The survey found that 37% of respondents have incorporated ESG factors into investment decisions, up from 29% in 2015. Adoption rates were highest among health care funds (62%), endowments (53%), and foundations (48%). Large funds (> $20B assets) had the highest adoption rate at 71%. The most common way of implementing ESG was by adding language to investment policies (53%). While the value proposition of ESG remains unclear for some, personal views on ESG are becoming more defined, and more funds are considering ESG incorporation.
Institutional investors are always looking for better ways to increase returns, reduce risk and achieve specific investment goals. Particularly in the wake of the financial crisis, investors have been seeking more robust ways to diversify and reduce risk.
This white paper was the culmination of a series of webinars and in-person conversations with corporate practitioners in the sustainability field. It provides the end user with an understanding of the ESG ratings and rankings field and helps prioritize engagement with the most influential organizations in the field.
Insurance Role in a Climate Change Constraint World: UAE Motor Best Practice ...NarimanMaalouf
Insurance is the risk manager of a society playing a substantial role in fostering economic growth. The role of insurance industry is to analyze impending threats and to provide solutions for adapting and mitigating such threats. The increasing awareness on climate change and risks posed by it has given insurance industry a center stage in devising policy solutions. The leading insurance industries such as Munich Re, Swiss Re and Allianz have assisted UNEP in devising principles of sustainable insurance. Along with that, insurance sector has advocated and implemented Environmental, Social and Governance (ESG) framework. They have aligned their corporate strategies in accordance with ESG framework in order to create an environmentally safe, socially just operating space for humanity.
The Pepperdine Private Capital Markets Project previews key finding from its forthcoming 126-page report detailing the 2010 outlook for private capital providers and privately-held businesses.
The Pepperdine Private Capital Markets Project previews key finding from its forthcoming 126-page report detailing the 2010 outlook for private capital providers and privately-held businesses.
Institutional investors are always looking for better ways to increase returns, reduce risk and achieve specific investment goals. Particularly in the wake of the financial crisis, investors have been seeking more robust ways to diversify and reduce risk.
This white paper was the culmination of a series of webinars and in-person conversations with corporate practitioners in the sustainability field. It provides the end user with an understanding of the ESG ratings and rankings field and helps prioritize engagement with the most influential organizations in the field.
Insurance Role in a Climate Change Constraint World: UAE Motor Best Practice ...NarimanMaalouf
Insurance is the risk manager of a society playing a substantial role in fostering economic growth. The role of insurance industry is to analyze impending threats and to provide solutions for adapting and mitigating such threats. The increasing awareness on climate change and risks posed by it has given insurance industry a center stage in devising policy solutions. The leading insurance industries such as Munich Re, Swiss Re and Allianz have assisted UNEP in devising principles of sustainable insurance. Along with that, insurance sector has advocated and implemented Environmental, Social and Governance (ESG) framework. They have aligned their corporate strategies in accordance with ESG framework in order to create an environmentally safe, socially just operating space for humanity.
The Pepperdine Private Capital Markets Project previews key finding from its forthcoming 126-page report detailing the 2010 outlook for private capital providers and privately-held businesses.
The Pepperdine Private Capital Markets Project previews key finding from its forthcoming 126-page report detailing the 2010 outlook for private capital providers and privately-held businesses.
Environmental, Social and Governance (ESG) investing is bringing a new lens to the world of traditional investment management. ESG is increasingly becoming a key decision criterion within the institutional and retail channels as investors seek to ensure that their investments align with their values. In this webinar, we will provide a unique understanding of distribution trends driven by ESG criteria vital to product development and sales strategies for Asset Managers.
Broadridge has partnered with MSCI ESG Research to provide Asset Managers with access to ESG factors for funds. On this webinar, we will provide a detailed overview of ESG investment trends as well as present an overview of a unique set of data that provides ESG transparency on more than 27,000 funds.
By David F. Larcker, Brian Tayan, Dottie Schindlinger and Anne Kors, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance and the Diligent Institute, November 2019
New research from the Rock Center for Corporate Governance at Stanford University and the Diligent Institute finds that corporate directors are not as shareholder-centric as commonly believed and that companies do not put the needs of shareholders significantly above the needs of their employees or society at large. Instead, directors pay considerable attention to important stakeholders—particularly their workforce—and take the interests of these groups into account as part of their long-term business planning.
• While directors are largely satisfied with their ESG-related efforts, they do not believe the outside world understands or appreciates the work they do.
• Directors recognize that tensions exist between shareholder and stakeholder interests. That said,
most believe their companies successfully balance this tension.
• In general, directors reject the view that their companies have a short-term investment horizon in
running their businesses.
In the summer of 2019, the Diligent Institute and the Rock Center for Corporate Governance at Stanford University surveyed nearly 200 directors of public and private corporations globally to better understand how they balance shareholder and stakeholder needs.
A common perception is that sustainable investing means having to settle for lower returns. But by investing in a cheap and efficient way, it's possible to match the market return or even better it.
