In a lively presentation at the Canadian Responsible Investment Conference last Wednesday, Lisa Hayles of EIRIS reviewed their latest report, On Track for Rio + 20 - How are global companies responding to sustainability? (download report here in PDF). The report analyses the sustainability performance of 50 of the world's largest companies by market capitalization.
The most recent update of the Green Transition Scoreboard (GTS), released in February 2012, finds that over $3.3 trillion ($3,306,051,439,680 to be exact) have been invested in the green economy since 2007, putting global investors and countries on track to reach $10 trillion in investments by 2020.
For many of you who read this blog, the Social Capital Partners story will be familiar to you. On Wednesday, I had the opportunity to hear Bill Young speak, and once again I was inspired, and I thought - this is a story worth repeating.
Bill Young came into a lot of money at the time of the technology stock frenzy, and he used it to found Social Capital Partners in 2001. He wanted to figure out the answer to the question “is there a way to harness market forces to do social good?”
“Reason #10: Finally, people simply don’t know what they don’t know."
Many staff and board members of foundations are preoccupied by their charitable giving work. They are not aware that there are other possibilities for the application of all of the assets of an endowed foundation. They don’t ask questions. And if you don’t know, how will you be encouraged to alter your behaviour? This conference is an excellent opportunity to learn about SRI. But I ask you, how many members of foundation investment committees are present?”
That was Hilary Pearson, President of the Philanthropic Foundations of Canada, speaking at the SIO conference in June 2007. Taking this need for information to heart, tomorrow sees the release of a seminal report commissioned by the Social Investment Organization and funded by Environment Canada, Education and Training on Responsible Investing for Canadian Foundations and Endowments: An Inventory and Needs Analysis.
There’s been a subtle semantic shift over the past few years in the SRI movement, as more companies and industry leaders choose to talk about sustainable investing, rather than socially responsible or responsible investing.
It may seem unimportant on the surface, after all, what’s in a name?, but it’s an issue many people take very seriously.
Socially Responsible Investing is typically understood in terms of publicly traded equities, but SRI can impact other asset classes such as fixed income or real estate.
An engaging panel at the SIO Conference provided us with lots of thought provoking ideas on the subject of green real estate. This topic has generated considerable interest because many of the asset managers who signed on to the UN Principles for Responsible Investment are not only owners of stocks and bonds, they have significant holdings of real property. Responsible property investment is an approach to property investment that recognizes environmental and social considerations along with more conventional financial objectives. And because green real estate has widely accepted benchmarks like LEED, and the business case is easily quantified, socially responsible real estate may be an easier first step for mainstream investors.
In 2007, it seemed socially responsible investing had finally reached its "tipping point" in Canada - institutional investors were on board following the UN's Principles of Responsible Investment and on the retail side, the big banks were launching their first-ever SRI funds.
But, thanks to the credit crisis, the euphoria was short-lived, and today, SRI advocates are once again seeking ways to engage new investors. That was one of the topics of an advisor panel discussion held Monday at the Canadian Responsible Investment Conference in Winnipeg.
For investors looking at socially responsible investing, the one question that never seems to go away is: Do you have to sacrifice performance to invest in SRI mutual funds?
In seeking to answer this question within a specific fund category, another issue emerges. That is, to what extent is performance likely to vary among competing SRI offerings?
Originally posted at the SRI Monitor on April 5, 2009
Sustainable investment in emerging markets has grown significantly over the past few years, to more than $300 billion US in 2008, according to a study conducted by Mercer and commissioned by the International Finance Corporation, the private arm of the World Bank Group. That figure represents nearly 10% of total investment in emerging markets.
Funds labeled specifically as socially responsible or sustainable represented about $50 billion in assets, but this represents only a tiny fraction (1.5%) of total emerging market investments compared to 2.73% in developed markets. The remainder was comprised of mainstream institutional funds committed to integrating environmental, social and governance (ESG) issues within their core investment processes.
Canada's senior executives seem to be getting the message that sustainability issues are important to their businesses. But there's a major gap between understanding and action, according to a survey released this week.
The study, conducted by PricewaterhouseCoopers LLP (PwC) and the Canadian Financial Executives Research Foundation, reveals that 90% of Canada's senior financial executives believe their companies should be reporting on environmental and social impacts. However, only half said they have sustainability reporting systems in place, even though most also believe the average investor does not have enough information about the environmental and social performance of Canadian companies.
The news that Quebec's giant Caisse de depot lost 25% of its value partly due to the collapse in the asset-backed commercial paper market (ABCP) has left people shaking their heads. Top people in government, banking and investment are now asking the obvious question: "How could they not have seen the risk in this?"
As the murky world of ABCP has come to light, it's becoming increasingly apparent that two issues were key to this massive market failure. First, the exact nature of the underlying assets were never made public; and second, the unique social risks presented by these assets were never disclosed nor understood by the market.
This lack of transparency was caused by disclosure exemptions representing massive regulatory failure; a regulatory failure that cost investors billions of dollars in assets.