What's New(s) in ESG: June 11, 2018

June 11, 2018 Dmitriy Ioselevich

Here are the top stories in ESG from the U.S., the EU and around the world.

NEWS:

GIIN: Annual Impact Investor Survey 2018

• The GIIN’s 2018 Annual Impact Investor Survey signals a diverse and dynamic impact investing market. The report findings are based on survey responses from 229 of the world’s leading impact investing organizations, including: fund managers, banks, foundations, development finance institutions, pension funds, insurance companies, and family offices. In total, respondents collectively manage over USD 228 billion in impact investing assets, a figure which serves as the latest best-available ‘floor’ for the size of the impact investing market. (The GIIN: read more, ThinkAdvisor: read more, Institutional Investor: read more, ImpactAlpha: read more)

The New Allure of Sustainable Investing

• Proponents of environmental, social, and governance investing argue that an ESG strategy is not only sound, but can also be a bridge to female clients and millennial heirs. Having such a bridge will be increasingly important as an estimated $30 trillion in assets changes hands over the next few decades. American women are a powerful financial force. Through increased earning power and inheritance from their husbands and parents, they now control more than 50% of the country’s wealth, an amount projected to reach two-thirds by 2030. (Barron’s: read more)

G7 DFIs Announce ‘2X Challenge’ to Mobilize $3 Billion to Invest in the World’s Women

• A major new commitment was announced today by the development finance institutions (DFI) of the G7 to mobilize $3 billion by 2020 for investment in business activities that will benefit women. The 2X Challenge: Financing for Women (‘2X Challenge’), is an ambitious target that calls on DFIs to mobilize their own funds, as well as private capital, to unlock resources that will help advance women as entrepreneurs, as business leaders, as employees and as consumers of products and services that their enhance economic participation. (OPIC: read more, The Globe & Mail: read more)

Big Investors Urge G7 to Step up Climate Action, Shift From Coal

• Institutional investors with $26 trillion in assets under management called on Group of Seven leaders on Monday to phase out the use of coal in power generation to help limit climate change, despite strong opposition from Washington. Government plans to cut greenhouse gas emissions were too weak to limit warming as agreed by world leaders at a Paris summit in 2015, they wrote. U.S. President Donald Trump announced a year ago that he was pulling out of the pact. "The global shift to clean energy is under way, but much more needs to be done by governments," the group of 288 investors wrote in a statement before the G7 summit in Canada on June 8-9. (Reuters: read more, G7: read more, Inside Climate News: read more)

Pope Tells Oil Executives to Act on Climate: ‘There Is No Time to Lose’

• On Saturday, the pope gathered money managers and titans of the world’s biggest oil companies during a closed-door conference at the Vatican and asked them if they had gotten the message. “There is no time to lose,” Francis told them on Saturday. Pressure has been building on oil and gas companies to transition to less polluting forms of energy, with the threat of fossil-fuel divestment sometimes used as a stick. (The New York Times: read more, ABC News: read more, MSN: read more, Axios: read more)  

How ESG Factors Play Into Alternative Investments

• While the integration of environmental, social and governance factors is becoming more prevalent in discussions about institutional investing, there’s more work to do when it comes to alternative investments. In fact, private equity is an asset class in which a firm can make its voice heard in regards to sustainability factors more easily than with others. (Benefits Canada: read more)

Emerging Markets Next on Map for Impact Investing

• Impact investing in emerging markets might be poised for a major growth spurt, as proponents see pension funds and other institutional investors taking an increasing role in a field that largely has been filled by government financial institutions, foundations, and more specialized private equity managers. (Pensions & Investments: read more)

Private Investors in Asia Slow to Integrate Environmental, Social and Governance Factors

• The $1.4 trillion Government Pension Investment Fund of Japan is integrating environmental, social and governance, or ESG, factors into its investment practices, but private investors in Asia are lagging in adopting such risk-management Impact Investing frameworks. Family offices, wealth management teams, private equity and venture capital funds in Asia are largely ignoring ESG approaches, according to a new report from Asian Venture Philanthropy Network and consultancy Oliver Wyman. Only 1% of total managed assets are invested using ESG practices, the report said. (ImpactAlpha: read more)

Billionaire Sean Parker’s Untold Win: How He Eliminated Taxes to Aid Distressed Cities

• "When it actually passed, I didn't really believe it," Parker said onstage Wednesday at the seventh annual Forbes 400 Summit on Philanthropy. "I think at one point Peter Thiel bet me $1 million I couldn't get this done." Parker explained to the 150 mostly billionaire and centi-millionaire attendees at San Francisco's Contemporary Jewish Museum that tucked inside the massive tax bill was a piece of legislation Parker refers to as a "silver lining." For the past 10 years he had been lobbying Congress to implement something called Opportunity Zones, an urban and rural development program that encourages long-term investments in low-income areas through significant tax incentives. (Forbes: read more)

OPINION:

Can Impact Investing Avoid the Failures of Microfinance?

• In my view, the pursuit of scale must be accompanied by a litmus test to make sure we are equally scaling impact, in a way that is both accountable to and transformative for beneficiary communities. Impact investing can learn from the history of microfinance — the provision of debt and other financial services to the poor — an industry that was at a similar stage 15 years ago. In that case, the industry achieved financial scale, while impact at scale was largely left behind. Fortunately, impact investors have the opportunity to think more creatively over the next decade, as long as they learn from past mistakes in microfinance. (Harvard Business Review: read more)