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

What a week this has been!

On Monday, the Global Sustainable Investment Alliance released its 3rd Biennial Global Sustainable Investment Review 2016. The report was presented during an international webinar that was broadcast to journalists across the globe. The Executives Directors of the SIF members of the Global Alliance explained how the global sustainable investment assets reached $22.89 trillion at the beginning of 2016, registering a 25% increase from 2014. Europe accounts for over half of these assets (53%), while the United States accounts for 38%. In nearly every market, sustainable investing has grown in both absolute and relative terms and, just like in the European market, the most prominent strategy remains negative/exclusionary screening, echoing what is clearly an international trend with over $15 trillion of assets. Climate concerns have contributed to the growing interest in green finance and a strong rise in climate-aligned bonds. Mature dynamics are sculpting fiduciary duty to become the leading force behind consistent SRI growth. 

On Tuesday, the US Administration issued an executive order to roll back the Clean Power Plan, possibly ending a number of Obama's climate policies. Referring to ‘a different direction’ on climate policies, President Trump's take on climate change policy actions seems alarming to say the least. The international arena holds its breath as it waits to see what direction the country will take on the Paris Agreement. Speculation is rife that this step is just the beginning of the end.

Meanwhile, on this side of the Atlantic, the focus has shifted back on to taxes. Oxfam’s 
latest report looks at how European banks continue to add a chapter in tax havens, triggering stronger EU rules on tax transparency. On Tuesday, the Economic and Monetary Affairs Committee MEPs voted to close loopholes which allowed some of the world’s largest corporations to avoid paying tax on profits by exploiting differences in the tax systems of EU and third countries. The MEPs backed a resolution recommending changes to the EU’s anti-tax avoidance directive by 44 votes to 0 with 2 abstentions. In the context of “hybrid mismatches”, the goal of these amendments tackled the different tax rules in third countries which make such loopholes possible. Interestingly, there seems to be an alignment which hopefully can help tackle the issue of tax evasion for companies in different sectors, which represent a ravaging plague for our economies. There is still a long way to go to achieve a level playing field for all actors across our society. Eurosif’s members think there is a role for investors to play. What do you think?
Happy reading,
Flavia Micilotta
- Eurosif's Executive Director

European banks stashing billions in tax havens (EUobserver) Europe's largest banks are draining public coffers by stashing billions of profits offshore. A 52-page report, by international aid agency Oxfam out on Monday (27 March), estimates €25 billion of banker money ended up in tax havens in 2015.
The climate finance architecture the world needs (GreenBiz) Climate finance architecture has become too complex. Over the past 25 years, dozens of national, regional and international climate funds have been created. Each new fund responded to needs and gaps that existed at the time, but this has led to a rather complicated system.
MEPs vote to close loopholes for exploiting EU and third country tax differences (European Parliament press release) Economic and Monetary Affairs Committee MEPs have voted to close loopholes which allow some of the world’s largest corporations to avoid paying tax on profits by exploiting differences in the tax systems of EU and third countries.

Standard Ethics issues sustainability ratings to the forty largest European Banks (Standard Ethics press release) Standard Ethics has issued sustainability ratings to the forty largest European Banks. Banks are weighted according to their sustainability rating and the Top 10 alone weigh 75% and are: BNP
Paribas, Nordea Bank, UniCredit, BBVA, Danske Bank, HSBC, Intesa SanPaolo, Soc Generale, Svenska, Swedbank
EU, China to strengthen climate, clean energy ties (New Europe) European Union Climate Action and Energy Commissioner Miguel Arias Cañete will visit China, from March 29 to April 2 to discuss the implementation of the EU-China energy roadmap agreed by Cañete in June 2016, clean energy cooperation, low-emission mobility and emissions trading. Cañete’s mission to China comes at a critical time in international climate policy, allowing the EU and China to show joint leadership and explore how they can reinforce their strong commitment to the 2015 Paris Agreement ahead of the EU-China summit to be held in June, the Commission said.
Madrid to launch social bond (Global Capital) The autonomous community of Madrid has mandated five banks to lead manage its inaugural social bond. The city selected Barclays, BBVA, Credit Agricole CIB, ING and Natixis as joint bookrunners for its, benchmark-sized, euro-denominated bond.
Transparency is the fourth supply chain success metric (Green Biz) In a number of industries, a fourth metric for success recently has emerged — the need for transparency across an organization’s extended supply chain. According to Chris Dubois, senior vice president of leading analytics firm IRI, "Consumers are more concerned than ever about where their food comes from. They are not only making their concerns widely known on social media, they are editing their shopping lists based on those concerns. That’s why the food transparency trend is growing."

