Pensionfund Metalektro (PME) is the pension fund of the Metal and Electrical Engineering Industry (Metalektro) in the Netherlands. PME works on behalf of 1,300 companies and around 166,000 pensioners. As of December 31st, 2018, PME had over USD 52 billion of assets under management.
As a founding signatory to the UN's Principles for Responsible Investing, PME believes that ESG factors impact the value of their investments. The Pension Fund's approach to Responsible Investment is principles-based and respects international norms such as the OECD Guidelines for Multinational Enterprises, the International Labor Organization Standards, and the Oslo Treaty on Cluster Munitions. PME is currently seeking to decrease the annual carbon footprint of their equity portfolio by 25% by 2020 compared to 2015 levels. Finally, the Pension Fund is aiming to align 10% of their portfolio to the UN Sustainable Development Goals by 2021.
The Ten Principles for Responsible Investing
IPE: Listed UK asset manager Schroders is to acquire a majority stake in impact investor BlueOrchard, underscoring the growing mainstream investor interest in this extension of the ESG investing movement.
Funds Europe: Apex Group has launched an in-house environmental, social and governance (ESG) ratings and analytics service to evaluate the responsible investing standards of privately held global companies.
The New York Times: Moody’s Corporation has purchased a controlling stake in a firm that measures the physical risks of climate change, the latest indication that global warming can threaten the creditworthiness of governments and companies around the world.
Top 1000 Funds: Hedge funds expect to invest more than half of their assets next year based on environmental, social, and governance factors, a large jump from 2018, according to a survey by BarclayHedge.
The Asset: DBS Bank Indonesia (DBS) has partnered with PT Sumatera Timberindo Industry (STI), a premium wooden door manufacturer, to sign the first export financing sustainability-linked loan of its kind in Indonesia.
CNBC: European funds managing $2 trillion in assets called on cement companies to slash their greenhouse gas emissions on Monday, warning that a failure to do so could put their business models at risk.
GreenBiz: A large majority of leading companies are failing to report on the risk of deforestation in their supply chains, despite many of their business activities potentially posing a major threat to the survival of the world's forests.
Globe Newswire: EDF signed two €300 million sustainability-indexed revolving credit facilities (RCF) which incorporate a pricing adjustment based on EDF’s sustainability performance linked to CO2 emissions and energy efficiency.
IPE: Sweden’s largest pension fund Alecta has welcomed the government’s plan to issue green bonds for the first time by next year – but others have voiced doubts about the proposed environmentally-linked sovereign debt.
The Rockefeller Foundation was founded in 1913 by John D. Rockefeller. Its mission is to promote humanity's well-being by building collaborative relationships to solve global challenges related to health, food, power, and economic mobility. As of December 31, 2016, the Rockefeller Foundation managed an endowment of US$ 4 billion.
The Rockefeller Foundation has been a pioneer in Impact Investing, a term that was coined at the foundation's Bellagio Center in 2007. Their program-related investment portfolio was launched in the 1990s, investing in the first micro-finance debt funds. They have been leveraging their grant-making to build the field of impact investing field – developing networks, measurements and standards like the Global Impact Investing Network (GIIN), B-Lab and GIIRS. In 2019, the Foundation announced the creation of a new entity: Rockefeller Foundation Impact Investment Management to mobilize like-minded investors to scale up finance vehicles the UN Sustainable Development Goals funding gap.
PR Newswire: Arabesque S-Ray, a leading global data provider of environmental, social, and governance (ESG) metrics, today announced strategic partnerships with four new co-investors: Allianz X, Commerz Real AG, DWS Group, and Land Hessen. Allianz X led Arabesque's Series A funding round, with the four shareholders jointly investing $20 million.
Investment Executive: The importance of responsible investment practices for hedge fund investors is expected to grow in the next couple of years, according to new research.
Forbes: In June 2017 the European Union passed the EU Accounting Directive for Non-financial Information. It was implemented Member States in 2018. This law “requires large companies to disclose certain information on the way they operate and manage social and environmental challenges” on an annual basis.
South China Morning Post: Listed companies in Hong Kong should go beyond international standards in disclosing greenhouse gas emissions and waste management data to improve the city’s response to environmental challenges, say campaigners.
