.png?width=200&height=78&name=CH%20Diligence%20(thicker%20line-white).png "CH Diligence (thicker line-white)")
Established in 1987, the National Pension Service ("NPS") is a public pension fund seeking to enhance social stability and welfare in South Korea. As at June 30 2020, NPS was the third largest pension fund in the world with KRW 752 trillion (USD 633 billion) of assets under management.
As part of its Investment Principles, NPS seeks to fulfill the fiduciary duty of managing the Fund while considering ESG factors, among others to improve investment sustainability. As such, NPS integrates ESG issues in its listed equity strategies and when selecting, appointing and monitoring external managers.
Bloomberg: Calls for racial diversity at every level of the corporate world have inspired socially conscious investors. It’s a powerful group, with more than $30 trillion in global assets backing companies that prioritize environmental stewardship, social impact, and good governance, known by the shorthand ESG. But when it comes to how integrated companies are— or aren’t—the data are painfully limited.
Financial Times: Germany is expected to sell its first ever green government bond next week, in a deal investors predict will boost the market for debt linked to spending on environmental projects. [Full article available to Financial Times subscribers.]
Harvard Business Review: Over the last decade, U.S. venture capital investments quadrupled, the number of businesses started by women grew to 40%, and we’ve seen growth in the number of entrepreneurs of color. However, the percentage of venture capital dollars going to women-founded companies has barely budged since 2012, and the numbers are even worse for Black and Latinx founders — only 1% of VC-backed founders are Black, and less than 2% are Latinx.
Bloomberg: The European Union is planning to sell green and social bonds to finance some of its 750 billion-euro ($887 billion) recovery fund, according to a person familiar with the matter.
Financial Times: Property investors may think they have enough to worry about right now, with the pandemic driving some commercial tenants to suspend rent payments while others consider whether they will need big office or retail space at all in future. [Full article available to Financial Times subscribers.]
Bloomberg: As ESG investing grows, a key question for asset managers and owners will be whether the strategy can be as good at solving the world’s most pressing problems as it can be at avoiding risk.
Institutional Investor: A proposal from the DOL seeks to block 401(k) plans from offering ESG funds. US SIF’s Lisa Woll and former Department of Labor deputy assistant secretary Judy Mares say such a move would harm the very investors the department is meant to protect.
Financial Times: The UN-backed Green Climate Fund, the world’s largest climate finance institution, is facing a wave of internal misconduct complaints including allegations of sexism and harassment in the workplace, and criticism over the death of an employee from coronavirus. [Full article available to Financial Times subscribers.]
Bloomberg: Norwegian life insurer Storebrand ASA has beefed up its climate policy, leading it to exit oil giants Exxon Mobil Corp. and Chevron Corp. and accelerate a full divestment from coal.
AustralianSuper is the largest Superannuation and Pension Fund in Australia. As at December 31 2019, AustralianSuper managed the retirement assets of 1 in 10 Australians and had AUD186.5 billion of assets under management (US$ 126 billion).
As part of its engagement to the UN PRI, AustralianSuper has implemented a framework resting on these three pillars: ESG Integration, Active Ownership and Member Values. With regards to Climate Change, AustralianSuper is a member of Climate Action 100+ and supports the Taskforce for Climate-related Financial Disclosures. As such, the organization has released a report aligned with the TCFD reporting framework addressing its Governance Structure and its risk management procedures with regards to Transition and Physical climate-related risks.
Reuters: One of the world’s leading investor groups pushing for more corporate action on climate change said it has added Mexican state-owned oil company Petroleos Mexicanos (Pemex) to its list of targets.
Institutional Investor: In the aftermath of March’s coronavirus crash, numerous fund managers and data providers determined that companies with high ESG scores outperformed during the rapid sell-off — and a surge of money followed into funds focused on environmental, social, and governance issues.
Bloomberg: Citigroup Inc. Chief Executive Officer Michael Corbat said banks should start walking away from clients who don’t acknowledge the need to reduce their carbon emissions -- even as he pledged support for the fossil-fuel industry.
Bloomberg: Sustainability reporting is quickly going mainstream. While companies aren’t always required by regulators to report their greenhouse gas emissions, human rights records and wastewater management, investors are pushing them for this information at a faster clip.
