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Source: Governance & Accountability Institute

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December 22, 2016

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The NYT Brings Us Encouraging News in the Swelter of Negative Reports as Sustainability Advocates Consider Possible Changes of Course in the New Year for U.S. Federal Government Policies

Leading Business readership publication focuses attention on the dramatic rise of ESG factors in investing over the past five years in wrap up story...

If you have not yet seen the story by Randall J. Smith that appeared in The New York Times Business Section on December 14th, we urge you to read it now, and to share it with your colleagues. Especially those occupants of the C-suite, board room, investor relations office -- this will help to make the important case for ESG / sustainable investing. It's our Top Story this week and the headline puts things in focus: investors are sharpening their focus on "S" and "E" risks to stocks.

This is a front page, Business Section [Deal Book] wrap-up feature that shares news, commentary and important developments at such organizations as MSCI, Vanguard, TIAA-CREF, Goldman Sachs, Perella Weinberg Partners, Rockefeller Brothers Fund, US SIF, Heron Foundation, Parnassus and other leaders in sustainable investing.

"Investing based on ESG factors has mushroomed in recent years," author Randall Smith explains, "driven in part by big pension funds and European money managers, trying new ways to evaluate potential investments."  The article helps those not yet familiar with sustainable investing to understand the increasing momentum in "sustainable" or "ESG" or "sustainable, responsible & impact" investing.

The organization MSCI is in sharp focus in the piece, with Linda-Eling Lee (the firm's able head of global research) interviewed on the company's approach to ESG research, ratings, equities indexes, and related work.  At MSCI, the assets managed using ESG approaches is now at $8 billion-plus -- that's triple the 2010 level.  ESG-related risks and opportunities are being closely evaluated as MSCI looks at publicly-traded companies, and as explained by the MSCI head of global research, 6,500 companies are followed by 150 analysts working in 14 global offices.

The recent US SIF survey results are heralded -- $8.1 trillion in professionally-managed AUM assets in the U.S.A. are determined using ESG factors in analysis and portfolio management (the big driver is client demand).  The TIAA-CREF Social Choice Equity Fund is at $2.3 billion in assets under management -- doubling in the past five years.  MSCI's ESG indexes are at $3 billion -- tripling over the past three years.  Vanguard's social index fund is at $2.4 billion -- quadrupling since 2011.  There's a new CalSTRS low-carbon portfolio (using an MSCI index) set at $2.5 billion. 

This article in the Business Section of a leading American daily newspaper provides an encouraging -- and very timely! -- look at the momentum that's been building the capital markets signaling mainstream capital markets uptake and dramatic growth in adoption of ESG strategies and approaches for asset owners and asset managers. 

As we suggest, it is a wonderful wrap-up of top-line developments in sustainable investing that also underscores the importance of corporate sustainability to individual institutional investors -- and should help to make the investing and business cases for top management.

This news article is of course timely as corporate sustainability and sustainable investing professionals consider the potential changes on the horizon with a new administration and the new congress coming to town with a very different agenda - at least what has been publicly proclaimed to date.  There is clearly momentum in the capital markets for consideration of corporate ESG factors as investment dollars are being allocated.  This is good news heading into 2017 and the probable headwinds sustainability professionals will encounter.

Top Story

Investors Sharpen Focus on Social and Environmental Risks to Stocks
(December 14, 2016)
Source: New York Times - Investing based on so-called E.S.G. factors has mushroomed in recent years, driven in part by big pension funds and European money managers that are trying new ways to evaluate potential investments. The idea has changed over the last three decades from managers’ simple exclusion from their portfolios of “sin stocks” such as tobacco, alcohol and firearms makers to incorporation of E.S.G. analysis into their stock and bond picks.


Sustainability in Focus

Source: Sustainable Brands - Silicon Valley-based firms are often praised for innovation, but how do they measure up when it comes to sustainability efforts? The Centre for Sustainability and Excellence (CSE) recently sought to answer this question, and...

Source: GreenBiz - I just inked a two-year lease on a BMW i3 as part of my ongoing crusade to actually do the things we’re asking Americans to do to be more sustainable. Here’s what I’ve learned — and what I hope the automotive industry will...

Trump, carbon neutrality and the next phase of business sustainability
(Monday - December 12, 2016)
Source: The Conversation - Solutions to climate change require new types of aggressive thinking. While global treaties to reduce greenhouse gas emissions are important, they are not enough. Eventually society has to go carbon neutral, and then it has to go...

Source: Shopfloor.org - Leigh Fibers, based in Wellford, South Carolina, is a nearly 100-year-old family owned business that uses sustainable product engineering to create branded products and specialty fibers that provide unique solutions to specific...

The challenges of diversity in sustainability leadership
(Tuesday - December 13, 2016)
Source: GreenBiz - The goal of environmental stewardship is to preserve the diversity of ecosystems, cultures and natural resources. Organizations pledging to protect the planet’s resources should naturally reflect the diversity needed to solve the...

How Companies Can Combine Sustainability And Customer Experience
(Tuesday - December 13, 2016)
Source: Customer Think - So all in all, the right way to go about it is to give the people an incentive to go for the sustainable choices.

5 Ways Small Business Can Increase Revenue Through Sustainable Solutions
(Tuesday - December 13, 2016)
Source: Equities - Sustainability is one of the top issues facing today’s businesses. It may seem daunting and expensive to start prioritizing green initiatives, but it’s actually an exciting opportunity for extra revenue! Many companies are...

