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

Everyone knows that the glass can be either half empty or half full. We tend to alternate our answer depending on what we are going through at a given moment. Reading the news every week, I get the feeling that the push and pull in favour of or against sustainability is as about stable as a house of cards.
 
On a positive note: renewable sources supplied 16.7% of energy consumed in the EU in 2015, which is well within striking distance of the 2020 target for 20%. Given the European Commission's target of at least 27% of energy demand to be met by renewable energy by 2030, a 40% cut in GHG emissions compared to 1990 levels, and at least 27% energy savings compared with the business-as-usual scenario, it seems safe to say that at least policy-wise there are positive signs. Those signs are also very useful ones for investors who intend to capitalise on the renewable energy investment wing and explore new opportunities in clean technologies.  

On the other side of the spectrum though, a report - released during the current UN climate negotiations in Bonn - has highlighted the need for about $50 billion by 2020 to help the victims of climate change who are forced to migrate and lose their homes. Where is the money going to come from? Innovative finance seems to be the answer but of course, that entails entering the realms of taxes (carbon, financial transactions, etc..) still more realistic and concrete options than setting up ad-hoc institutions, but political will to act, and to do so in a timely fashion, is urgently needed.
 
Following this week's meeting of the European Investment Bank's Board of Directors, the
 Juncker Investment Plan is now expected to trigger €194 billion in investments across all 28 Member States. This means over half of the €315 billion target of total investments are due to be mobilised by the European Fund for Strategic Investments (EFSI).

Earlier this week, European MEPs from Economic and Monetary Affairs and Budgets committees backed an extension of the European Fund for Strategic Investments (EFSI). The potential of the Fund, for which the EIB has approved over 200 projects, as part of its Infrastructure and Innovation Window are worth just under €28 billion. Given the policy maker’s focus in further strengthening the environmental and social component of the Fund, should make us confident that more investments in favour of sustainable projects are on their way. Here the glass clearly seems to be half full.
Happy reading,
Flavia Micilotta
- Eurosif's Executive Director
ESG
Unilever's Sustainable Living brands outstrip rest of business (edie) Unilever has continued to present the business case for sustainability, with the consumer goods firm's 'Sustainable Living' brands delivering more than 60% of its growth last year, and growing at twice the rate of the rest of the company.
 
Trump a ‘fillip’ for ESG as inflows outpace other strategies (Fund Strategy) Inflows into ESG funds are growing at a significantly higher rate than traditional funds, as fund houses argue Donald Trump’s climate scepticism is failing to slow momentum and may even be a “fillip” for ethical strategies’ popularity.
 
Sustainability is disruptive talk but wears incremental trousers (GreenBiz) Sustainability is about change. But while we’re good at looking at the biggest picture and thinking long-term, we’re missing what’s going on inside our organizations. 


 

Fossil fuel lobby could be forced to declare interests at UN talks (The Guardian) A push from developing countries to force fossil fuel lobbyists taking part in UN climate talks to declare their conflicts of interest has won a significant battle against resistance from the world’s biggest economies including the European Union, US and Australia.
 
The EU: What happened to climate’s poster child? (EURACTIV) The 28-member European Union, the third-largest emitter of planet-warming greenhouse gases after China and the United States, has long been held up as the poster child of efforts to save Earth’s climate. But after years of taking the lead in talks on a global climate pact, and making tough policy and investment choices to lessen fossil fuel reliance at home, the bloc’s resolve now seems to be flagging, analysts say.
 
Mapping the finance for Paris (Environmental Finance) Ian Callaghan and Tessa Tennant examine who is doing what to help finance the commitments made as part of the Paris Agreement on climate change.

 
Investors
Juncker Plan set to trigger more than EUR 194 billion in investments across all 28 Member States (European Commission midday express) Following this week's meeting of the European Investment Bank's Board of Directors, the Juncker Plan is now expected to trigger EUR 194 billion in investments across all 28 Member States. 
 
Top UK fund manager divests from fossil fuels (The Guardian) One of Britain’s biggest managers of ethical funds is to dump £20m of shares in fossil fuel companies in one of the biggest divestments so far because of climate change.
 

 

Oil and gas industry heeding (some) investor demands on climate risks (Investment & Pensions Europe) The oil and gas industry is responding to demands from investors about their climate change management and disclosure, although investors still have concerns and should step up their engagement, a director of Hermes’ stewardship and engagement arm has said.

Innovative finance needed to find $300 billion a year for climate losses (Eco-Business) With money for action on climate change already in short supply, an estimated $300 billion a year needed to help countries deal with unavoidable climate losses will have to come from innovative new sources, such as a financial transaction tax or carbon tax, researchers say.
 
Finance sector gets guidance on Natural Capital Protocol (Environmental Finance) Guidance has been issued to provide financial institutions with a structured framework to identify, measure and value natural capital within their banking, investment and insurance activities. The publication has been prepared as a draft supplement to the Natural Capital Protocol by the Natural Capital Coalition, the Natural Capital Finance Coalition and VBDO, the Dutch association of sustainability-focused investors.
 
UK public pensions launch investment cost transparency drive (Investment & Pensions Europe) The UK’s local government pension scheme (LGPS) has launched a cost transparency code for asset managers. The £217bn (€253bn) system – which includes 89 pension funds for local authorities in England and Wales – announced the code at a Pensions and Lifetime Savings Association (PLSA) conference today.
 
Significant tailwinds for EU renewables (Investment Europe) The message from the EU in March couldn’t have been clearer. The region is firmly on course to meet its 2020 targets for renewable energy following a doubling in its share of final energy consumption since 2004. Over €1 trillion will need to be invested in renewable energy generation between 2015 and 2030 if we are to meet the proposed 2030 target.

 
Asset Managers
Fidelity launches two low-cost index funds focused on sustainability (The Boston Globe) In a sign of the times for Fidelity Investments, the Boston mutual fund giant on Monday launched two new low-cost index funds, both focused on sustainability, or the stocks of companies that pay attention to the environment, corporate governance, and social issues. Fidelity for years stayed out of so-called “socially responsible” investing, saying it would always pick the most profitable stocks for its investors. But the sustainable trend has now become so ubiquitous that most mainstream firms now have offerings, in part to appeal to millennials.

Actiam bans tobacco from portfolios (Investment Europe) After announcing it was divesting from companies that derive more than 15% of their revenue from coal mining, the Dutch asset manager Actiam is now set to exclude tobacco manufacturers from all portfolios and index funds.



Is your nonfinancial performance revealing the true value of your business to investors? (EY) Analyzes survey responses from 320 senior decision-makers at buy-side investment institutions worldwide to better understand their outlook on the value of integrated reporting in the private sector. The study finds that 92 percent of respondents believe that ESG issues — ranging from climate change to diversity to board effectiveness — have real and quantifiable impact over the long-term; more than 80 percent of respondents believe that generating sustainable returns over time requires a sharper focus on ESG factors. In addition, 91 percent of respondents find integrated reports useful when making an investment decision.
 
FCA targets smaller firms on disclosure failings (FT Financial Adviser) The Financial Conduct Authority has said it will be targeting smaller IFAs to get them to up their game on disclosure. Its suitability review, published on 17 May, found the largest firms, and those which are restricted and network members, were more likely to provide suitable advice and to do acceptable disclosure.

 
QUOTE OF THE WEEK
"We won't have a stronger economy if it is not sustainable, both socially and environmentally.

Pervenche Berès, MEP & Chair of EMPL Committee, welcoming the annual European Financial Stability and Integration Review (EFSIR) report.
Copyright © 2017 Eurosif, All rights reserved.


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