RI ESG Briefing, November 1: US SRI market is now worth $12trn – US SIF

The latest ESG market developments


OPTrust, one of Canada’s largest defined benefit pension plans, has invested alongside UK-based private equity firm Three Hills Capital Partners collectively over €60m into ACT Commodities, a Dutch firm that specializes in trading environmental commodities related to incentive schemes focused on reducing the use of fossil fuels and emission of greenhouse gasses.

Generation Investment Management has invested in autonomous vehicle tech firm DeepMap, according to a statement from the Palo Alto, California-based company. Terms of the deal weren’t disclosed but Lilly Wollman, Co-Head of Generation’s Growth Equity team, said DeepMap was “perfectly placed” to address the imminent needs of autonomous vehicles.

Nearly 90% of the world’s public pension savings are unprotected from the economic shocks of global warming, the Asset Owners Disclosure Project has revealed. The project found that only 13% of savings managed by the world’s 100 largest public pension funds have undergone a formal climate risk assessment, leaving $9.8trn exposed to global warming.

China: Climate-related disclosure among Shenzhen Stock Exchange-listed companies has significantly improved in both quality and quantity. The number of companies disclosing environmental information has increased to 666 in 2018 semi-annual reports, up from 476 in 2017 annual reports. As many as 215 listed companies – 32% of those making environmental disclosures – voluntarily disclosed additional information not required by regulation. Link


LifeSight, consulting firm Willis Towers Watson’s UK defined contribution master trust, has announced it will be allocating around half of the equity investments within the default fund into ESG strategies by the fourth quarter of this year. It’s claimed to be the first master trust of its kind to make ESG a major part of the default fund and the ESG allocation will be split between two strategies: the MSCI Adaptive Capped ESG Universal Index and the Robeco Global Sustainable Multi-Factor Equities Index.

A new consulting firm offering impact investment services has been launched by Markus Kessler – the former CEO of cosmetics manufacturing firm Dalli Group, – and Russ Stoddard – the president of creative agency Oliver Russell. The US and Germany-based social consulting firm is called Humanista.

Canadian investors have urged companies to disclose child and forced labour in their supply chains. The investor announcement comes after a recent recommendation from the Parliamentary Subcommittee on Human Rights that the Canadian government enact legislation to ensure businesses disclose the steps they are taking to address child- and forced-labour in their global supply chains. Link. Governance

The US SIF Foundation has found that sustainable, responsible and impact investing (‘SRI’) assets now account for $12trn —or one in four dollars—of the $46.6trn in total assets under professional management in the US. This represents a 38% increase over 2016. It said much of this growth is driven by asset managers, who now consider environmental, social or corporate governance (ESG) criteria across $11.6trn – up 44% over 2016. The top three issues for asset managers and their institutional investor clients are climate change/carbon, tobacco and conflict risk.

Responsible investment in Canada continues to experience rapid growth, with such assets now exceeding $2trn – a 41.6% increase in under two years – the Responsible Investment Association (RIA)’s 2018 Canadian RI Trends Report has found. RI now accounts for 50.6% of Canadian AUM, up from 37.8% two years ago.

The Principles for Responsible Investment has issued a briefing for investors ahead of a Securities and Exchange Commission roundtable on November 15 on possible regulatory changes to the shareholder voting process. “This briefing is intended to support signatories in submitting comment letters to the SEC in advance of the roundtable,” it said in a web posting titled “Shareholder voting process threatened”.

Effective from 1 January 2020, the International Accounting Standards Board (IASB) has updated its definition of materiality as follows: “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.”

The Strategic Investor Initiative launched a new report entitled Emerging Practice in Long-Term Plans which identifies content elements essential to an effective investor-facing CEO-delivered long-term plan as well as key themes CEOs should address in long-term investor facing disclosures.

Index firm MSCI will launch a new index series that will reflect the desire of many investors to account for unequal voting structures in the indexes they use. The move follows an 18-month consultation which highlighted the divide in opinions among international institutional investors. MSCI said its Global Investable Market Indexes will “continue to reflect the complete investable equity universe for international institutional investors”.

ESG research firm Sustainalytics has launched its Sustainable Products Research, designed to identify companies that derive revenue from sustainable products and services. Investors can use this research for sustainability-themed product creation, portfolio construction and capital allocation strategies, integration of product involvement data into ESG analysis and for client portfolio reporting.