Bloomberg: Europe’s bankers and traders got plenty of slack from their regulators to weather the pandemic. For money managers, it’s a different story.
Citywire Selector: Odey Asset Management has drawn up contingency plans including the closure of his flagship fund as its founder faces court over an alleged indecent assault.
Financial Times: Asia’s fastest-growing market for debt billed as “socially responsible” has drawn criticism after data showed the vast majority of this funding has been raised for jobs and housing rather than the environment. [Full article available to Financial Times subscribers.]
Financial Times: A growing chorus of big investors, including Calpers, Schroders and DWS, are piling pressure on companies and auditors to include material climate risks in accounts, after a similar move by oil company BP this summer. [Full article available to Financial Times subscribers.]
Financial Times: Investment funds branded as “sustainable” are under fire for their heavy exposures to US tech giants at the centre of controversies over data privacy, labour practices and monopolistic behaviour. [Full article available to Financial Times subscribers.]
AP4 is one of five funds that act as a buffer in Sweden's national pension system. The Pension System was created in 1960, but it was not until 2001 that the current AP fund structure was established, allowing the AP funds to diversify their strategies. One of the key investment rules, set out by the Ministry of Finance, is to consider environmental and ethical matters without compromising the objective of attaining high returns. As of June 30 2020, AP4 had SEK 403.2 billion of assets under management (US$ 46.4 billion).
Through sustainable investments and active ownership, AP4 is able to create sustainable value for its trustees. ESG issues are considered in both its internally and externally managed portfolios. Further, AP1, AP2, AP3 and AP4 collaborate through the Ethical Council to lead engagement with investee companies across issues linked to the Sustainable Development Goals. Finally, AP4 is active in many collaborative initiatives on responsible investing. For example, they joined several of their peers to engage with the Brazilian Embassy reacting to a legislative proposal over Deforestation concerns in 2020.
Bloomberg: Neil Record’s firm says it incorporates ESG in policies and strategy, but he personally supports the U.K.’s biggest climate skeptic group.
Institutional Asset Manager: The green bond market is teeming with new investors, and issuers are expanding supply on all fronts – issuing ever-riskier types of debt under a green label, and causing some observers to ask whether the market is growing in the right direction.
Institutional Investor: AQR Capital Management is making the case that quantitative investing and environmental, social and governance investing are a good fit.
Bloomberg: Long-term investors—those who have perpetually flagged the kind of systemic and workforce issues that now face companies everywhere—are having an outsized influence during this global crisis.
Financial Times: Strong environmental, social and governance credentials provided no special protection to risky companies during the Covid-19 related drop in markets earlier this year, according to research that challenges the idea that such attributes can make a portfolio more durable. [Full article available to Financial Times subscribers.]
Pensions & Investments: This summer's swell in protests against police brutality and racial injustice have been accompanied by an unprecedented outpouring of statements from corporations acknowledging the existence of systemic racism. CitiGroup, Nike, J.P. Morgan Chase and Amazon.com are just some of the corporate giants that have spoken out in recent weeks. However, this moment demands more than Instagram posts declaring #BlackLivesMatter and one-time donations to Black-led organizations.
IPE: The Local Authority Pension Fund Forum (LAPFF) in the UK has joined an Australian trio of investors in raising concerns over mining group Rio Tinto’s testimony at the Australian Parliamentary hearings that took place last week regarding the destruction of Aboriginal caves at Juukan Gorge.
Financial News: UK-based investors poured £362m into funds managed according to environmental, social and good corporate governance principles during July — the highest-ever monthly total for such strategies.
Pensions & Investments: The risks and opportunities of ESG investing continue gaining acceptance by institutional asset owners.
Funds Europe: Before the pandemic forced a shift in focus, sustainable investment and the EU’s green agenda was one of the most discussed topics in financial services – and fast becoming an area of fundamental focus for governments and regulatory bodies.
The Seattle City Employees' Retirement System ("SCERS") was established in 1929 to provide pension benefits to city of Seattle employees. With approximately 12,000 active employee members and 6,800 retired employee members (or their beneficiaries) who participate in the plan, SCERS had 2.77 billion of assets under management as at March 31, 2020.