Media reaction: Donald Trump’s climate and energy executive order (Eco-Business) The order takes aim at the Clean Power Plan, the social cost of carbon and a slew of fossil fuel regulations. It does not mention the Paris Agreement on climate change. Carbon Brief rounds up the extensive media coverage of the order, spanning analysis of the announcement and editorials reacting to the news.
UK fund managers publish cost transparency proposal (Investment & Pensions Europe) The UK’s Investment Association (IA) has proposed a new cost disclosure framework, including transaction costs and securities lending revenues. In a consultation published on Monday, the fund management trade body presented a “common data engine” to provide a measure of asset management costs to multiple stakeholders and regulatory bodies.
PensionsEurope calls for ‘legislative calm’ until IORP II review (Investment & Pensions Europe) PensionsEurope wants “no further changes” to the regulations regarding pension funds, as it prepares for the launch of a continent-wide stress test regime. Janwillem Bouma, chairman of PensionsEurope, reiterated a previous call for “a period of legislative calm”, this time until a planned review of the IORP II directive in 2020.

Institutional investors and home bias in Europe’s Capital Markets Union (Bruegel) Integrated capital markets facilitate risk sharing across countries. Lower home bias in financial investments is an indicator of risk sharing. We highlight that existing indicators of equity home bias in the literature suffer from incomplete coverage because they consider only listed equities. We also consider unlisted equites and show that equity home bias is much higher than previous studies perceived. We also analyse home bias in debt securities holdings, and euro-area bias. We conclude that European Union membership may foster financial integration and reduce information barriers, which sometimes limit cross-country diversification.
OECD advises on responsible business conduct expectations for investors (Investment & Pensions Europe) Institutional investors should use their leverage to influence investee companies to help prevent or address adverse impacts on human rights or the environment, according to a new paper from the OECD.
Investors implementing ESG frameworks despite barriers to entry (The Asset) The lack of transparent, standardized, quality data remains a significant barrier to the adoption of ESG strategies, according to a recent survey conducted by State Street Corporation.
Campaign groups hit out at UK charge disclosure proposal (Investment & Pensions Europe) The founder of a transparency pressure group has criticised the Investment Association’s (IA) stated aim of getting a new cost disclosure code enshrined in the UK regulator’s lawbook. Andy Agathangelou, founder of the Transparency Task Force (TTF), warned that such an outcome would mean the UK’s investment charges rules were “designed by a highly conflicted trade body whose primary responsibility is, and remains, the welfare of their members and not the actual investors themselves”.

SVVK-ASIR appoints GES as engagement provider (GES press release) The Swiss Association for Responsible Investments (SVVKASIR) has appointed GES as its engagement provider to conduct dialogue with companies from its members’ investment portfolios. The engagement will cover a selection of companies in breach of sustainability norms as determined by the Federal Constitution and/or international norms and conventions such as the UN Global Compact.
NN IP bolsters ESG investment decision process (Investment Europe) Dutch asset manager NN Investment Partners (NN IP) has partnered with data provider South Pole Group to strengthen the integration of ESG criteria in its investment decisions. South Pole Group provides information on companies’ carbon emissions, waste and water use.
MiFID II challenges stretch beyond 2018, warns policy specialist (Citywire Selector) Asset managers need to look beyond simply complying with MiFID II when it comes into force but also make sure longer-term plans to adopt and adapt to it as it evolves are in place. That is according to BlackRock’s director of government affairs and public policy, Martin Parkes. Speaking at ALFI’s 2017 conference, Parkes said MiFID II regulation brings the idea of continuity to asset management.
Schroders: Food giants face risks similar to Big Tobacco (Fund Strategy) Schroders is calling on fund managers to push food and drinks companies to cut sugar as it threatens to turn the sector into the next Big Tobacco, facing regulatory and consumer pressure. The asset manager has joined with Rathbone Greenbank to create a guide for challenging companies on governance, strategy, implementation, public policy and demonstrating progress.
Quote of the week
"In almost all the markets represented in this report, sustainable investing has grown in both absolute and relative terms in the two years since the beginning of 2014."

From the Global Sustainable Investment Review 2016, published on Monday the 27th.  
Copyright © 2017 Eurosif, All rights reserved.

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