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SRI HEADLINES


 The news that shaped the week in responsible investing 
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Dear SRI reader,

Recent research has shown that having a negative outlook may be the secret to living a longer life. To a pessimist that would not necessarily be a good thing, but rather confirmation that the worst never falls short. To the global community out there, Trump’s tweet on Wednesday, when he informed his followers that he would announce his decision on Paris on Thursday, must have sounded like another of those signs.

To some, the worst thing Trump did was to expose the fragile nature of the Paris Accord. It demonstrated that countries are under no real obligation to deliver on the agreement and therefore to deliver meaningful climate change strategies at a national level. As a gentlemen’s agreement, signatories believe in each other’s good faith and vision that motivated their signing in the first place.

To others, it is good news that the US exited the agreement, as it had become too reliant on the role of government to propose solutions to environmental challenges. This decision should act as a boost for Americans, who need to have their ‘environmental’ conscience awakened.

On a really positive note, the EU was preparing for this and in a bold and swift move, it formed an alliance with China, which is being sealed as I write, to shape the road ahead with measures to lead the energy transition towards a low carbon economy. The EU, the world biggest carbon market, has agreed to give China €10 million to support its plan to roll out a national emissions trading system this year in a move to link the two schemes. The alliance is set to give a high level of detail on how they intend to make real the promises they initially made. Both sides are also going to evaluate how to help developing countries reduce their carbon footprints by sharing know-how and in this way contributing to much of the EU 2020 agenda to spur job creation, investment opportunities and economic growth.

Certainly, it would have been best to continue working on delivering the Paris Agreement with all the countries that were part of the original block. At the same time, it is not sustainable to be strong and continue the fight with a Trojan horse hampering efforts from within.

 

We hope this EU-Sino alliance will be a strong and sustainable, one able to build solid foundations for other countries worldwide.
Happy reading,
Flavia Micilotta
- Eurosif's Executive Director
ESG
Paris climate deal: Dismay as Trump signals exit from accord (BBC) There has beeninternational condemnation of President Trump's announcement that the US is withdrawing from the 2015 Paris climate agreement. UN chief Antonio Guterres's spokesman called it "a major disappointment" .

Climate deal will not be renegotiated, EU tells Trump (EUobserver) Founding EU members Germany, France, and Italy have told US president Donald Trump that the Paris climate treaty “cannot be renegotiated”, after Trump announced the US would pull out. Trump said on Thursday that the US is “getting out” of the Paris deal, which he called “unfair” to the country.

MEPs back national carbon cuts under Paris Agreement (European Parliament press release) Plans for national greenhouse gas emission cuts were backed by ENVI MEPs on Tuesday. These cuts will help deliver on the EU’s overall target for 2030 - a 30% cut from 2005 levels, in line with the Paris Agreement.


 

Sustainable investment market in Germany, Austria and Switzerland makes significant gains yet again (FNG press release) Sustainable investments are continuing to increase in importance. In 2016, this market again saw disproportionately high growth in Germany, Austria and Switzerland, with overall growth standing at 29 per cent. The latest annual statistics from FNG – Forum Nachhaltige Geldanlagen for these three countries put a figure of almost 420 billion euros on investments in which not only financial but also environmental and social criteria are taken into account. If investments which factor in one or more sustainability aspects or strategies are also included, the total comes to over four trillion euros.

Diversity, ESG relatively low scheme governance priorities: survey (Investment & Pensions Europe) Board diversity, ESG investing, and external reviews are relatively low governance priorities for pension scheme trustees and managers, according to a report. It was produced by Winmark, which runs professional member networks to facilitate peer learning, and Sackers, a law firm. It was based on a survey of 84 pension schemes – trustees and pension managers – and 13 in-depth interviews with chairs of trustee boards and other pensions experts.

ESG begins with G for Carnegie Fonder (Investment Europe) Governance, risk minimisation and long term horizons were among key takeaways from a seminar on ESG issues attended by the full portfolio management team at Sweden’s Carnegie Fonder recently, the manager says in a note to its investors. The ‘G’, Governance, part of ESG was highlighted for its central role in enabling the other two parts of the acronym – Environmental and Social – to function. 

How to minimise the legal risks of green bonds (Environmental Finance) Green bonds allow a company to attract a more diverse investor base and can enhance a company’s reputation for governance and ESG compliance. Green bonds may also carry additional legal and reputational risks, in two ways. The first relates to the process of marketing and selling the green bond in the first place. The second relates to following through on what makes the bond “green” and complying with on-going obligations.

