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

Transparency and good ESG reporting practice seem to have become a mantra for all stakeholders involved in investment decisions today. Input is coming from EU regulators, international governing bodies and pension funds. This week, the London Stock Exchange Group had a go at defining recommendations for good practice in ESG reporting and launched a guide, through its Global Sustainable Investment Center. Its goal is to bring coherence in reporting for investors. This is hardly a new issue for stock exchanges. In fact, the set up of the Sustainable Stock Exchange (SSE) Initiative back in 2009 aimed to create a learning platform for stock exchanges, investors, regulators, and companies to adopt best practices in promoting corporate sustainability while encouraging sustainable investing. 
Week after week, we see how positive pressure keeps coming from all sides and yet, according to a recent report by Boston Common Asset Management published today, many banks are falling behind in assessing climate risk while only a minority are integrating the results of these environmental stress tests into their business decisions. Although this news is far from encouraging, according to the same report things are improving, as 82% of surveyed banks implement substantive policy changes related to climate-risk since 2015 and the same percentage of banks have adopted explicit oversight of climate risk at board level.
To quote Mindy Lubber, President of Ceres, 'The standard of best practices is changing and the Bloomberg task force is pushing for that change quite aggressively'.

Finally, if you are planning to send through your feedback to the TCFD consultation, don't forget the deadline is this Sunday 12th of February.

Happy reading,

Flavia Micilotta
- Eurosif's Executive Director
STILL ON THE RISE
  • London Stock Exchange Group Launches Guidance For ESG: London Stock Exchange Group issued guidance, through its Global Sustainable Investment Centre, setting out recommendations for good practice in Environmental, Social and Governance (ESG) reporting. The global guide responds to demand from investors for a more consistent approach to ESG reporting, which is now a core part of the investment decision process. 
  • Pension giant files five environmental shareholder resolutions:  A US-based pension fund has filed five environmentally-focused shareholder resolutions with its portfolio companies. The California State Teachers' Retirement System (CalSTRS) filed four of the resolutions with oil and gas companies, Gulfport Energy, WPX Energy, Cimarex Energy and Black Hills. They call for their management to issue a report detailing how the company is monitoring and managing its methane emissions. The fifth resolution has been filed with drinks manufacturer Monster Beverage Company and again targets disclosure, this time calling for an analysis on water risk.
  • Dutch cabinet seeks greater supervision for large company schemes: The Dutch cabinet wants to make it mandatory for larger company pension funds to have permanent internal supervision, rather than an annual check by a ‘visitation’ committee.
  • Stress Test: How banks are looking at climate risk: According to a recent report by Boston Common Asset Management, many banks are falling behind when it comes to assessing climate risk and only a few banks are performing environmental "stress tests."The report shows, however, that banks have improved in adopting climate strategies, and 23 out of the 28 banks surveyed implemented substantive policy changes related to climate-risk since 2015.
  • Premiums 4 Good: redefining the role of insurance in society: An initiative from QBE allows the insurer's customers to opt to have up to 25% of their premiums invested responsibly. Tom Herbstein and Andrew Voysey explain why the initiative is an important development.
  • Cambridge pushes to become largest University to divest from fossil fuels: Cambridge University's governing body, Regent House, has passed a motion to divest its £5.8 billion ($7.2 billion) endowment fund from fossil fuels. If successful Cambridge would be the largest in the world to do so.
AND YET SOME DOUBTS
  • Energy companies 'underestimate' low-carbon potential: Energy companies are underestimating the growth of solar photovoltaic (PV) and electronic vehicles in their market outlooks, according to a report. Expect the Unexpected: The Disruptive Power of Low-carbon Technology claims the fossil fuel industry is not sufficiently accounting for these two technologies’ cost trends in their scenario analysis.
  • Data busts the myth of cheap fossil fuels: Carbon Tracker Initiative has released a study that might surprise the general public. The global study, "End of the Load for Coal and Gas?" (PDF), found renewable energy is now more cost-effective than fossil fuels. These data conflict with conventional wisdom that coal and gas are the cheapest fuels available.
QUOTE OF THE WEEK
"Life punishes those who come late."
 
- Valdis Dombrovskis, the Commission's VP for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, in a keynote speech at the High-level Diner Debate of the Long-Term Investment intergroup on the 7th of February.
WEEKEND READING
  • McKinsey Study: Companies Focused on the Short Term Lag Peers, Drag Down GDP: New research, led by a team from McKinsey Global Institute in cooperation with FCLT Global, found that companies that operate with a true long-term mindset have consistently outperformed their industry peers since 2001 across almost every financial measure that matters.
  • Thun Group releases discussion paper on banks’ human rights responsibilities: The Thun Group, an informal banking consortium focused on how the sector should adopt the UN Guiding Principles on Business and Human Rights, has released a discussion paper stating that banks are liable for “adverse human rights impacts caused or contributed in their own activities”, but not those they finance. 
  • Nonfinancial risk today: Getting risk and the business aligned: Leading companies have established frameworks for risk and control management (R&CM) that help management balance the risk-management imperatives and the needs of the business—in other words, an approach to risk that accurately reflects the business context, while ensuring that risk and compliance management is embedded across the entire organization. This means going beyond implementing yet another checklist or improving the links between business units. It requires an explicit management dialogue about nonfinancial risk—about where it can occur and how it is being mitigated—and extends to questioning where the cost of control may be too high, given the value at stake.
  • Gender equality: time to close the gap: It would take another 70 years for women to earn the same as men with the current pace of progress, according to the European Commission. Europe might be one of the world's leaders when it comes to gender equality, but in the EU women still get on average lower salaries and pensions and continue to be underrepresented in political and economic positions of power and decision-making. A report adopted by the women's rights committee today urges the EU to step up its efforts.
  • Church investors warn FTSE 350 chiefs on pay: The Church of England is among a group of major institutional investors warning FTSE 350 they will vote down excessive executive pay packages at 2017 AGMs. The Church Investors Group, which represents £17bn of assets, has written to members of the FTSE index outlining their voting policy for the year, which also addresses board diversity, the independence of auditors and wider engagement concerns.
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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