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Integration-AMWG-Mer..
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Integration-AMWG-Mer..

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  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Mission: ALL levels of financial institution operation: Incl: Lending, asset management, insurance
  • Transcript

    • 1. United Nations Environment Programme Finance Initiative Xavier Desmadryl Global Head of SRI Research, HSBC Investments Co-Chair, UNEP FI Asset Management Working Group
    • 2. <ul><li>UNEP FI Asset Management Working Group </li></ul><ul><li>A Strategic Alliance </li></ul><ul><li>ABN AMRO Banco Real Brasil Hermes Pensions Management </li></ul><ul><li>Acuity Investment Management HSBC Investments (Co-Chair) </li></ul><ul><li>BNP Paribas Asset Management Insight Investment Management </li></ul><ul><li>Calvert Group (Co-Chair) Mitsubishi UFJ Trust & Banking Corp. </li></ul><ul><li>ClearBridge Advisors, SAI Morley Fund Management </li></ul><ul><li>Eurizon Capital Pax World Funds </li></ul><ul><li>Groupama Asset Management RCM (UK) </li></ul><ul><li>Henderson Global Investors </li></ul><ul><li>Mission – advance mainstream integration of environment, social </li></ul><ul><li>and governance (ESG) issues into investment processes </li></ul>
    • 3. AMWG Projects (2004 – 2006) Materiality 1 Freshfields Materiality 2
    • 4. AMWG Projects (2007) Private Banking Pension Funds
    • 5. <ul><li>AMWG Projects (2007) – Coming Soon </li></ul><ul><li>AMWG & Institute for Responsible Investment, Boston College </li></ul><ul><li>Handbook on Responsible Investment by Asset Class </li></ul><ul><li>AMWG & Mercer Investment Consulting </li></ul><ul><li>Study on Responsible Investment Performance & ESG Integration (Phase One) </li></ul>
    • 6. <ul><li>AMWG & Mercer Investment Consulting </li></ul><ul><li>Study on Responsible Investment Performance & ESG Integration (Phase One) </li></ul>
    • 7. <ul><li>General Outline </li></ul><ul><li>Introduction </li></ul><ul><li>Large matrix of studies and template aspects </li></ul><ul><li>Research </li></ul><ul><li>About 20 academic and 10 broker/industry studies </li></ul><ul><li>Conclusion </li></ul><ul><li>Academic and broker/industry research connected </li></ul><ul><li>Future Research Opportunities </li></ul><ul><li>Emerging areas that could use some study, methodology concerns, practitioner interest </li></ul><ul><li>Appendix </li></ul><ul><li>Moskowitz Prize winners, link and description of Lloyd Kurtz www.srisstudies.org site, </li></ul><ul><li>other notable responsible investment publications </li></ul>
    • 8. <ul><li>Framework </li></ul><ul><li>Full Academic Reference </li></ul><ul><li>Author, year, title, publication, issue, volume, page numbers, URL </li></ul><ul><li>Target Audience </li></ul><ul><li>Broad Financial Performance Measures </li></ul><ul><li>Corporate accounting, investment performance, index performance </li></ul><ul><li>Specific Financial Performance Measures </li></ul><ul><li>Sharpe ratio, share price, operating cost </li></ul><ul><li>Broad ESG Measures </li></ul><ul><li>Which combination of E-S-G issues is being tested? </li></ul><ul><li>Specific ESG Measures </li></ul><ul><li>Management diversity, greenhouse gas emissions, environmental management system </li></ul>
    • 9. <ul><li>Framework </li></ul><ul><li>Time Period of Study </li></ul><ul><li>Unit of Measurement </li></ul><ul><li>Company, sector, industry, investment fund, constructed portfolio, literature </li></ul><ul><li>Number of Units </li></ul><ul><li>1 company or 40 companies? 3 investment funds or 200 investment funds? </li></ul><ul><li>Region/Market Geography </li></ul><ul><li>US domestic, Europe, Asia? Large cap or small cap? </li></ul><ul><li>Test </li></ul><ul><li>What is the hypothesis being tested? </li></ul><ul><li>Source of ESG Data </li></ul><ul><li>Which research provider? </li></ul>
    • 10. <ul><li>Framework </li></ul><ul><li>Responsible Investment Approach </li></ul><ul><li>Which RI approach is being tested? ESG integration, screening, engagement, </li></ul><ul><li>proxy voting, etc. </li></ul><ul><li>Results </li></ul><ul><li>3 general results: RI has neutral, positive or negative impact on investment performance </li></ul><ul><li>Summary </li></ul><ul><li>Commentary </li></ul><ul><li>Strengths & weaknesses and relative importance of study </li></ul><ul><li>Link to Other Articles </li></ul>
