Last week’s annual event at Davos saw a number of sustainability topics discussed, including the sustainable development goals, blockchain, gender equality, sustainable agriculture and climate targets. Below are some of the ESG highlights and launches from across the conference.
In a session on Remaking Global Finance, BlackRock CEO Larry Fink said no one talked about the inclusiveness of the financial system and spoke of improving financial literacy so people don’t feel frightened of long-term financial instruments. Vice Chair Phillip Hildebrand spoke about BlackRock’s research into achieving “sustained financial performance” through incorporating sustainability and impact measures. For the full story, see RI’s story
That session was entitled Investing for Impact and also involved Lars Lokke Rasmussen, the Prime Minister of Denmark, who said the country was close to establishing a Sustainable Development Goals (SDG) Fund with Danish pension funds.
Akinwumi Ayodeji Adesina, the President of the African Development Bank said it was looking to issue ‘nutrition social impact bonds’ across the continent. “Nutrition is about brain matter. I can fix roads. I can fix rail. I can’t fix brain matter when it is dead…. Nutrition social impact bonds will allows us to be able to raise money from the capital markets and use our AAA rating to bring that money in and blend it for countries to be able to frontload critically important investment in nutrition.” The AfDB has already issued bonds aligned with other Sustainable Development Goals, such an access to electricity.
In a session entitled Towards Better Capitalism, Theresa Whitmarsh, Executive Director, Washington State Investment Board spoke about how it approaches fiduciary duty and ESG: “Time horizon allows us to reconcile fiduciary duty beyond shareholder concerns to societal concerns. If companies think with a myopic focus on short-term earnings they are typically sowing the seeds of their own destruction and you see a lot of catastrophes happen over time because companies are not thinking how they are building for the long term. If a company is creating value over time my returns are going to better. Time horizon allows you to reconcile fiduciary duty with societal commitment.”
At the same session, Indra Nooyi, Chairman and CEO of PepsiCo, described investors as typically impatient with differing views across geographies when it comes to what ‘long term’ means: “In the US, 90% of the buy-side never ask the question [about long-term goals], and stick with strategy and quarterly earnings,” she said. “Europe asks about the long term, and Asia asks about the real long term. There are different views on duration – is three-to-five years long term?”The Access to Medicine Foundation launched the investor-backed Antimicrobial Resistance (AMR) Benchmark. It shows where leading pharmaceutical companies are taking action against AMR, which firms are leading, and where faster progress is needed.
The Blended Finance Taskforce launched its report “Who is the private sector? Key considerations for mobilizing institutional capital through blended finance”. It explores segments of the private sector and analyses their unique investment preferences and regulatory conditions and identifies the likelihood each segment will participate in blended finance. The paper was commissioned as part of a broader initiative known as Better Finance, Better World.
Aviva Investors’ Chief Responsible Investment Officer, Steve Waygood, used a discussion at Davos to urge business schools to address sustainability in their programmes. Writing about Waygood’s speech in a blog on Davos, Mark Campanale, founder of the Carbon Tracker Initiative said “this is surely a logical step to embed this in business leaders’ thinking at the earliest opportunity”.
Campanale also used his blog to describe how he walked out of on session which was “somewhat marred by a banker giving the room the benefit of his views on why we should develop the Arctic – including selling us his ‘ethical charter’ that would allow us to develop its vast resources ‘sustainably’”. “As my head was reacting to this slowly, I found myself rising from the head of one of the tables and leaving the room,” he said. “It was my heart instructing my legs to go, as I couldn’t bear listening to it any longer.”
Ellen MacArthur, founder of the MacArthur Foundation announced a new agreement with UN Environment to scale up and accelerate the shift towards a circular economy.
Peter Maurer, the President of the Swiss-led International Committee of Red Cross (ICRC), spoke at Davos about humanitarian challenges for 2018. He said new financial instruments like humanitarian impact bonds, impact finance and blended finance would be future opportunities for raising money.
The World Economic Forum’s Shaping the Future of Economic Progress Initiative has published the Inclusive Development Index (IDI), based on the notion that most citizens evaluate their countries’ economic progress not by the amount of goods and services produced in their economy (GDP) but by their household’s standard of living – including income, employment opportunity, economic security and quality of life.
Additional reporting from Sophie Robinson-Tillett