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 The news that shaped the week in responsible investing 


Dear SRI reader,

Have you been wondering how countries are performing in terms of green growth? 

What have the G20 countries achieved in terms of being able to deliver the quality of growth to which citizens aspire? Are we effectively growing to be less reliant on natural resources and more strategic at fighting pollution? Are we linking the greening of the economy with opportunities for growth and development? Well, wonder no more!

This week, the OECD published its
Green Growth Indicators 2017, extending the research already made available in 2014 and 2011.

The report enumerates signs of improvements across countries in terms of a productive use of environmental services and pollution reduction. Of note is the understanding of productivity that the OECD makes in this report, termed as 'multifactor'. This concept takes into account that the pursuit of economic growth and better economic conditions can, almost by default, translate into an utter reliance on natural capital depletion and heavily polluting technology. For this reason, considering a multiplicity of factors has led to the consideration of multiple inputs, such as labour, produced capital and natural capital, and outputs, such as GDP and pollution. In a way, this concept is integrating the elements of environmental and social criteria to explain the real progress made in productivity. This holistic approach, applied to the sources of growth and the role of productivity gains, almost perfectly reflects the way SRI investors look at ESG criteria in their investment decisions in order to gain a true and fair view of how sustainable investments really are. 

On the policy side, taxes and subsidies are also looked at as ways to send the right market signals that can influence producers and consumers. Taxes can play a very valuable role in terms of incentivising some practices and discouraging polluting activities that are still rampant today. Shifting levies away from labour towards the environment, could determine the opening of capital flows to fund much needed investments. In a similar vein, a recent ECP 
Policy Brief on energy poverty in Europe further stresses, the need to fix the misaligned incentives between landlords and tenants who bear the costs of energy inefficient buildings, which in their right, hamper policymaking. The local specificities of energy issues make the definition of reliable indicators even more of an issue - difficult to tackle at a European level and still remain to be dealt with by national governments. Europe needs investments along with interventions from both the EU budget and the European Investment Bank in order to address market failures in the financial sector and unleash innovative solutions.
Happy reading,
Flavia Micilotta
- Eurosif's Executive Director
Transparency for intermediaries (European Commission) On 21st June  2017, the European Commission proposed new transparency rules for intermediaries that design or sell potentially harmful tax schemes. Intermediaries are firms or persons which can help their clients to set up schemes to reduce their tax bills.

Countries progressing too slowly with green growth, warns OECD (BusinessGreen) The world's biggest economies are progressing too slowly with their green growth efforts with many having yet to fully disconnect their greenhouse emissions from economic growth, the OECD has warned in its Green Growth Indicators 2017 report.

LuxFLAG launches Green Bond label (Investment Europe) The Luxembourg Finance Labelling Agency (LuxFLAG) has added to its list of labels with one for funds investing in green bonds, which are instruments used to finance green projects.

Sustainable Development Goals per gli investitori responsabili (Asvis) Il raggiungimento degli SDGs richiederà un investimento pari a 1,4mila miliardi di dollari nei Paesi in via di sviluppo a basso reddito: il settore privato e gli investitori hanno quindi un grande ruolo da svolgere. Promuovere l'adozione di criteri ambientali, sociali e di governo in tutta la catena del valore degli investimenti può incoraggiare maggiori investimenti privati nello sviluppo sostenibile, con un conseguente impatto positivo sulla società.


Insurers are bystanders on climate change risk management (Environmental Finance) Insurers are largely bystanders when it comes to managing climate change risk in their investment portfolios, according to the latest survey by the Asset Owners Disclosure Project (AODP).
Social Europe: what Parliament is doing on social policies (European Parliament) Compared to the rest of the world, Europe has the best levels of social protection and ranks highly in terms of quality of life and wellbeing. However, it faces a wide range of challenges: The effects of the economic crisis are still deeply felt in many member states and, even though things have already improved in many countries, great disparities remain within the EU. Unemployment rates are decreasing overall but vary strongly among EU countries.

The long journey to end energy poverty in Europe (European Policy Centre) Energy poverty is on the rise in Europe, even though it is unevenly distributed across social groups and territories. In general, policymaking is hampered by the misaligned incentives between landlords and tenants on who should bear the costs of energy inefficient buildings. At EU level, the absence of reliable indicators across member states makes the identification of energy-poor consumers difficult. In this Policy Brief, Claire Dhéret and Marco Giuli emphasise that the European Union’s added value in the fight against energy poverty should not be underestimated, because of the relatively new nature of the concept and the lack of policy experience among many member states in confronting this issue.