The 4 pillars of a corporate sustainability program
(Wednesday - December 14, 2016)
Source: GreenBiz - Yet while corporate sustainability has evolved significantly over recent decades, there’s no handbook on how best to structure a program. As a result, companies looking to embrace the triple bottom line may feel they are building...

BMW Brilliance leads car industry in sustainability
(Thursday - December 15, 2016)
Source: Chine Daily - A major contributor to China's sustainability in the auto market, BMW Brilliance Automotive Ltd is looking to protect the local environment and control emissions by adopting greener technology, said senior executives of the...

Sustainability: Earth, the long view
(Thursday - December 15, 2016)
Source: Nature - For Grinspoon, the fact that we have become so numerous, moved so many species from continent to continent, changed the chemical composition of the soil and rerouted the planet's water does not call for a retreat, but rather for...

Source: Farm Bureau News - At the core of sustainability trends and continuous improvement in agriculture are millions of individual decisions made by farmers and land managers each day. Field to Market: The Alliance for Sustainable Agriculture recently...

Supply Chain Sustainability: The New Green Lean Money Machine
(Thursday - December 15, 2016)
Source: Forbes - Frankly, if you’re getting the idea that sustainability is becoming a compulsory part of the new business curriculum, you’d probably grade an “A.”

ESG Issues & Players

Top 10 Issues That Will Frame Corporate Responsibility In 2017
(Monday - December 12, 2016)
Source: The Institute for Human Rights and Business (IHRB) - News Release - The Institute for Human Rights and Business (IHRB), a global think tank, today published its eighth annual “Top 10” list of business and human rights issues for the coming year.

Atmospheric levels of methane, a powerful greenhouse gas, are spiking, scientists report
(Monday - December 12, 2016)
Source: Washington Post - Atmospheric concentrations of this gas(methane) — which causes much sharper short-term warming, but whose effects fade far more quickly than carbon dioxide — are spiking, a team of scientists reports in an analysis published...

The Top 10 Business Risks of 2017
(Tuesday - December 13, 2016)
Source: CPA Practice Adviser - Recent global uncertainties and their potential effects on businesses are top of mind for board members and executive management teams as they assess their risks for 2017, according to the results of the fifth annual survey of...

As U.S. Shale Seeps Into Biggest Oil Market, Saudis Hone Defense
(Tuesday - December 13, 2016)
Source: Bloomberg - As Saudi Arabia goes on a shock and awe attack to curb a global oil glut, it’s also playing defense to hold on to its most prized customers.

EPA finds fracking can impact drinking water, shifts emphasis from earlier report to focus on risks
(Wednesday - December 14, 2016)
Source: CNBC - The Environmental Protection Agency's final report on a five-year study finds hydraulic fracturing can in fact contaminate drinking water in some cases.

Is Climate Change Shrinking Glaciers? Likelihood Is 99 Percent
(Thursday - December 15, 2016)
Source: Live Science - And a new study found with 99 percent certainty that climate change is driving their retreat, or shrinkage, with the likelihood of any other factor causing such dramatic change estimated at 1 in 100,000, the researchers found.
 

Asset Managers, US Pension Funds, Sovereign Wealth Funds

As Brexit approaches, signs of a gathering economic storm for Britain
(Wednesday - December 14, 2016)
Source: Washington Post - Nearly six months after the vote, the shape of Britain’s post-Brexit relationship with Europe remains a mystery. Prime Minister Theresa May has declined to say exactly what she wants from the two-year negotiations she has said...

A sovereign wealth fund for India'
(Wednesday - December 14, 2016) Associated Profiles : Temasek Holdings
Source: The Hindu Business Line - India's SWF may be structured along the line of Singapore's Temasek Holdings, which invests its multiple asset classes across Asia, Australia and New Zealand, Europe...

5 Signs Showing Sovereign Funds Gearing for Spending in 2017
(Monday - December 12, 2016) Associated Profiles : Abu Dhabi Investment Authority
Source:   swfinstitute.org - Athene was backed by Apollo Global Management LLC, but also had investors such as the Teacher Retirement System of Texas (TRS) and Cayman Islands-based Procific, a sovereign wealth enterprise of the...

A huge public pension fund faces an agonizing decision: Should it reinvest in tobacco'
(Thursday - December 15, 2016) Associated Profiles : California Public Employees’ Retirement System (CalPERS)
Source:  Los Angeles Times - Sixteen years ago, CalPERS, the nation's largest public pension fund, vaulted to the forefront of the social investing movement by voting to dump its $671 million in tobacco stocks....


Trump's Transition -- And Potential
Impacts on Sustainability

'I'm very open-minded on environment,' Trump says
(Monday - December 12, 2016)
Source: Politico - President-elect Donald Trump told “Fox News Sunday” that he is “open-minded” on environmental issues, suggesting that he could greenlight controversial pipeline projects halted by the current administration and at the same time...

Source: Salon - In selecting Exxon Mobil CEO Rex Tillerson as his secretary of state, President-elect Donald Trump is making the same bet he asked voters to make on him: that a track record of business accomplishment will translate...

Senate fight looms after Trump taps Exxon CEO as top U.S. diplomat
(Wednesday - December 14, 2016)
Source: Reuters - President-elect Donald Trump named the head of Exxon Mobil Corp, Rex Tillerson, as his choice for U.S. secretary of state on Tuesday and won backing from some Republican foreign policy figures ahead of a possible Senate fight...

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