In 2013, when SCERS adopted their ESG policy, they recognized that ESG issues have an impact on the performance of companies and that such consideration is compatible with their fiduciary duty. Consequently, SCERS adopted a Positive Action based on Shareholder Advocacy, Sustainability Investments and Integrating Climate Risk into the Investment Process. Finally, SCERS engages collaboratively with its peers through its membership to Climate Action 100+ and Ceres.
Institutional Investor: Unconscious discrimination is pervasive, pernicious — and preventable if firms do the right thing.
GreenBiz: In the latter part of 2016, Ethan Steinberg and two of his friends planned a driving tour across the United States to interview farmers. Their goal was to solve a riddle that had been bothering each of them for some time. Why was it, they wondered, that American agriculture basically ignored trees?
Top 1000 Funds: CalPERS has a moral imperative to confront racism and economic inequality, according to its chair and president, Henry Jones, who spoke to Amanda White in a Sustainability in a time of crisis podcast.
IPE: A major collaborative process overseen by some of Europe’s best-known pension investors has produced a framework aimed at enabling asset owners and asset managers to maximise the contribution they can make to keeping global warming to 1.5°C.
The Asset: Emerging social aspect of ESG since Covid-19 set to spur knowledge sharing, standardization.
Funds Europe: The fund management sector looks set to swoop on the topic of social inequality once markets emerge from Covid-19.
Financial Times: It should have been a vindication for the sustainable investment industry. Shares in fast fashion retailer Boohoo lost a third of their value last month after allegations that workers in its UK supply chain were paid £3.50 an hour. [Article available to Financial Times subscribers.]
Private Equity Wire: A group of leading private equity investors have joined forces to create the first international network of Initiative Climate International (iCI).
Institutional Asset Manager: A third (34 per cent) of fund managers at infrastructure investment firms are unaware of the upcoming EU disclosure requirements, due to come into force in March 2021.
Founded in 1908, Folksam is one of the biggest insurance and pension providers in Sweden. As at December 31, 2019, Folksam had US$ 47,5 billion of assets under management.
As part of their responsible investment strategy, Folksam has implemented a policy covering all of its assets with regards to ESG issues. As such, the firm excludes tobacco, commercial gambling, controversial weapons, oil sands and coal. Moreover, Folksam engages with portfolio companies on a regular basis over climate change, environmental issues, human rights and corruption to encourage firms to take responsibility for their activities.
Sustainability Report 2019 (Available in Swedish only)
TCFD Aligned Climate Report 2019 (Available in Swedish only)
IPE: Asset owners should hold managers running their fixed income investments via passive strategies to account on the issue of stewardship.
IPE: UK defined contribution (DC) master trust NEST has adopted a climate change policy aimed at aligning its portfolio with the goal of keeping global temperature rises within 1.5°C above pre-industrial levels.
Bloomberg: Metals and mining are a critical part of the future of clean energy, and that’s triggering major shifts in a historically dirty industry.
Financial Times: As environmental, social and governance investing has swept across the financial world, the “E” in ESG has become nearly synonymous with attempts to mitigate climate change. But while the climate crisis is one of the planet’s gravest problems, it is not the only environmental threat that needs tackling. [Full article available to Financial Times subscribers.]
Bloomberg: Investors are overlooking the risk of water scarcity and the impact it could have on their portfolios in the coming decade, according to BlackRock Inc.
GreenBiz: Morgan Stanley has become the first major U.S. bank to commit to measuring and disclosing the climate impact of its loans and investments, announcing last week that it has joined a multi-trillion dollar group of global financial institutions developing a standardized method for carbon accounting.
Institutional Investors: “Culture matters.” How many times have you uttered this phrase when talking about your own company or your manager due diligence process?
Top 1000 Funds: Investors have only a few days to comment on the US Department of Labor’s proposed amendment to investment duties regulation and ESG – which many believe is out of step with the market and potentially damaging to retirees’ retirement income – with the window for comment closing on July 30.
The Washington Post: In tightknit social media groups and private email chains, black entrepreneurs share their Silicon Valley stories. It often starts with a racist comment from a venture capitalist or a subtle jab that reveals a deep bias. The stories usually have the same ending: a decision to pass on investing.
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