Will EU Council block trillions of investment in energy efficiency? (EURACTIV) Politicians have a tendency to play things safe, only committing to policy objectives that are well within reach, even when it goes against long-term EU goals or plain common sense. This seems to be the case for the draft Energy Efficiency Directive, warns Benedek Jávor.
Costs and charges: the crossover between MiFID II and PRIIPs (RegTech) The common driver for both regulations is investor protection and they both effectively talk about the provision of short and concise information documents for prospective retail investors to enable them to compare different products and acquire a better understanding of the risks behind them. However, MiFID II has a broader scope and “applies to firms providing investment services and firms that manufacturer or distribute financial instruments,” whereas PRIIPs focuses on “unit-linked funds, structured products and retail investment products.”

Institutional investors urge Energy Ministers to set strong ambition for EU Energy Efficiency Direct (IIGCC) Ahead of the upcoming Energy Council (26 June, 2017) institutional investors who manage more than €19 Trillion in assets have written to Energy Ministers across the EU urging them to agree an ambitious framework that includes a bold long-term decarbonisation objective to 2050 aligned with the objectives of the Paris Agreement.

Oil firms could waste trillions if climate targets reached (Reuters) Energy giants including Exxon Mobil (XOM.N) and Royal Dutch Shell (RDSa.L) risk wasting more than a third of their budgets on projects that will not be needed if climate targets are to be met, a think tank report shows. More than $2 trillion of planned investment in oil and gas projects by 2025 could be redundant if governments stick to targets to lower carbon emissions to limit global warming to 2 degrees Celsius, according to a report by the Carbon Tracker think tank and institutional investors.


2017 Responsible Investment and Stewardship Report (First State Investments) Each year we publish a responsible investment and stewardship report which outlines our progress in these areas and profiles each of our investment team’s approaches to responsible investment. We also include over 30 case studies of responsible investment in practice.

How a Long-Term Approach Boosts Returns (Institutional Investor) Long-horizon investors may earn as much as 1.5 percent in additional returns annually, according to new research from Willis Towers Watson's Thinking Ahead Institute. The report examined how long-term investors can add value to their portfolios. It also looked at short-term pitfalls that limit potential gains.

Juncker Plan: More than EUR 200 billion in investments set to be triggered; changes enhance accessibility of European Investment Project Portal (European Commission) Following last week's meeting of the European Investment Bank's (EIB) Board of Directors, the Juncker Plan is now expected to trigger EUR 209 billion in investments across all 28 Member States. This represents two-thirds of the original EUR 315 billion target of total investments to be mobilised by the European Fund for Strategic Investments (EFSI). The operations approved under the EFSI now represent a total financing volume of just under EUR 39 billion.
Asset Managers
Bank of England sets outs climate change reporting risks for banks (CCH Daily) In its new report The Bank of England’s Response to Climate Change, the bank has outlined the physical risks of climate change upon insurers and financial services, and its plans to help the UK financial system and its constituents move to a lower carbon economy.

Transparency sees huge increase in importance (Funds Europe) Transparency has more than doubled in importance for asset owners when making traditional and alternative investments since the financial crisis, though investors are often unsure how to achieve it, a survey shows.

From bank loans to capital markets union, Europe builds bridge finance: mini-bonds and Schuldschein (ItalyEurope 24) On the one side, bank deleveraging is reducing credit flows to the economy. On the other side, the creation of the Capital Markets Union is gaining momentum but it is a slow moving process. That’s why Europe needs bridge finance products, the “economics of private placements”, that is, hybrid instruments that help SMEs in the not-so-easy transition from bank loans to equity or bond public issues. Italy and Germany are pushing forward with the proposal of two financial products, mini-bonds and Schuldschein: not brand new but are flexible, this is exactly what banks, institutional investors, issuers and entrepreneurs are looking for to smooth things out.


Société Générale launches Italy's first Positive Impact Finance bond (Environmental Finance) Italy’s first Positive Impact Finance (PIF) bond for retail investors has been issued by Société Générale. The bond contributes to the UN Environment Finance Initiative-led Positive Impact Finance program because Société Générale is committed, for the entire life of the bond, to maintain on its balance sheet positive impact assets equivalent to 100% of the nominal amount invested in the bond.

Top global banks still lend billions to extract fossil fuels (BusinessGreen) Analysis, carried out by a group of NGOs including the Rainforest Action Network and Sierra Club, showed that multinational banks around the globe, including many household names, were trumpeting their green credentials while continuing to pour money into the dirtiest fuels.
"Green growth is about fostering growth and development, while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. 

Rintaro Tamaki, OECD's Deputy Secretary-General, on the publication of the Green Growth Indicators 2017.
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