 
Investors
ExxonMobil shareholders defy board in 'historic' climate change vote (Investment & Pensions Europe) A majority of ExxonMobil shareholders voted in favour of a climate change disclosure resolution despite the company urging them to oppose it, in sharp contrast to the fate of a similar resolution filed by shareholders last year. 

Shareholders defeat environment-related proposals at Chevron annual meeting (Pensions & Investments) Two environment-related proposals were defeated at Chevron Corp.’s annual meeting Wednesday, despite support from several large pension funds. Approximately 73% of shareholders rejected a shareholder proposal calling for Chevron to issue a report on how it can transition to a low-carbon economy, according to preliminary voting results from the energy company.
 

 
US withdrawal from Paris Agreement 'an irrelevance', say investors (Environmental Finance) With President Trump widely expected to announce the US’ withdrawal from the Paris Agreement today, investors are sceptical over its implications on global climate action, with one branding it an ‘irrelevance’.

Green Reporting Takes Root (CFO) Investor demand for sustainability data has been surging. “Companies need to understand that they need to satisfy the demand. But there’s a disconnect between what investors are [demanding] and what companies are reporting,” says former SEC chair and current SASB director Mary Schapiro. 

German investors warm to ESG, but barriers remain (Investment & Pensions Europe) German institutional investors have voiced concerns about the transparency and adequacy of sustainable investment strategies on offer, according to a survey by Union Investment.

Corporate tax avoidance: Directive adopted on hybrid mismatches (EU Council press release) The EU has taken a further step to prevent corporate tax avoidance, adopting rules to close down 'hybrid mismatches' with the tax systems of third countries. On 29 May 2017, the Council adopted a directive to prevent corporate groups from exploiting the disparities between two or more tax jurisdictions to reduce their overall tax liability. 

Why investors want greater ambition for the Clean Energy Package (EURACTIV) The goals of EU energy policy going forward must be ambitious if European countries want investors to provide the capital required to realise a smooth transition to a low-carbon economy and the growth this could generate, writes Stephanie Pfeifer.

Green Climate Fund offers $500m for private sector climate projects (Environmental Finance) The Green Climate Fund (GCF) has launched a $500 million request for proposals (RFP) to support private sector projects that help combat climate change in developing countries. It is the first time the fund has directly invited the private sector to apply for funding, Sergio Pombo, an advisor to the fund, told the Innovate4Climate conference in Barcelona.

Investment groups tell investors to give up tobacco industry (BBC) Four international investment groups have called on investors to quit the tobacco industry. Axa, Calpers, Scor and AMP Capital have already sold or are selling their tobacco investments.
 
Asset Managers
Asset managers call for financial reporting changes (Fund Strategy) Sarasin and Partners, Legal and General Investment Management, Columbia Threadneedle Investments, and Hermes Investment Management are among investors seeking to shake up financial reporting so that companies must report unrealised profits.

Exclusive: Fidelity may back climate resolutions, a milestone for activists (Reuters) Fidelity Investments may support shareholder proxy proposals calling on companies to report on sustainability matters this year, a major shift by the Boston asset manager as climate activists gain more traction at large U.S. corporations.

Impact lives and play ESG in EM, the example of Alquity (Investment Europe) Generate positive social outcome. These four words have become a hallmark of a growing trend in the asset management industry that is either termed impact investing or sustainable investing.


 

Deutsche Bank merges with GCF (Investment Europe) Deutsche Bank signed an Accreditation Master Agreement (AMA) with the green climate fund (GCF), enabling the bank to receive and use GCF capital and raise further funds from private sector investors to support action on climate change. The agreement was signed in London by Nicolas Moreau, head of Deutsche Asset Management and member of the management board of Deutsche Bank AG, and executive director of the GCF’s Secretariat, Howard Bamsey.

Johnson & Johnson, L'Oreal step up on deforestation (GreenBiz) CDP has announced that its forest supply chain initiative has expanded with the addition of eight new corporates. The investor-backed environmental disclosure group said the companies would work with it to gather information from key suppliers detailing how they are tackling deforestation risks. The companies signing up to the expanded initiative include McDonald's Latin American franchise Arcos Dorados, Swiss fragrance company Firmenich, Brazilian meatpacker JBS, Brazilian paper producer Klabin, Canadian restaurant group Restaurant Brands International and U.K. energy firm SSE.
 
QUOTE OF THE WEEK
"No one should be left behind, but the EU and China have decided to move forward.

Miguel Arias Cañete, the European Union's Climate Commissioner, on forging a new EU-China alliance  to take a leading role in tackling climate change just as Trump was set to announce the US' withdrawal from the Paris Agreement. He was talking to The Guardian
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