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SRI HEADLINES


 The news that shaped the week in responsible investing 

 

Dear SRI reader,

A King once said that only fools rush in.
 
Judging from where we are today in terms of the fight against climate change and our efforts currently in place to ensure global, economic and social equality, it seems clear that we should not only rush but sprint. The UN Sustainable Development Goals (SDGs) provide, in this regard, a good, if not great, opportunity for investors to act fast and a lot of players are willing to start running and engage in the conversation. Eurosif this week attended an interesting gathering of international investors in Stockholm, who discussed the relevance of the SDGs to their strategy and how they recognise the opportunity of moving full steam ahead in their collaborations.
 
An interesting initiative has recently been launched by Convergence, a new Canadian government-backed body. The concept revolves around an online matchmaking platform to connect investors to ‘blended finance’ opportunities addressing the SDGs in emerging and frontier markets. This initiative also features the collaboration of Citi and Ford Foundations and it highlights the importance of blended finance in impact investing today as a way of promoting innovation in finance.
 
Earlier this week, the UNEP FI and the G20 launched an 
investor toolkit to identify opportunities in the energy efficiency market. The toolkit comes after 3 years of collaborative work by participating countries, international organisations, financial institutions and country experts with the goal of enhancing capital flows for energy efficiency investments, as compiled and supported by the G20 Energy Efficiency Finance Task Group (EEFTG).
 
The heightened focus on the environment has strongly increased the number of renewable energy projects being developed around the world in the last couple of years. Unfortunately, the social abuse deriving from that has also grown exponentially, according to the
latest report from the Business & Human Rights Resource Centre (BHRC). The report highlights failures on behalf of the companies who are working on renewable energy projects in developing countries to abide by international standards. The danger of forgetting the social factor, to solely focus on environment, is a recurring problem.

It is of capital importance for companies to truly respect sustainability and be responsibly conscientious in their work. The SDGs - which combine the social, environmental and governance dimensions - are a valid blueprint for that.
Happy reading,
Flavia Micilotta
- Eurosif's Executive Director
ESG
What index provider FTSE Russell has learned about ESG investing? (GreenBiz) When the index provider FTSE first started integrating environmental and sustainability factors into indices back in 2001, the landscape for ESG investments looked drastically different. Just over 15 years later, Campos, who leads FTSE Russell’s ESG business in the Americas, said interest in integrating ESG factors into investment decisions has evolved from something only a small group of investors cared about into a phenomenon that has become widely accepted by many companies and asset owners.

Commission takes new steps to enhance compliance and practical functioning of the EU Single Market (European Commission press release) These measures will make it easier for people and companies to manage their paperwork online in their home country or when working, living or doing business in another EU country and it will help ensure that commonly agreed EU rules are respected.

EIB says its green bonds outperform in secondary market (Environmental Finance) Climate Awareness Bonds (CABs) issued by the EIB “have been outperforming regular EIB issuances” in the past few months. The EIB said: “investor preferences in the secondary market have led to awarding a green premium to the majority of the [euro-denominated] CABs,” despite these green bonds being priced “in line with existing regular bonds”.


Are we experiencing a Groundhog Day of ESG information? (GreenBiz) In the film "Groundhog Day," Bill Murray's character relives the same dayuntil he has learned enough of life’s lessons to move on. Today’s chief sustainability officers are living a similar cycle with the annual sustainability ratings and rankings field. There has been a long-standing, love-hate relationship between corporations and those that judge them on environmental, social and governance performance (ESG) performance. While these two sides may appear to have an antagonistic relationship, there is actually some constructive co-dependency — and even mutual enabling behavior — that helps perpetuate this dynamic.

Volvo to roadshow Europe's first green bond for automobiles (Environmental Finance) Volvo Cars is to issue the first green bond from a European car manufacturer, with the proceeds being used to finance cars that can be powered without fossil fuels. Volvofinansbank, Volvo’s financial arm, is to roadshow its framework for the bond on Monday 8 May in Stockholm. It is understood the bond will be a senior, unsecured loan, denominated in Swedish kronor.

Renewable energy faces growing human rights concerns (Eco-Business) Legal disputes, bad publicity, protests and violence. The transition to a low-carbon economy is not without problems, with renewable energy projects — mainly hydropower — running into the same community conflict issues the fossil fuels industry has faced, a Business & Human Rights Resource Centre (BHRC) report has found.
 