    • 11. <ul><li>Examples – Academic Studies </li></ul><ul><li>SRI: Viable for Value Investors? (Abramson & Chung, 2000) </li></ul><ul><li>Beyond Dichotomy: The Curvilinear Relationship Between Social </li></ul><ul><li>Responsibility & Financial Performance (Barnett & Salomon, 2006) </li></ul><ul><li>Ethical Investing in Australia: Is There a Financial Penalty? (Bauer, Otten & Rad, 2006) </li></ul><ul><li>SRI & Portfolio Diversification (Bello, 2005) </li></ul><ul><li>Do SRI Fund Managers Really Invest Differently? (Benson, Brailsford & Humphrey, 2006) </li></ul><ul><li>To Sin or Not to Sin? Now That’s the Question (Chong, Her & Phillips, 2006) </li></ul><ul><li>Does Weak Governance Cause Weak Stock Returns? An Examination of Firm </li></ul><ul><li>Operating Performance & Investors’ Expectations (Core, Guay & Rusticus, 2006) </li></ul><ul><li>The Eco-Efficiency Premium Puzzle (Derwall, Gunster, Bauer & Koedijk, 2006) </li></ul><ul><li>Investing in SRI Mutual Funds (Geczy, Stambaugh & Levin, 2005) </li></ul><ul><li>Corporate Governance & Equity Prices (Gompers, Ishii & Metrick, 2003) </li></ul><ul><li>The Price of Sin: The Effects of Social Norms on Markets (Hong & Kacperczyk, 2006) </li></ul><ul><li>The Impact of Excluding Tobacco & Armaments Stocks from a UK Equity Porfolio </li></ul><ul><li>(Mercer Investment Consulting, 2005) </li></ul>
    • 12. <ul><li>Examples – Academic Studies (continued) </li></ul><ul><li>Corporate Social & Financial Performance: A Meta-Analysis </li></ul><ul><li>(Orlitzky, Schmidt & Rynes, 2003) </li></ul><ul><li>The Performance of SRI: Investment Funds & Indices (Schröder, 2004) </li></ul><ul><li>Is it Better to be Naughty or Nice? (Shank, Manullang & Hill, 2005) </li></ul><ul><li>SRI Mutual Funds (Statman, 2000) </li></ul><ul><li>SRI Indexes: Composition, Performance & Tracking Error (Statman, 2006) </li></ul><ul><li>Corporate Social Performance & Stock Returns: UK Evidence from Disaggregate </li></ul><ul><li>Measures (Brammer, Brooks & Pavelin, 2006) </li></ul><ul><li>CSR & Financial Performance (Van de Velde, Vermeir & Corten, 2005) </li></ul><ul><li>Investor Activism, Managerial Responsiveness & Corporate Social Performance </li></ul><ul><li>(David, Bloom & Hillman, 2007) </li></ul><ul><li>Do CSR Ratings Predict Corporate Social Performance? (Toffel, Chatterji & Levine, 2007) </li></ul>
    • 13. <ul><li>Examples – Broker/Industry Studies </li></ul><ul><li>Period: 2006-07 </li></ul><ul><li>The Impact of CO2 Regulation on Oil Demand & Alternative Plays (Bernstein Research) </li></ul><ul><li>Bio-Fuel Challenges (Cheuvreux) </li></ul><ul><li>Sustainability Compendium (Citigroup) </li></ul><ul><li>Crossing the River (Citigroup) </li></ul><ul><li>Global Energy: Enhanced Energy ESG Framework (Goldman Sachs) </li></ul><ul><li>Food & Beverage (Goldman Sachs) </li></ul><ul><li>Global Mining & Steel: Integrating ESG (Goldman Sachs) </li></ul><ul><li>The Business of Climate Change: Challenges & Opportunities (Lehman Brothers) </li></ul><ul><li>Global Agriculture (Merrill Lynch) </li></ul><ul><li>Nanotechnologies: There are Still Plenty of Opportunities & Uncertainties </li></ul><ul><li>at the Bottom (Oddo Securities) </li></ul><ul><li>Alternative Alpha – Infrastructure (UBS) </li></ul><ul><li>What Really Counts: The Materiality of Extra Financial Factors (West LB) </li></ul>
    • 14. <ul><li>2007 Timeline </li></ul><ul><li>Soft Launch – Methodology & Plan </li></ul><ul><li>TBLI Conference Asia (May, Bangkok) </li></ul><ul><li>PRI Annual Event (July, Geneva) </li></ul><ul><li>Official Launch & Panel Discussion </li></ul><ul><li>UNEP FI Global Roundtable (24-25 October, Melbourne) </li></ul>
    • 15. <ul><li>Phase Two (2008) </li></ul><ul><li>Mapping of ESG Criteria by Sector </li></ul><ul><li>Impact of ESG Criteria in Valuation Models </li></ul>
    • 16. NCIPLE ONE 1 We will incorporate ESG issues into investment analysis and decision-making processes.
    • 17. United Nations Environment Programme Finance Initiative Asset Management Working Group Mercer Investment Consulting www.unepfi.org www.merceric.com/ri [email_address] [email_address]

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