IPE: I had the privilege of spending a few days in June in San Diego with Harry Markowitz, joint winner of the 1990 Nobel Prize for economics, founder of modern portfolio theory and still going strong at the age of 91. We had some great discussions on a number of subjects in the company of another innovator in finance, Yves Choueifaty, founder and CEO of TOBAM.
Hedgeweek: MJ Hudson, an asset management consultancy, has acquired Spring Associates Responsible Investment Service, an ESG (environmental, social and governance) consultancy and reporting business, based in Amsterdam.
Bloomberg: Bank of Nova Scotia is debuting in the green bond market following other Canadian rivals including Royal Bank of Canada.
IPE: Nordea Life & Pension Sweden announced it shifted SEK22bn (€2.1bn) of investments in the first six months of this year from traditional investments to sustainable investments with a low carbon footprint and strict sustainability criteria.
Economia: Despite the FTSE 100 being less than 1% off their target of 33% female representation at board level by 2020, many companies may still be guilty of a “tick box attitude”
The F.B. Heron Foundation was founded in 1992 by an anonymous benefactor to support people and communities help themselves out of poverty. Since 1996, Heron has been developing a mission-related investment strategy to leverage their resources in order to increase their impact on low-income communities. By 2012, all of the Heron's assets were invested in Mission-related investments and grant-making. As at December 31, 2017, Heron had $ 308 million of assets under management.
The investment and grants portfolio are managed by the same investment committee. All of their activities rest on four strategic pillars: Community Systems, Net Contribution, Properly Capitalizing Enterprises, and Conscious Portfolio Construction. Investments must touch at least one of the aforementioned strategic pillars. Additionally, each for-profit investment measures, evaluates, and monitors the aggregate effect of an organization on human, financial, civic and natural capital. This methodology was utilized to create the U.S. Community Investing Index (Bloomberg Ticker: CMTYIDX), an index of publicly traded companies contributing positively to the communities in which they operate.
Top1000 Funds: A confluence of recent research and the evolution in perspective of the Delaware courts presents an opportunity for both companies and investors to systematically improve performance while reducing unwanted risk exposures. However, investors must make the first move.
Guernsey Press: When it introduced the Guernsey Green Fund rules in July 2018, the Guernsey Financial Services Commission created the world’s first regulated green investment product. In doing so, it effectively created a ‘kitemark’ that once awarded assures investors that specific green criteria have been met and that their investments are having the desired, positive environmental impact.
Singapore Business Review: CapitaLand inked sustainability-linked loan agreements with Credit Agricole Corporate & Investment Bank, Natixis Bank and Societe Generale to raise a total of $300m.
IR Magazine: Many approaches are taken to measure diversity and equality but the benefits of being on an index – in this case, the Bloomberg Gender-Equality Index (GEI) – were explored at the recent Bloomberg Sustainable Business Summit in London.
IPE: New asset owner-backed research on high-emitting companies’ behaviour with regard to climate change has prompted calls for investors to step up engagement with industry and focus their attention on companies’ emissions rather than their management systems and processes.
Renewables Now: The European Investment Bank (EIB) and Paris-based asset manager Amundi SA have signed an agreement to launch a new green financing programme that will enable smaller European enterprises to gain access to green debt instruments.
The Guardian: India’s finance minister, Nirmala Sitharaman, has called for the creation of a “social stock exchange”, allowing ethically minded investors to buy stakes in social enterprises, volunteer groups and welfare organisations.
Funds Europe: The FTSE Climate Risk-Adjusted World Government Bond Index tilts towards government markets that, on a relative basis, demonstrate a greater degree of “resilience and preparedness” for climate change.
IPE: Sweden’s biggest pension fund, Alecta, has invested just over SEK1bn (€100m) in the first African social government bond, financing welfare and development in an unnamed West African country.
The W.K. Kellogg Foundation was established in 1930 by the founder of Kellogg's, the food manufacturing company. The financial endowment was to be used to promote the health, happiness and well-being of children. The Foundation's systems approach led them to widen their focus to support families and communities to create conditions in which vulnerable children can achieve success as individuals, and as contributors to society. As of August 31, 2018, the W.K. Kellogg Foundation had USD 8.6 billion of assets under management.