Corporate Responsibility 2018 Aura Solution Company Limitedgannuu999
In our role as a global financial services company, we dedicate our people, resources and ideas to investor success and economic progress. Our impact also extends beyond the business of
investing. By committing to social and environmental
stewardship, human rights and responsible conduct, we hope to
strengthen our communities and serve the greater good.
Harvard Business Review Magazine periode 01 02 2021
January–February 2021. When to Work with Rivals: Sometimes you need to join forces with your fiercest competitors
What is an ESG Audit?
Environmental, social and governance (ESG) risks are inevitable for every business. But how these issues are collected, managed and reported are what will make the difference between a company that is prepared or not.
Despite continued uncertain economic conditions, most companies remain persuaded that there is a strong causal link between their financial performance over a 5-10 year time horizon and their current commitment to improving their environmental, social and governance performance.
Against this background, a number of business leaders are reviewing their approach to sustainability, weighing new corporate strategies and new business models in efforts to ensure their long-term sustainability.
Etude PwC "Bridging the gap" sur les investisseurs institutionnels (mai 2015)PwC France
Selon la dernière étude du cabinet d’audit et de conseil PwC, intitulée « Bridging the gap », sept investisseurs institutionnels sur dix (70 %) – parmi les 60 qui ont été interrogés par PwC au plan mondial – affirment qu’ils refuseraient de participer à une levée de fonds de private equity ou à un co-investissement si ceux-ci présentaient un risque environnemental, social ou de gouvernance.
Méthodologie :
Pour réaliser cette étude, PwC a mené des entretiens individuels avec 60 commanditaires de 14 pays, totalisant quelque 500 milliards USD d’allocation aux gérants ou general partners (GP) de fonds de private equity. Les participants à l’enquête ont répondu sur la base du volontariat, d’où une surreprésentation probable des investisseurs relativement avancés dans leur approche de l’investissement responsable. Le panel était composé à 30 % de fonds de pension, à 20 % de gestionnaires d’actifs et à 7 % de fonds souverains ou publics. Parmi les répondants figuraient de grands fonds de pension du monde entier, comme le CalSTRS (caisse de retraite de l’enseignement public de Californie), l’USS (caisse de retraite de l’enseignement supérieur britannique), la caisse de retraite de BT, le West Midlands Pension Fund, le Wellcome Trust, un fonds de pension suédois et des fonds confessionnels aux États-Unis et en Finlande. Parmi les principaux gestionnaires d’actifs figuraient les sociétés Aberdeen, Hermes GPE, F&C et BlackRock. 7 investisseurs français ont aussi participé à cette étude comme par exemple BPI France, Ardian ou OFI Asset Management (devenu depuis SWEN Capital Partners).
Responsible investment is rapidly becoming a mainstream concern within the investment industry. The dramatic growth in the number of investors who have adopted the Principles for Responsible Investment (PRI) is only the latest indicator of the increased attention the sector is paying to the integration of environmental, social and governance (ESG) factors into investment management.
Too often environmental, social and governance (ESG) initiatives are simply looked at through a compliance and risk management prism. But this ignores the real opportunity that embracing and managing ESG issues presents - that of enhancing business value. This presentation lays out the service value chain and brand value linkages while illustrating how strong ESG performance translates to superior market performance.
The Boston Consulting Group, MIT Sloan Management Review, and the United Nations Global Compact joined forces to provide an inside look at how companies are dealing with sustainability issues: http://on.bcg.com/1Ci1R8l.
Big risks require big data thinking, Global Forensic Data Analytics Survey 2014EY
This presentation is based on EY FIDS' report on Forensic Data Analytics and comprises global as well as India findings.
For further information, please visit: http://www.ey.com/FIDS
Environmental, Social and Governance (ESG) investing is bringing a new lens to the world of traditional investment management. ESG is increasingly becoming a key decision criterion within the institutional and retail channels as investors seek to ensure that their investments align with their values. In this webinar, we will provide a unique understanding of distribution trends driven by ESG criteria vital to product development and sales strategies for Asset Managers.
Broadridge has partnered with MSCI ESG Research to provide Asset Managers with access to ESG factors for funds. On this webinar, we will provide a detailed overview of ESG investment trends as well as present an overview of a unique set of data that provides ESG transparency on more than 27,000 funds.
By David F. Larcker, Brian Tayan, Dottie Schindlinger and Anne Kors, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance and the Diligent Institute, November 2019
New research from the Rock Center for Corporate Governance at Stanford University and the Diligent Institute finds that corporate directors are not as shareholder-centric as commonly believed and that companies do not put the needs of shareholders significantly above the needs of their employees or society at large. Instead, directors pay considerable attention to important stakeholders—particularly their workforce—and take the interests of these groups into account as part of their long-term business planning.
• While directors are largely satisfied with their ESG-related efforts, they do not believe the outside world understands or appreciates the work they do.
