Israeli SRI research provider Greeneye has taken home the country’s Green Globe award, described as the “environmental Oscar equivalent to best film”, in recognition of the firm’s efforts in advancing the cause of responsible investment in the country.
Greeneye is Israel’s first and – to date – only signatory to the Principles for Responsible Investment (PRI), having signed up in 2007.
The firm’s CEO, Noga Levtzion Nadan, says that though Greeneye is in the minority, responsible investment is a “growing arena” that is attracting more and more interest, particularly of late from institutional investors.
Nadan and her colleagues have been promoting RI issues in Israel for some 10 years as what she describes as “the only RI research company” in the country.
The country has typically been on investors’ radar screens over investments in companies linked to the West Bank. In 2014, for example, PGGM, the Dutch pension giant, got caught up in a diplomatic spat over its divestment of five Israeli banks over their links to financing settlements in the disputed territory.
But Greeneye has been working closely with the Israeli Securities Authority (ISA) by providing pre-investment research, developing responsible indices and working with lawmakers to design environmental legislation, and has also served as environmental advisor to the Maala CSR Tel Aviv Stock Exchange Index since enrolling with the PRI.
This led to Greeneye producing a new set of disclosure rules for companies listed on the exchange, which requires corporates to include a section in their annual reports detailing environmental impact management. There was also more work to be done with the Israeli Government’s Ministry of Environment to rank companies according to their compliance based on regulatory enforcement, which also serves as an assessment tool for investors.Israel is in a good spot to publicise its capital markets as a good opportunity for RI, notes Jonathan Porat-Lubensky, vice president of research and business development, because asset owners are starting to demand more. Saving for a pension fund is mandatory in Israel, for one, and the public is beginning to understand the connection between their savings and how they are used to make investments.
“The pressure for institutions to move towards RI is coming from asset owners”, Nadan notes, adding that at present more than 50% of the assets under management by the country’s pension funds and institutions are being invested overseas. “That’s something we are working on – how can we help these managers, give them the right tools to invest responsibly and provide them with enough information so that they can be responsible stewards.”
There are yet to be any more Israeli signatories to the PRI, though Nadan sees this changing soon: “Companies in Israel won’t sign until they are actually doing RI activities or moving towards them. Now we are starting to see things change, we will see that thought process influence more companies.”
The next target for Greeneye’s efforts is to educate a new generation of responsible investors as signalled by joining Israel’s Vigeo Eiris network, which pushes the firm’s corporate sustainability data to asset managers to better educate them. In particular, the research firm shares a methodology for assessing target companies on a number of ESG metrics, including pollution control, management style and commercial risks.
“Otherwise we are working with the Government on building policy, training analysts, and other things”, says Nadan. “We are hoping that not long from now we will see an improvement in the RI outlook for Israel.”