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What's New(s) in ESG: June 18, 2018

Dmitriy Ioselevich

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


Asset Managers Engage in ESG ‘War for Talent’

  • Competition for employees familiar with environmental, social and governance issues is increasing as asset managers scramble to gain reputations as responsible investors. Rivalry between candidates who want ESG roles is also sharper as interest in responsible investment surges. UBS Asset Management, the SFr792bn (€685bn) Swiss manager, received 6,200 applications for fewer than 25 jobs when it set up its responsible investment team in 2015. (Financial Times: read more)

Asset Managers: ESG or Bust

  • Two-thirds of respondents to Aon’s first survey of global investors on responsible investing considered environmental, social, and governance factors to be important to their organizations; 40 percent have policies in place, and another 14 percent are in the process of implementing one. Consulting firm Aon analyzed responses from 223 institutional investors, including endowments, foundations, and corporate and public pension plans. According to the firm, interest from millennials and women have driven the trend. Millennials represent the majority of the work force, and want investments consistent with their values. (Institutional Investor: read more, Pensions & Investments: read more, Aon: read more)

New Goldman Sachs Fund Will Track Paul Tudor Jones’s Feel-Good Companies

  • On Wednesday, Goldman Sachs, using Mr. Jones’s metrics, will introduce a new exchange-traded fund as part of series of social impact efforts by the firm. The fund is a feel-good selection of Russell 1000 companies, tracking the top 50 percent of those in each industry based on Just Capital’s publicly available model, which scores businesses using a complex formula related to workers, customers, products, environment, jobs, communities and management. Only 6 percent of the calculation of the index relates to how well a company provides investor return. (New York Times: read more, Business Insider: read more, CNBC: read more, Investopedia: read more, Yahoo! Finance: read more)

BlackRock, Wells Fargo Are Betting on Ethical Investing Funds for 401(k)s

  • Doing good and saving for retirement may soon get easier. BlackRock Inc. and Wells Fargo & Co. are developing their first-ever ESG funds for retirement savings plans, seeking to tap into growing demand for ethical investing. Both firms plan to create a series of target-date funds with this focus, according to people familiar with the matter, with BlackRock aiming to debut some later this year. The asset managers are betting that a surge in interest in environmental, social or governance investing will carry through to 401(k)s, where there are few such options. (Bloomberg: read more)

A Champion of Responsible Investing Takes On the Gun Industry

  • John Streur, the chief executive of the investment firm Calvert Research & Management, remembers exactly where he was when he learned of the shooting at Marjory Stoneman Douglas High School in Parkland, Fla. Mr. Streur recalled standing in New York’s Pennsylvania Station on the afternoon of Feb. 14, squinting at his iPhone in disbelief as he read that 17 teenagers and teachers had been shot dead, he said recently. As chief of one of the world’s biggest responsible investing mutual funds, Mr. Streur was an activist on issues including climate change and equality, yet he said he felt powerless when it came to gun violence. Now, he wanted to see if he could use Calvert’s financial clout to change the way guns — most notably the AR-15 military-style assault rifle used in the massacre and weapons like it — were sold in the United States. (The New York Times: read more)

Impact Investments Made by More Than 70% of Millennials and Gen Xers

  • A large majority of affluent millennials (77%) and Generation X investors (72%) have made an impact investment, according to a study from Fidelity Charitable, an independent public charity. This compares with just 30% of affluent donors from the baby boomers and older generations, according to the study, "Impact Investing: A Tipping Point?" (Investment News: read more, Barron’s: read more, Fidelity: read more)

Market Analysts Find Green Economy Market Cap Matches Fossil Fuel Sector

  • The growing body of work detailing how green investments tend to outperform the market has gotten a little larger with the release of a new report from FTSE Russell. The market analysts last week published a study titled "Investing in the Global Green Economy: Busting Common Myths (PDF)," which explores the current scale and performance of green economy investments. It concluded that while the green economy previously has been regarded as a "loose concept rather than a defined, investable, industrial system," investors are wrong to assume it is a limited, small cap-dominated market where they have to "give up performance in exchange for environmental benefits." (GreenBiz: read more, BusinessGreen: read more, FTSE Russell: read more)

U.K Government Pledges Support to Expand Impact Investing

  • The U.K. government will work with the financial services industry to help make impact investing easier, including potential changes to pension fund law. The government published a response to an industry-led report released in November, which made five recommendations aimed at enabling investment to be better aligned with investor values. In its response Tuesday, the government said it was committed to working with the investment and savings industries to support the launch of further social impact investment strategies and encouraging more investments into relevant areas, such as opportunities that address social challenges. (Pensions & Investments: read more, Third Sector: read more, Gov.UK: read more)

The Main Street Investors Coalition is an Industry-Funded Effort to Cut Off Shareholder Oversight

  • Here’s a tip from a long-time Washington DC lawyer: the more folksy or patriotic the name of the group, the more likely that it is funded by people who are promoting exactly the opposite of what it is trying to pretend to be. And thus we have the Main Street Investors Coalition, which bills itself as “bring[ing] together groups and individuals who have an interest in amplifying the voice of America’s retail investor community.” (Harvard Law School – Corporate Governance: read more)

Impact Investors Mobilize Around Inclusive Opportunity Zones

  • The passage of the Investing in Opportunity Act created equal parts enthusiasm and anxiety. Now, worry has, at least in part, begun to shift toward a mobilization of resources, networks and identified best practices for effective community investment. The provision of last year’s U.S. tax bill lets investors defer and even reduce capital gains taxes by redeploying those gains into investment funds targeting underinvested U.S. communities. The Rockefeller Foundation’s Raj Shah said at last month’s Mission Investors Exchange conference that an influx of outside capital could lead to “not lifting up those that this was intended to lift up.” The Kresge Foundation’s Rip Rapson added, “Think of how easy it is for this to go sideways.” (ImpactAlpha: read more)


Why Understanding The Financial Supply Chain Is The Key To Moving More Impact Capital

  • In 2013 an ambitious new company called Varthana was founded in response to one of India’s most intractable problems: education.  India’s school system has the distinction of being the world’s largest and also one of the world’s worst; a 2017 article in the Economist described the quality of India’s schools as “a scandal.” There was just one problem – no bank would lend them money. Private schools for low-income families? Too risky. Too specialized. No precedent. Not a fit with existing product lines like small business or real estate lending. Too much work. Thankfully, there is a world of finance that exists precisely to fund businesses like Varthana: impact investing. (Forbes: read more)

Young, Female and Smarter Than Their Bankers

  • The private bankers who serve Asia’s very wealthy have a new challenge on their hands. It’s young, female and smarter than they are. The old model of pushing IPOs or junk bonds to clients who spend more time golfing than behind a desk doesn’t cut it anymore. Venerable financial institutions including HSBC Holdings Plc and UBS Group AG are being forced to lift their game to serve customers who want sophisticated advice about everything from cross-border opportunities to impact investing. A survey commissioned by RBC Wealth Management that canvassed 1,051 individuals globally with at least $1 million in assets found that 86 percent of the younger generation in Asia believed they could tackle social issues through investing versus 67 percent in the West. (MSN: read more)

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