RI Briefing, January 25: Royal Bank of Canada in social and environmental initiative

RI’s regular review of responsible investing developments

The Royal Bank of Canada, the major Canadian banking group, has announced a total of C$20m (€15.2m) in commitments to a new social and environmental initiative. It comprises a new $10m fund called the RBC Impact Fund and a $10m investment by the RBC Foundation into Socially Responsible Investment (SRI) funds. “We’ve been waiting for the right moment to launch a program of this nature, and the moment is now,” said Gordon Nixon, RBC’s president and CEO. Announcement

Campaign groups FairPensions and ASH (Action on Smoking and Health) have released a report – Local Authority pension funds and investments in the tobacco industry – querying the idea that pension funds are ‘duty bound’ to invest in tobacco. The report argues there are “misconceptions” about investors’ fiduciary duty to maximise returns. It follows research showing that there is £1.3bn (€1.6bn) of UK pension fund investment in tobacco.

Banking giant UBS will now integrate data from research firm RepRisk to help it identify environmental and social risks and manage due diligence. RepRisk said UBS will use the information “on a global scale for client vetting within all divisions, including Wealth Management and Swiss Bank, Global Asset Management and the Investment Bank”. The data will be used to screen potential new clients and suppliers.

The Long Finance group of futurists has released a study plotting possible future scenarios for the global financial services market. The 70-page report, called “In Safe Hands? The Future of Financial Services”, is by Gill Ringland, CEO of consulting firm SAMI. Link

The five New York City Pension Funds are to expand their commitment to minority and women investment managers by $500m – on top of the $6bn already under management by such firms. The move was “another step in ensuring that minority and women-owned firms have more opportunities to compete for City business,” said New York City Comptroller Liu.

Triodos Bank has raised £2m of funding for social projects in the Merseyside region of the UK via a Social Impact Bond from a syndicate of leading UK social investors, including the Big Society Investment Fund. Triodos and the Greater Merseyside Connexions Partnership have been awarded a £4.5m ‘payment-by-results’ contract under the Department for Work and Pensions’ new Innovation Fund project. The funding is provided by private sector social investors, who only achieve a financial return if pre-agreed outcomes are met.The Government Employees Superannuation Board, the A$12bn (€9.7bn) Western Australian public employees’ fund, says it will drop its ‘MY plan – Responsible Investments Australian Shares’ option from March 23. GESB launched the option in 2007 and it’s run by AMP Capital Investors, according to an item in the Sustainability Report. With more managers taking ESG into consideration, the option is now “less relevant”.

Dexia Asset Management, the socially responsible investment pioneer, says it is closer to new ownership following the collapse of its parent company last year. “Come the springtime, we shall have a new shareholding structure,” says CEO Naïm Abou-Jaoudé. “With this new partner, we will be in a position to create new synergies and thus emerge stronger from the current economic climate.”

Complicity in the violation of human rights is most significant environmental, social and governance (ESG) risk faced by investors in the BRIC economies (Brazil, Russia, India and China), according to the latest ESG Atlas and Risk Calculator from researchers Maplecroft. The document includes 49 ESG risk indices, evaluating 197 countries, which investors can choose from to create country scorecards and a bespoke global ESG dashboard. Link

David Pitt-Watson, the Chair of Hermes Focus Asset Management, made an address entitled ‘Financial Markets and the Investments of the Church’ to the Church Investors Group late last year. The church, he argued, “needs not just to preach morality, but to practice it in the way it manages its money”. The speech is available here.

Portfolio 21 Investments, a Portland, Oregon-based funds house with around $500m in assets under management, has published a report looking at environmental risks and opportunities for investors. Peak: Investing at the Edge of Ecological Limits is by Portfolio 21’s Chief Investment Officer and CEO Leslie Christian.

Consulting firm Towers Watson has released a ‘how we look at the world’ overview of thematic investment. “Thematic investing is about capitalising on future trends,” the firm’s Thinking Ahead Group (TAG) says. Possible future trends include finance, economics, politics, society environment and technology. Link