In 2007, the Foundation committed to dedicate $100 million of their endowment to Mission Driven Investments – a type of impact investment seeking to advance the Foundation's mission while generating both social and financial returns. To maximize their impact, the philanthropy has collaborated with KKS Advisors to develop an investment framework to analyze how portfolio companies are creating broader systemic change. This framework rests on 4 pillars:
Mission Aligned Framework for Investing
IPE: Everyone knows about ‘big oil’ and how much influence the global agribusiness sector has. But there is less awareness about the negative impacts of meat producers – the ‘global meat complex’.
IPE: Today, greenwashing is discussed in the investment industry. To some extent, it is not a new phenomenon, actual or alleged. Not quite as old as time, but a bit part of the furniture, perhaps.
Business Times: Tackling social and environmental issues was the clarion call at the 7th Asian Venture Philanthropy Network Conference. The event, from June 25-28, saw the launch of the region's first multi-sector Climate Action Platform.
Financial Standard: Some of Australia's best-known and listed fund management companies are falling behind their ASX 200 counterparts in disclosing ESG factors about their companies.
Opalesque: Almost one-third of respondents (29%) have an environmental, social and governance (ESG) policy in place for their alternative investments, and another third plan to implement an ESG policy over the next five years, said a survey.
Financial Times: A financing programme for sustainable commodities backed by green bonds aimed at supporting Brazilian farmers and avoiding the clearing of the country’s grasslands is being launched in London today.
The Asset: The offering represents the first euro-denominated green bond offering from the state lender and second green bond overall since its debut US dollar green bond in 2017. It also comes on the heels of KDB’s onshore offering raising 400 billion Korean won (US$337.7 million) from its two-year sustainability bond earlier in May.
IR Magazine: In an attempt to cement the UK’s position as a global climate leader, the government has announced its Green Finance Strategy, which sets out plans to increase investment in sustainable projects and infrastructure.
Pensions Age: Aviva has launched a workplace pension default investment strategy incorporating ethical and environmental, social and governance (ESG) considerations.
Formed in 1984, Cbus is the Super Fund for the building, construction and allied industries in Australia. As at March 31st 2019, Cbus provided superannuation and income stream accounts to more than 797,000 members, managing over AUD 49.8 billion.
Cbus believes the active consideration of Environmental, Social and Governance issues can improve long term risk adjusted returns. As such, all internally and externally managed portfolios integrate ESG risks and opportunities into the investment process. Additionally, Cbus does not invest in companies involved in manufacturing controversial weapons and tobacco products. The organization's responsible investment approach focuses on issues such as Climate Change, Cognitive Diversity, Health & Safety, Labor & Human Rights, and Product Supply Chains at portfolio companies. Furthermore, as an active owner, Cbus influences its holdings through proxy voting and engagement.
Responsible Investment Principles
Climate Change Position Statement
CNBC: Central banks around the world must proactively fight climate change in their own investment portfolios in order to safeguard their key priorities, according to research.
IPE: Flaws in the European Commission’s approach to sustainable finance could lead to member states and even the EU being sued, according to a think tank.
Top 1000 Funds: Around 750 of the world’s largest listed companies are being encouraged by investors to disclose more workforce data. These companies have this week been sent the ‘Workforce Disclosure Initiative’ (WDI) survey. Supporting this call for data is a group of 127 investor signatories – including AustralianSuper, PGGM, OPTrust and USS – collectively managing $14 trillion.
Green Biz: Global issuance of green bonds has hit yet another milestone: for the first time surpassing $100 billion inside six months, the Climate Bonds Initiative confirmed.
Financial Times Adviser: Defined contribution pension schemes will need to consider their members’ views on ethical investing, according new guidance from The Pensions Regulator.
IPE: Renewed calls from hundreds of major investors for governments to act to cap further global warming may this time be followed by political action, analysis has suggested.
Funds Europe: Avoiding environmental, social and governance (ESG) tail risks helps generate alpha over a full market cycle – more so than tilting a portfolio towards top ESG ratings – and active management is crucial to the process.
Wall Street Journal: When Floris Fooij proposed a $1.7 million upgrade for the vitamin plant he oversees in New Jersey a few months ago, he did something he wouldn’t have done in the past: He mapped out for the finance team how the upgrade would affect the firm’s greenhouse-gas emissions.
Barron's: Kristin Hull is having an excellent year. The CEO of Nia Impact Capital has just completed another 12 months of market-beating performance for her gender-lens portfolio, and if things go according to plan, a mutual fund version could be available soon.