Net Impact 2014 - Finance & Investing Track
Beyond Spreadsheets: Sustainable Investing for the 21st Century
1:00 PM - 2:30 PM, 7 November 2014
As sustainable investment grows into a $14 trillion meta-trend, there is no doubt that the shape of the investment ecosystem is changing. Evidence of performance effects from incorporating environmental, social, and governance (ESG) factors—alongside growing demand from regulators, clients, and beneficiaries—is driving the adoption of sustainable investment practices globally. In this interactive workshop, you will work through case studies to learn how experts in the finance and investment industry are integrating ESG factors into investment decisions, and how you can too.
Track: Finance & Investing
Tags: CSR Entrepreneurship Funding Global Business Impact Investing
Graham Sinclair, Principal, SinCo linkedin.com/in/grahamsinclair
Case Study IFC Case Study: Gold Mine in Africa - Goldstar
FV Tool IFC CommDev
FV Tool TOOL https://www.fvtool.com/page.php?node=aWQ9MTI=
"Graham and Toniqua were very engaging speakers, they kept attendees attention all the way and made the session fun!"
"Thinking about how to value a tree was an incredibly valuable exercise."
"They were wonderful! Very exciting, engaging, and informative."
"Toniqua and Graham delivered on their promise of hosting the best panel at the conference!"
"Thank you again for sharing your stories, experience, and expertise with the Net Impact audience. It was a pleasure working with you on this session."
"Thank you both for allowing me to be a part of your session. This was one of the highlights of my successful experience over the past few days."
Can there be any doubt amongst long-term investors that we are all “impact investors” now? Investment decisions made by professionals have an influence on what gets financed, what gets tracked, and what does not. Globally, the institutional investment management industry has over US$ 62 trillion in AuM today, an all-time record surpassing the last high before the 2007 global financial crisis. Institutional investors operate within an investment ecosystem where incentives do not balance environmental, social and economic returns. Like “sustainable investment”, the very phrase “impact investing” reminds investment practitioners of the intended - and unintended - consequences of their professional investment activities at a time when many in the industry are questioning the value added by the industry.
The sustainable investment theme describes integrating environmental, social and governance (ESG) factors. We will use the definition of “sustainable investment” from the IFC - "an umbrella term for all investment techniques that integrate environmental, social and governance (ESG) value-drivers into financial research and investment processes”. Impact investing goes a step further: it proactively seeks positive returns beyond the financial. Even global mega institutional investors have policies and/ or strategies that make them “impact investors” via the universe they select, the due diligence they undertake, or their activities as active stewards. The 21st century reality that sustainable investment is an advanced investment theme and impact investing is a significant part of that responding to opportunities to “both drive positive social and environmental change and to cater to a growing client base of investors”. Even powerful sovereign wealth funds (SWF) have attempted different versions of “impact investing”: Qatar Holdings US$100 billion fund set up an impact investing program in 2013.
New research on “Impact Investment: Sovereign Wealth Funds, Corporate Governance and Stock Markets” points to the “soft law” standards of the OECD (a think tank) that require disclosure of information that help an impact investor to justify investment. This is unsurprising: one-in-two dollars invested in private equity in Sub-Saharan Africa is funded by development financing institutions (DFIs) with explicit ESG policies. Investment industry body the CFA Institute points to future innovation in investment products that will meet the needs of asset owners in a more sustainable, longer-term way that generate returns as well as aligns with society and the economy at large, namely owning all of the externalities, positive and negative, of the companies they own. Partly in response to client demands for different approaches, partly driven internally by their staff or their firms’ need to be seen as something other than a great “great vampire squid wrapped around the face of humanity”.
Using the case study approach, the discussion with fellow participants should help you learn the skills that will help you use the tools, techniques and concepts that combine to better understand and apply the sustainable investment case. At each stage questions faced by investors, analysts and marketers are asked and answered: what is the sustainability business case, and how does it make the firm better.
FURTHER READING LIST
Articles, reports, frameworks and videos on ESG in investment practice and current themes.
