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

This week has seen many significant trends on the governance side. A corporate governance equity index was launched on the Swiss exchange by Ethos, the Swiss Corporate Governance Index (ESCGI), and is the first index of this type on the Swiss stock market. The index is designed to weight constituents according to corporate governance best practice criteria, while also taking into account companies’ carbon emissions. 
Meanwhile, in the US, a group of asset owners and money managers representing $17 trillion in assets released a framework of guiding principles for U.S. corporate governance and investment stewardship. The aim of this initiative, which brings together all types of investors, is to enable them to speak with one voice on fundamental governance issues, by way of codifying the fundamentals of good corporate governance and establishing baseline expectations for U.S. corporations and their institutional shareholders.
This week was also a good opportunity to reflect on a central theme for Europe: energy. Europe's 'energy union' was originally conceived in response to Russia's incursion into Ukraine. Today, we turn to the US and hold our breath, pondering what the consequences for climate change might be. The road ahead will probably see new alliances being formed and a new geopolitical scenario being drawn. More ambitious targets need to be set to align with the Paris Agreement's energy transition discourse and investments in renewables in Europe need to gain traction once again in order to get there. We are eager to see a strong Europe partnering with a determined China to write an effective energy road map. What Europe needs to do now is join the dots across its priorities and objectives and make it happen.

Happy reading,

Flavia
- Eurosif's Executive Director
COMMITTING TO CORPORATE GOVERNANCE
  • 4 stakeholder engagement trends to watch: There are clear drivers for multinationals to rethink their approaches to risk, resilience and corporate responsibility. A far wider range of plausible scenarios is in play, and traditional risk management and strategy tools are not well placed to address current challenges. And open, interactive communication with those that are affected by, or have power to influence, a company’s strategy and agenda just shot to the top of the priority list.
  • Ethos launches corporate governance index on Swiss exchange: Ethos Foundation, a Swiss pension fund organisation promoting socially responsible investment (SRI), has launched a corporate governance index on the country’s main stock exchange.
  • Institutional investor coalition announces corporate governance framework: A group of asset owners and money managers representing $17 trillion in assets released Tuesday a framework of guiding principles for U.S. corporate governance and investment stewardship.
  • The dawning age of the earth-competent board: In a post-Paris world, board directors need to recognise that doing their fiduciary duty increasingly means paying attention to climate change and the risk it poses to business, says global sustainability leader Philippe Joubert.
FINANCING THE FIGHT AGAINST CLIMATE CHANGE
  • Irish parliament votes to divest from fossil fuels: Ireland took a step closer to becoming the first country to divest its sovereign wealth from the fossil fuel industry. The country's lower house of parliament, Dáil Éireann, defeated the government to pass the Fossil Fuel Divestment Bill 90 to 53.
  • The State of Green Business, 2017: The Paris Agreement provided hope that nearly 200 nations would work in concert toward mitigating many of those impacts. But the 2016 U.S. presidential election — and, to a lesser degree, the U.K.’s vote last year to leave the European Union — muddied the waters, promising to slow progress, perhaps significantly. As this report is being published, barely two weeks into the administration of President Donald Trump, much about future climate action and environmental protection remains unknown.
  • Green bond market expected to exceed $120bn in 2017: The fast-growing green bond market is predicted to exceed $120 billion in new issuances this year, but the rate of growth is unlikely to exceed that seen in 2016, according to an Environmental Finance survey.
  • Sluggish renewables investment poses challenge to EU energy plans: European investment in renewables has dropped by half since 2011, but the EU remains “well on track” to hit its 2020 target of boosting the sector by 20%, the European Commission said on the 1st of February as it launched its second report on its Energy Union strategy.
  • Green bond comment January: Vive la France: The big story in January was the Republic of France's mammoth green bond, weighing in at €7 billion, by far the biggest ever issue. You may remember that Poland pipped France to the post to become the first ever sovereign green bond issuer in December, with a €750 million issue. But the French made up for this with the sheer size of their issue. The order book was a staggering €23 billion.
  • We all need to divest from fossil fuels now – especially Australian universities: The end of coal is inevitable but divestment will help accelerate the process, especially as we can’t rely on the Australian government to stabilise the environment.
QUOTE OF THE WEEK
"The EU needs positive stories. The Energy Union is a positive EU story. A story of economic modernisation, of future-proof investment, of EU global leadership."
- Maroš Šefčovič, the Commission's VP, at the launch of the second State of the Energy Union report, 1st of February.
IN OTHER NEWS
  • Making the best of the European single market: Now more than ever, the EU needs to address concerns about the significant decline in productivity growth and the increasing perception of unfairness. Completing the single market would unlock the EU's growth potential. However, stimulation of growth should be complemented by policies that empower member states to fight inequality.
  • ESMA calls for share class transparency in Ucits funds: The European Securities and Markets Authority (ESMA) has called for greater transparency among providers of Ucits funds with multiple share classes, highlighting the need to align the objectives of the share classes.
  • Oekom launches ESG impact assessment service: Oekom Research, a German sustainability ratings agency, has expanded its range of services to help investors better understand the environmental, social and governance (ESG) impact of their investment decisions.
  • Future of taxation in the single market: In recent decades, taxation policy in the EU has developed in a complex and often inconsistent way. Although member states still preserve their sovereignty over tax policies, the EU plays an active role in enhancing tax harmonisation to fulfil its ambition of completing the single market. 
  • DEUTSCHE BANK: Amended guidelines for coal financing: The bank has revised its approach to coal financing and amended its guidelines governing coal power and mining. Deutsche Bank and its subsidiaries will not grant new financing for greenfield thermal coal mining and new coal-fired power plant construction. Moreover, the bank will gradually reduce its existing exposure to the thermal coal mining sector.
About Eurosif
 
Eurosif is the leading European association for the promotion and advancement of sustainable and responsible investment across Europe, for the benefit of its members.

Eurosif's purpose is to:

1. Promote best practice in Sustainable and Responsible Investment (SRI) on behalf of its members
2. Lobby for European regulation and legislation that supports the development of SRI
3. Support its members in developing their sustainable and responsible investment business
4. Promote the development of, and collaboration between SIFs across Europe
5. Provide research and analysis on the development and trends within the SRI market across Europe
6. Raise awareness of and increase demand for SRI throughout the European capital markets
 
www.eurosif.org
 
Eurosif’s EU Transparency registration number with the European Commission is 70659452143-78.
Copyright © *|2016|* *|Eurosif- The European Sustainable Investment Forum|*, All rights reserved.

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Telephone: +32 (0)2 743 29 48

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