standards as to what it really entails – or even what it means. Moreover, today’s investment management norms in a benchmark-focused world still materially constrain ESG actions.
IR Magazine: Petrochemical companies are facing pressure to disclose incidents where they have spilled plastic into the ocean, which leads to what is said to be a major source of pollution.
IPE: The Norwegian government is allowing the country’s NOK9trn (€932bn) sovereign wealth fund (SWF) to invest up to 2% of the fund’s value in unlisted renewable energy infrastructure.
IR Magazine: With the government’s gender pay gap reporting deadline of April 4 only two days away, UK asset management trade body the Investment Association (IA) has today launched a new report that looks into the make-up of the gender pay gap in the asset management sector.
The Sydney Morning Herald: Amid disagreement between investors over how best to structure executive pay packets, company directors say the regulator may need to help boards withstand short-term pressure from investors by encouraging a more "holistic" view of pay and performance.
Founded in 1994, OPTrust manages the OPSEU Pension Plan, one of the largest defined benefit plans in Canada. The plan is jointly sponsored by the Province of Ontario and Ontario's Public Service Employees Union. As of December 31st, 2018, the Fund had close to CA$ 20 billion of assets under management.
As long-term investors, OPTrust recognizes that ESG factors impact investment risk and return, and its reputation. As such, its Statement of Investment Policies and Proceduresmentions that all investment teams are accountable for all taken ESG-related risks. OPTrust's Responsible Investing Strategy includes the consideration of ESG risks, Active Ownership, and Stakeholder Engagement. Furthermore, the Fund does not invest in companies involved in manufacturing tobacco products, cluster munitions and anti-personnel landmines (in accordance to international conventions signed by Canada).
Euractiv: The European Parliament voted on a proposed classification for sustainable assets on Thursday (28 March), voting to exclude nuclear power from receiving a green stamp of approval on financial markets.
Financial Review: Australia's four major banks have joined forces with insurers and superannuation funds to back an initiative that aims to reshape the financial system to deal with climate change, in one of the strongest signs yet that the industry is taking the threat of environmental upheaval seriously.
FS Super: Over the past decade, wind and solar have provided the bulk of additional generation capacity to the National Electricity Market (NEM), replacing retired coal and gas-fired plants. Despite a significant number of regulatory and policy changes directly affecting the relative economics of the different sources of generation, wind and utility-scale solar generation capacity has more than doubled, from 2.3GW in 2012 to 4.8GW in July 2018, with a strong acceleration over the past 24 months, in particular for utility-scale solar.
Share Action: 90 global companies, including 21 of the world’s 100 largest firms, have responded to investor calls for more consistent and comparable workforce data – a request aimed at improving the quality of jobs worldwide and helping to tackle inequality and poverty.
The Guardian: The UN’s housing advisor has accused private equity firms and one of the world’s largest corporate residential landlords, Blackstone Group, of exploiting tenants, “wreaking havoc” in communities and helping to fuel a global housing crisis.
Reuters: Generous salary and juicy bonus? Check. Client meetings at private members’ club? Check. Swanky Mayfair office? Check. Company maternity scheme? Maybe, we’ll get back to you.
Forbes: In this post, Bob Eccles will analyze the importance of the infrastructure sector. It’s overall score is 21.4—compared to 36.0 for food and beverage, 32.6 for healthcare, 30.4 for extractives & mineral processing, 28.4 for resource transformation, 23.8 for renewables and alternative energy, 20.1 for consumption—putting it the low end of the sectors he has written about so far.
Harvard Business Review: Aside from professional sports, the investment business — encompassing investment management, mutual, hedge, private equity, and venture capital funds — might have the lowest percentage of women at the top of the pyramid (at 4%). And women only control between 1% and 3.5% of assets under management, depending on specific class.
Digital Journal: Citi has issued and traded its first structured green bond, distributed by UBS Global Wealth Management. The proceeds will fund green projects in renewable energy, energy efficiency, sustainable transportation, water quality and conservation, and green buildings as defined in Citi’s Green Bond Framework.
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