- More Companies Bow to Investors With a Social Cause: Shareholders Drive Changes in Policies Ranging From Rain Forests to Human Rights By EMILY CHASAN, WSJ blogs, March 31, 2014 7:47 p.m. ET http://online.wsj.com/news/articles/SB10001424052702304157204579471383739569084
- GENERAL NEWS: Firms' Political Gifts: Count 'em If You Can BY JASON ZWEIG WSJ Updated Sept. 1, 2014 9:40 a.m. ET http://online.wsj.com/news/articles/SB30001424052970203937904580120071024068314?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB30001424052970203937904580120071024068314.html
- Dumping Coal Is Easy. But Who Will Divest the Rest? | The Audubon Birds & Climate Change Report Daniel Glick Published Sep 09, 2014 http://climate.audubon.org/article/dumping-coal-easy-who-will-divest-rest
- "The Socially Responsible Quant": A Quantitative Perspective on ESG Portfolio Analysis, July 17, 2013, Recorded Webinar http://www.msci.com/resources/webcast/the_socially_responsible_quant_a_quantitative_perspective_on_esg_portfolio_analysis_1.html
- ESG-100 by Usman Hayat, CFA, CFA Institute http://mmd.cfainstitute.org/courses/ESG-100/story.html
- CERES Blueprint For Sustainable Investing, Peter Ellsworth and Kirsten Snow Spalding, Ceres, June 2013 http://www.ceres.org/resources/reports/the-21st-century-investor-ceres-blueprint-for-sustainable-investing
- Sustainable Investing: Five Videos to Watch By Usman Hayat, CFA - Enterprising Investor Practical analysis for investment professionals CFA Institute September 2014 http://blogs.cfainstitute.org/investor/2014/09/22/sustainable-investing-five-videos-to-watch/
- Sustainable Investing: Establishing Long Term Value and Performance, Deutsche Bank, June 2012. https://institutional.deutscheawm.com/content/_media/Sustainable_Investing_2012.pdf
- Deutsche Bank ESG framework https://www.db.com/cr/en/concrete-our-social-and-environmental-risk-framework.htm Investec Asset Management ESG integration http://www.investecassetmanagement.com/en/investment-expertise/stewardship/ Youtube Videodeck Playlist Sustainable Investment 2014 #NI2014 #ESG https://www.youtube.com/playlist?list=PLwNlzJLpzBM0cm3vxVmI_K9eZDNmDhQLO
- Integrating ESG into the Investment Process Remy Briand, MSCI. http://www.msci.com/event_presentations/integrating_esg_into_the_investment_process.html
- MSCI ESG Portfolio Analytics: Measuring and Benchmarking ESG Risks, July 19, 2012 http://www.msci.com/resources/webcast/msci_esg_portfolio_analytics_measuring_and_benchmarking_esg_risks_1.html
- Stakeholder Engagement: A Good Practice Handbook for Companies Doing Business in Emerging Markets http://www.ifc.org/ifcext/sustainability.nsf/Content/Publications_Handbook_StakeholderEngagement
- Strategic Community Investment: A Good Practice Handbook for Companies Doing Business in Emerging Markets http://www.ifc.org/ifcext/sustainability.nsf/Content/Publications_Handbook_CommunityInvestment
- Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever, GMO Quarterly Newsletter April 2011 by Jeremy Grantham GMO http://www.gmo.com/America/
- CDC Toolkit on ESG for Fund Managers http://www.cdcgroup.com/Documents/ESG%20Publications/esgtoolkitintroduction.pdf Actis ESG Code http://www.act.is/ActisPDFs/01271_Actis_ESG_Code.pdf
- Environmental, Social, and Governance Factors at Listed Companies: A Manual for Investors, CFA Institute Centre for Financial Market Integrity, July 2008 http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2008.n2.1
- The Corporate Governance of Listed Companies: A Manual for Investors, CFA Institute Centre for Financial Market Integrity, July 2008 http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2009.n12.1
- Carney raises the heat on climate: you can’t burn all the oil, Jon Hay EmergingMarkets, 12/10/2014 http://www.emergingmarkets.org/Article/3389530/Carney-raises-the-heat-on-climate-you-cant-burn-all-the-oil.html
- Digging into ESG risks reveals a different story for every mine 19-12-2013 | Engage | Michiel van Esch http://www.robecosam.com/en/sustainability-insights/library/engage/2013/digging-into-esg-risks-reveals-a-different-story-for-every-mine.jsp