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What's New(s) in ESG: May 28, 2018

Dmitriy Ioselevich

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


ESG Investing is Missing From Most US Retirement Plans: GAO

  • The U.S. Government Accountability Office reports that despite the growing popularity of ESG factors in investments, few retirement funds in the U.S., unlike Europe, incorporate those factors in their holdings. One reason for this, according to the GAO, is the lack of clear guidance from the Labor Department. For example, Labor hasn’t addressed whether defined contribution plans can incorporate ESG factors in their qualified default investment alternatives and still qualify for certain legal protections under the Employee Retirement Income Security Act. (ThinkAdvisor: read more) (Pensions & Investments: read more) (Forbes: read more)

Hedge Funds Boost ‘Responsible Investment’ Strategy

  • Hedge fund managers have been called many names over the years, but “responsible investor” is not one of them — until now. Hedge funds have committed a little more than 10 per cent of their assets to strategies that follow responsible investment principles, with some allocating up to half their funds in this way, according to research by the Alternative Investment Management Association, a lobby group, and the Cayman Alternative Investment Summit, organisers of an industry conference. (Financial Times: read more, AIMA: read more)

UN Responsible Investing Body Threatens to Kick Out Laggards

  • One in 10 of the signatories to a UN-backed responsible investment initiative have been placed on a watchlist for failing to show they are taking their commitment seriously enough, amid wider criticism of the body itself by investors. The Principles for Responsible Investment will put 185 of its 1,967 signatories on notice in the next fortnight after an annual audit suggested they had not demonstrated a minimum standard of responsible investment activity. The body did not disclose the identities of those on the list but said it included members of various sizes and across all regions. Just under a fifth of those falling short are asset owners, with most of the rest being asset managers. (Financial Times: read more)

Trump’s Former Climate Adviser Leads Industry’s Climate Pushback

  • George David Banks, who advised Trump on international environment policy, is taking the helm of a new multi-million dollar industry coalition to push back against the practice of proxy voting on the issue of climate change. (PRNewswire: read more) (The Hill: read more) (Axios: read more) (Institutional Investor: read more) (Bloomberg: read more) (Responsible Investor: read more) (Ceres: read more) (Forbes: read more) (RealClearMarkets: read more) (Forbes: read more)

ESG: What Institutional Investors are Saying About Sustainable Investing

  • Professor Robert Eccles of the Saïd Business School shared results from his recent survey of 582 institutional investors in partnership with State Street's Center for Applied Research, at our recent ESG Investing Conference in Stockholm. His survey found that the most common reason why institutional investors were integrating ESG factors were because they believed it helps "foster a long-term investment mindset" and "cultivate better investment practices." Yet there continues to be a perception - reality gap among some investors, which is holding them back from embracing ESG. The CFA Institute's 2017 survey asked investors who do not consider ESG factors why they did not. Common responses were "lack of demand" from clients or beneficiaries, skepticism that they add value and concern that taking ESG into account may be "inconsistent with fiduciary duty." (Neuberger Berman: read more)

World’s Wealthy Investing More in Companies That Care

  • A global investment club for the wealthy whose members aim to bring about social or environmental change as well as making a profit has grown by more than $1 billion in two years, according to a report. Toniic said its members now have a combined $2.8 billion in so-called impact investments - capital placed with companies and organizations that can demonstrate they benefit society or the environment - up from $1.65 billion in 2016. Members, who include families and foundations as well as wealthy individuals, said the industry was becoming more mainstream. (Reuters: read more)

How Women and Men Approach Impact Investing (Study)

  • Impact investing is an example of philanthropy’s innovation and elasticity, but there is also concern that impact investing may displace more traditional charitable giving. This research highlights the role gender plays in that discussion, and raises important considerations for fundraisers, wealth advisors, donors and philanthropists alike. (IUPUI: read more)

European Commission Unveils Sustainable Finance Legislative Proposals

  • Asset managers and other institutional investors who claim to have sustainability goals will need to show how their investments are aligned with these objectives under new rules proposed by the European Commission today. The information they would have to disclose would include the sustainability or climate impact of their products and portfolios. The requirements are part of a package of legislative proposals the Commission had promised when presenting its sustainable finance action plan earlier this year, aimed at harnessing the capital markets to help implement the international agreement on climate change that was reached in Paris in 2015. (IPE: read more) (P&I: read more) (European Commission: read more)

DOL’s ESG Investing Bulletin Raises Important Questions for Plan Fiduciaries

  • According to an analysis of the new DOL bulletin shared by Northern Trust Asset Management, the DOL has confirmed once again that pension managers can and should feel comfortable using ESG factors as an input in evaluating potential risk and financial return. Still, given some of the strong language used to warn retirement plan fiduciaries against placing other interests ahead of the financial benefit of their participants, the bulletin has created some confusion. (Plan Sponsor: read more)


The Promise of Opportunity Zones

  • As I prepare to testify on Opportunity Zones to the Joint Economic Committee, I am struck by the incredible benefits that new private investments could bring to distressed communities nationwide. A few common-sense, nonpartisan public policies will help this new tax benefit achieve its goals: increase opportunity for people across the country, provide direct and sustained community benefits, and foster inclusive economic growth. (The Hill: read more)

Taxpayers Shouldn’t Foot Bill for Climate Change Alone

  • On Thursday, May 24th, the U.S. District Court for the Northern District of California heard arguments on a motion to dismiss a pioneering lawsuit filed by San Francisco and Oakland against oil and gas producers like ExxonMobil, Shell, and others, seeking to recover the massive costs of adapting to climate change. If the case survives and moves to trial, it would be the first to do so, and would represent a watershed moment for climate liability lawsuits which have been filed by 13 localities across the country. (The Hill: read more)

The Third Stage of Corporate Governance

  • The recent announcements from major institutional investors about issues such as gender diversity and climate change seem like reactions to social ills.  But they are not unmoored from investing. They are logical expressions of a relatively newly empowered, third phase of corporate governance that tries to improve risk-adjusted return through the use of systems-level risk mitigation. (The CLS Blue Sky Blog: read more)

The SDGs are an Opportunity, Not Just a Challenge

  • The aims of the United Nations’ Sustainable Development Goals (SDGs) are ambitious: to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. Taken together, they provide a wide-ranging framework to help us tackle the most pressing social and environmental challenges of our time. Achieving these goals will be difficult and expensive. The UN itself estimates that the total cost could be about $11.5 trillion, including $1.4 trillion a year just to achieve SDG 1 (ending poverty for 700 million people). For business, there is a clear imperative to play a part in this effort; not least because today’s consumers, employees and investors increasingly expect it. (Forbes: read more)

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