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 The news that shaped the week in responsible investing 


Dear SRI reader,

We are living in very charged political times these days so it is good to remember that some times, politicians can be an inspiring force.

Climate change considerations came first this week as fifty of the UK's MPs standing for re-election, have called for their £612 million pension fund to sever investment ties with fossil fuels. The pressure exerted by MPs and constituents forced the pension fund to publicise 20% of its holdings for the first time last month. In 2016, the PCPF had invested £5.56 millon into BP and £4.9 million into Shell.

Almost there, not quite, but working on it. This is our take on how some asset owners are currently doing their bit to contribute to a transition economy. While some players have gone public about their seriousness in divesting, others still seem to think it’s fine to take a milder approach. When Axa last month announced its intention to divest from companies that derive more than 50% of their revenues from coal-related activities, it also specified that those players would only be eligible for insurance cover under ‘exceptional’ circumstances. Meanwhile, on the one hand, Allianz’s commitment to divest €225 million of coal holdings was not followed by a call to expand its coal divestment to its asset management and underwriting business. On the other hand, the company is considering the importance of continuing to engage with companies and support them in their sustainability journey, on a path that may potentially also lead to exclusion. Eurosif is very supportive of engagement as a strategy to signify a tangible effort in the promotion of sustainable practices across the investment spectrum. It offers a transparent way for investors to interact with issuers and allows the two parties to exchange on material issues.

Social issues are increasingly coming to the fore for investors as seven European pension schemes decided to divest from Ryanair in view of growing concerns over how the company manages its staff and its relations with the Unions. Ryanair, which continues to hold its European staff subject to Irish law, imposes salaries that are lower than the low-cost airline average in most other European countries. Several investors have already moved away from the Irish low-cost airline, and maybe more will in the future. Nevertheless, for the time being these divestment waves have not shaken CEO Michael O’Leary. Perhaps, some bona fide investors could choose the engagement path and help the group change course even if this would mean completely transforming its business model.
Happy reading,
Flavia Micilotta
- Eurosif's Executive Director
Seven European pension schemes ditch Ryanair stock (Financial Times) Seven European pension schemes overseeing nearly €300bn of assets have pulled their investments in Ryanair due to concerns about high-profile labour disputes involving the budget airline.

Climate change laws exceed 1,200 worldwide, finds LSE study (The Guardian) Nations around the world have adopted more than 1,200 laws to curb climate change, up from about 60 two decades ago, a sign of widening efforts to limit rising temperatures, according to a new study.
S&P launches first assessment under green evaluation tool (Environmental Finance) S&P Global has issued the first assessment under its Green Evaluation Tool just one week after it launched. The assessment was for Argo Infrastructure Partners placed $120 million of private placement debt used to fund a portion of the acquisition Cross-Sound Cable – an undersea cable project transmits power from renewable rich New England into Long Island, New York.


Developing countries’ access to CbCR: Guess who’s (not) coming to OECD dinner (Tax Justice) The OECD has just made available the list of activated relationships to automatically exchange country-by-country reports between countries.But the number of current activated relationships is not a problem of developing countries only. Out of the close to 200 jurisdictions where MNEs are likely to have operations, so far only 53 jurisdictions have chosen the multilateral approach (instead of the bilateral one) and thus signed the Multilateral Competent Authority Agreement (MCAA) to exchange the CbCR with each other. 
MPs demand fossil fuel divestment for pension fund (Edie) Representatives from the Labour Party, the Conservative Party, the Liberal Democrats, the Green Party, the SNP, the SDLP and Plaid Cymru have all demanded that the Parliamentary Contributory Pension Fund (PCPF) discloses its exposures to fossil fuels with a view to divesting.
Stepping up the game – The role of innovation in the sharing economy (Cologne Institute for Economic Research press release) While the sharing economy is generally perceived to be very innovative, it has hardly been analyzed what defines this innovativeness. The main aspect for the sharing economy as a whole is the peer-to-peer (P2P) organization of its businesses. This allows sharing platforms to enter markets more easily, consequently increasing competition in these markets.
Energy efficiency entrepreneur: EU targets should be higher (EurActiv) Ambitious European Union targets to boost energy efficiency can unlock much-needed private investment, Peter Sweatman told But the current targets are not high enough, said the rapporteur on the Energy Efficiency Financial Institutions Group (EFFIG).

Trillions of euros of energy efficiency investment up for grabs (EurActiv) European Union policymakers have made energy efficiency, particularly in buildings, central to their plans to create an Energy Union. But they must convince private investors to unlock trillions of euros of capital.
PensionsEurope challenges Better Finance pension savings report (Investment & Pensions Europe) PensionsEurope has urged European consumer finance campaign group Better Finance to make changes to the research behind a report on the real returns of pension savings of Europe, arguing that it is otherwise “comparing apples and pears”.


Solvency II And The CMU: Unlocking Contractual Savings’ Investment (The Market Mogul) Even though the free movement of capital has been a legislative reality in the European Union since the Treaty of Rome, the markets for most financial services and products remain largely divided. One of the main reasons for this is Europe’s over-reliance on bank funding, which has made the EU’s economy unstable and procyclical. 
Pension fund: EU should promote ‘one-stop shop’ for housing renovation (EurActiv) Homeowners typically don’t have the capital to invest in energy renovation solutions, despite the proven returns. Danish pension fund PKA helps bridge that gap with a one-stop-shop solution which, it believes, could be replicated across Europe.
IA renews call to reject quarterly reporting in new guidance (Fund Strategy) The Investment Association has renewed its call for companies to abandon quarterly reporting in new guidance that seeks to encourage long-termism in the industry. The 14-page document, Long-Term Reporting Guidance, also provides clarification on information that fund managers want to see in company annual reports, including drivers of productivity in a business, capital management strategy, ESG issues, and human capital management.

Asset Managers
Banks ‘tap to download’ to prove culture shifts (Financial News) Banks, under pressure to prove to regulators that their culture is changing, are trialling a new social media mentoring app that claims to provide a snapshot of how employees feel, behave and interact.
Allianz rejects calls to expand its coal divestment policy to its asset management and underwriting businesses (Environmental Finance) Allianz told its AGM that it has divested €225 million of ($245.7 million) of coal holdings, but it rejected a call to expand its coal divestment pledge to its asset management and underwriting business.
FCA sets out new whistleblower rules for foreign banks in the UK (Economia ICAEW) The Financial Conduct Authority (FCA) has introduced its final rules on whistleblowing requirements for UK branches of foreign banks. Following a consultation, the regulator said these banks will be under the same rules as British ones and will be required to introduce whistleblowing procedures internally.

Multi-manager verdict: What’s next for ethical investments? (Fund Strategy) No longer the preserve of the idealist, young consumers with real purchasing power are demanding change from corporations and, by implication, our role as an investment manager is to ensure we meet this expectation by holding them to account.
"Europe must help rewrite the global rulebook so that free trade becomes fair trade."

Frans Timmermans, first Vice President of the European Commission, on the publication of the Reflection paper on harnessing globalisation on Wednesday.
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