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Where do you fall on the spectrum of capital?

Issue #7: A weekly update on responsible investment and business doing good

11,000 scientists from 153 countries declared a climate emergency on November 5th.

“We declare clearly and unequivocally that planet Earth is facing a climate emergency. To secure a sustainable future, we must change how we live. Economic and population growth are among the most important drivers of increases in CO2 emissions from fossil fuel combustion. We need bold and drastic transformations regarding economic and population policies. Mitigating and adapting to climate change while honoring the diversity of humans entails major transformations in the ways our global society functions and interacts with natural ecosystems.”

The statement was published in the Journal BioScience. In the statement, the authors outlined 6 areas where steps can be taken by governments and businesses to lessen the effect of climate change.

These steps look at:

  • Energy
  • Short-lived pollutants
  • Nature
  • Food
  • Economy
  • Population

Top stories this week

Apple Sells Jumbo 2 Billion-Euro Green Bond in Europe Debut

Apple joined Europe’s booming market for green bonds with one of the largest-ever corporate issues of environmentally-friendly debt. Apple sold 2 billion euros ($2.2 billion) of six and 12-year bonds last Thursday, November 7th. It will use proceeds to reduce its carbon footprint, use greener materials in its products and conserve resources. Bloomberg.

Asset management: how safe is your job?

The asset management industry is at an inflection point driven by passives, fee pressure and technology. Increased interest in responsible investment is also driving change in the industry. A new basket of sustainability focused roles at asset management firms have emerged including titles such as: “Head of Responsible Capitalism” or “Head of Sustainable Credit.” Financial Times.

Dutch pension funds set to pivot from passive to active management

Large dutch pension funds are preparing to restructure their portfolios as they commit to ambitious sustainable investment goals that require a more active strategy. This follows July’s announcement where nine Dutch pensions funds managing €800bn committed to reducing their carbon footprint. Financial Times.

Are your investments damaging the world?

In another move from top MBA programs to increase their sustainable investment curriculum, London Business School has founded their first Student Impact Investment Fund. The aim is that it will be profitable and that all financial returns will be reinvested into more social enterprises. London Business School.

Responsible investment might become the new standard

Asset management company NN Investment Partners conducted a comprehensive survey of professional investors on responsible investment. The survey indicates a sharp increase in the demand for responsible investment solutions driven by younger investors. Born2Invest.

Event Highlight of the Week

Last week, our team joined London Business School and AQR Asset Management for Insight Summit 2019: The Future of Investing: ESG & New Frontiers. The event featured hours of insightful discussion about the evolution of ESG in the wider investment management space. Some highlights include:

  • Dame Elizabeth Corley from Allianz Global Investors sharing about the Spectrum of Capital from Financial-only through to Impact-only.

Source: The Bridges Spectrum of Capital (November 2015)

  • Nobel laureate Oliver Hart, Professor of Economics at Harvard University discussing The Business Round Table in the US. 181 CEOs have adopted the position that companies should not only operate in the interest of shareholders, they should also act on behalf of stakeholders.
  • Principles of Responsible Investing (PRI) CEO Fiona Reynolds, shared key policy forecasts around: Coal phase-outs, ICE sales ban, carbon pricing, CCS and industry decarbonisation, zero carbon power, energy efficiency, land use-based GHG removal and agriculture.
  • Meaghan Muldoon, Managing Director at BlackRock, EMEA Head of Sustainable Investing discussing BlackRock’s analysis of ESG investments by Value and Values.

Value X Values

Value = Fiduciary responsibility, material ESG Insights, ESG integration into investment decision, performance impact: neutral to positive.
Values = Client-driven, moral and ethical considerations, exclusionary screens, performance impact: neutral to negative.

Business Highlight of the Week

Our business highlight of the week is Invide Labs. Invide Labs is an invite only developer community from India. Their mission is to support developer talent in rural communities to connect with corporates. Via a series of human and computer based tests, the firm assesses technical talent and matchs that talent with companies.

We interviewed their founder, Pradeep Sharma. Pradeep discusses why he is passionate about providing opportunities to talent outside of mega cities. Read the full interview here.

Research Highlight of the Week

Sustainable Investing Capabilities of Private Banks

The Center for Sustainable Finance and Private Wealth conducted research from late 2018 to early 2019 on the sustainable investing capabilities of private banks. The key findings of the report include:

Sustainable investing offerings improve.

In comparison to 2018, banks’ offerings improved in range and depth. The average number of dedicated SI funds of participating banks rose from 30 to 58. Almost all banks have a dedicated discretionary SI mandate, and ESG integration has developed and become more refined.

Interest in active ownership increases — but is far from what it should be.

Shareholder voting and engagement is increasingly becoming the norm within the investment industry. Despite this trend, the report found insufficient focus from the banks in selecting fund managers that engage and vote, especially on sustainability factors. The report highlighted engagement as a mechanism through which investors can demonstrate measurable impact, especially at scale.

Clients’ expectations on SI services remain unmet.

The training and support of client-facing employees remain limited, and reporting on sustainability beyond financial measures underdeveloped in more than half of the participating banks. In most cases, sustainability reporting was limited to a simple look through ESG ratings.

EU Action Plan on Financing Sustainable Growth will impact the entire financial industry — private banks included.

Aspects gaining weight and posing potential challenges include disclosing climate risks to clients and asking clients about the ESG preferences and integrating these into investment processes.

Private banks fail to proactively implement changes to meet international environmental goals.

The focus of private banks tends to be on the assessment of investment portfolio climate risk exposure rather than alignment with international climate goals. Banks describe going beyond portfolio risk assessment as complex and challenging.

You can read this article where Taeun Kwon, the lead researcher, shares her insights and compares the findings to the ones from 2018. Read the full report.

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Nossa Capital

Nossa Capital

We are an ESG reporting and data management technology company.