Investors
How State Street Global Advisors Became an Unlikely Activist (Institutional Investor) One of the world's largest passive investors is starting to look a lot more like an activist these days.

Investors ‘are increasingly demanding that real estate obtains green certification’ (Environmental Finance) Investors are beginning to view real estate developments that lack a sustainability certification as an increased risk, according to one certification company. “If there's a new construction undoubtedly [there's reputation risk],” said Mahesh Ramanujam, president of Green Business Certification Inc.He pointed to the 2016 Dodge Data & Analytics Smart Market Study on World Green Building Trends, which found that over 60% of respondents anticipate that their projects will be green by 2018.

 
Climate change offers huge investment opportunity - experts (Eco-Business) Financing climate action is “the biggest opportunity in the history of the world - it’s the biggest investment opportunity”, says former US vice president Al Gore.

Institutional investors urge Australia to adopt modern slavery law (Investment & Pensions Europe) More than 30 major institutional investors are calling for the introduction of modern slavery legislation in Australia. The investors – which have over $2trn (€1.8trn) in assets under management between them – have signed a statement to a group of lawmakers in Australia that is conducting an inquiry into establishing a Modern Slavery Act in the country.

Swiss pension funds, insurers offered 2°C climate alignment tests (Investment & Pensions Europe) Swiss government authorities are offering the country’s pension funds and insurers an opportunity to test their equity and corporate bond portfolios to see if they are compatible with the 2°C maximum global warming target under the international climate change agreement reached in Paris in December 2015.
 
Convergence launches investor network to ease SDG investing (ImpactAlpha) Canadian nonprofit Convergence launched its long-awaited Investment Network this morning, promising to link private, public, and philanthropic investors with blended-finance opportunities in emerging markets. Making blended-finance deals happen isn’t easy, says Peter Stoute-King, the investment network’s managing director, but such deals are key to closing the $2.5 trillion annual gap in funding needed to achieve the U.N. Sustainable Development Goals.

UNEP FI and G20 create an investor toolkit on energy efficiency (Environmental Finance) The UN Environment Programme Finance Initiative (UNEP FI) and the G20 have partnered to create a tool to help investors identify opportunities in the energy efficiency market. Energy efficiency projects need $221 billion of annual investment for global emission reduction targets to be met, according to G20.

 
Asset Managers
Trump cuts spark fears of global corporate tax war (EurActiv) Donald Trump’s plans to slash corporate taxes in the United States have sparked concerns of a new global fiscal race to the bottom, possibly involving a wave of negative social consequences, experts say. Trump’s goal is for the reforms to propel the US economy to 3% annual growth. But the long-anticipated overhaul could face stiff opposition in Congress, including from some Republicans, with lawmakers sharply divided over the prospect of fuelling already-rising deficits.And the plans have also raised eyebrows at NGOs and non-profit organisations.

FCA sets charges template for new EU disclosure rules (Money Marketing) The FCA has told firms how they should disclose charges for products covered by forthcoming PRIIPs regulations. PRIIPs, which is going to be implemented in January 2018, will apply to a wide range of firms, including banks, insurers, and investment managers, and aims to extend Mifid II standards on consumer protection to insurance-based investment products.

Investment governance and the integration of environmental, social and governance factors (OECD paper) There are technical and operational difficulties in measuring and understanding ESG-related portfolio risks; however a growing number of tools are becoming available that enable institutional investors to integrate ESG factors to a greater or lesser extent.


The rise of the future makers (Investment Magazine) Australia’s biggest institutional investors are fielding more questions than ever about how they are managing environmental, social and governance risks in their portfolios. Campaigns by external activist groups played out in public and over social media are just part of the story, though. A more powerful force is the rising level of engagement among trustees concerned about how the funds they oversee are meeting their fiduciary obligation to consider all long-term investment risks.
 
"The Common Consolidated Corporate Tax Base will prevent companies from shifting their profits to tax havens and will open the way to a better tax governance."

Commissioner Pierre Moscovici, Economic and Financial Affairs, Taxation and Customs, at a hearing the European Parliament's PANA Committee on Thursday.
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