• Directors recognize that tensions exist between shareholder and stakeholder interests. That said,
most believe their companies successfully balance this tension.
• In general, directors reject the view that their companies have a short-term investment horizon in
running their businesses.
In the summer of 2019, the Diligent Institute and the Rock Center for Corporate Governance at Stanford University surveyed nearly 200 directors of public and private corporations globally to better understand how they balance shareholder and stakeholder needs.
A common perception is that sustainable investing means having to settle for lower returns. But by investing in a cheap and efficient way, it's possible to match the market return or even better it.
Corporate Responsibility 2018 Aura Solution Company Limitedgannuu999
In our role as a global financial services company, we dedicate our people, resources and ideas to investor success and economic progress. Our impact also extends beyond the business of
investing. By committing to social and environmental
stewardship, human rights and responsible conduct, we hope to
strengthen our communities and serve the greater good.
Harvard Business Review Magazine periode 01 02 2021
January–February 2021. When to Work with Rivals: Sometimes you need to join forces with your fiercest competitors
What is an ESG Audit?
Environmental, social and governance (ESG) risks are inevitable for every business. But how these issues are collected, managed and reported are what will make the difference between a company that is prepared or not.
Despite continued uncertain economic conditions, most companies remain persuaded that there is a strong causal link between their financial performance over a 5-10 year time horizon and their current commitment to improving their environmental, social and governance performance.
Against this background, a number of business leaders are reviewing their approach to sustainability, weighing new corporate strategies and new business models in efforts to ensure their long-term sustainability.
Etude PwC "Bridging the gap" sur les investisseurs institutionnels (mai 2015)PwC France
Selon la dernière étude du cabinet d’audit et de conseil PwC, intitulée « Bridging the gap », sept investisseurs institutionnels sur dix (70 %) – parmi les 60 qui ont été interrogés par PwC au plan mondial – affirment qu’ils refuseraient de participer à une levée de fonds de private equity ou à un co-investissement si ceux-ci présentaient un risque environnemental, social ou de gouvernance.
Méthodologie :
Pour réaliser cette étude, PwC a mené des entretiens individuels avec 60 commanditaires de 14 pays, totalisant quelque 500 milliards USD d’allocation aux gérants ou general partners (GP) de fonds de private equity. Les participants à l’enquête ont répondu sur la base du volontariat, d’où une surreprésentation probable des investisseurs relativement avancés dans leur approche de l’investissement responsable. Le panel était composé à 30 % de fonds de pension, à 20 % de gestionnaires d’actifs et à 7 % de fonds souverains ou publics. Parmi les répondants figuraient de grands fonds de pension du monde entier, comme le CalSTRS (caisse de retraite de l’enseignement public de Californie), l’USS (caisse de retraite de l’enseignement supérieur britannique), la caisse de retraite de BT, le West Midlands Pension Fund, le Wellcome Trust, un fonds de pension suédois et des fonds confessionnels aux États-Unis et en Finlande. Parmi les principaux gestionnaires d’actifs figuraient les sociétés Aberdeen, Hermes GPE, F&C et BlackRock. 7 investisseurs français ont aussi participé à cette étude comme par exemple BPI France, Ardian ou OFI Asset Management (devenu depuis SWEN Capital Partners).
Responsible investment is rapidly becoming a mainstream concern within the investment industry. The dramatic growth in the number of investors who have adopted the Principles for Responsible Investment (PRI) is only the latest indicator of the increased attention the sector is paying to the integration of environmental, social and governance (ESG) factors into investment management.
Too often environmental, social and governance (ESG) initiatives are simply looked at through a compliance and risk management prism. But this ignores the real opportunity that embracing and managing ESG issues presents - that of enhancing business value. This presentation lays out the service value chain and brand value linkages while illustrating how strong ESG performance translates to superior market performance.
The Boston Consulting Group, MIT Sloan Management Review, and the United Nations Global Compact joined forces to provide an inside look at how companies are dealing with sustainability issues: http://on.bcg.com/1Ci1R8l.
Big risks require big data thinking, Global Forensic Data Analytics Survey 2014EY
This presentation is based on EY FIDS' report on Forensic Data Analytics and comprises global as well as India findings.
For further information, please visit: http://www.ey.com/FIDS
Callan research that found investors over the last 20 years have had to take on three times as much risk to earn the same return electrified the institutional investing community. The Published Research Group interviewed Jay Kloepfer and Julia Moriarty about how the research was done and its implications.
According to results of Callan Associates’ 2013 Risk Management Survey, more than half of fund sponsors (55%) say their risk management tools are effective at mitigating investment risk, but 14% see them as simply a means to improve risk identification and monitoring. One-third of respondents indicated they do not know yet the effectiveness of their risk management tools because they are new and untested in a true market crisis.
The survey found formal risk management processes are most prevalent at large funds. Half of the medium and small funds have adopted a risk management process or are doing so in 2013. Forty-two percent of respondents employ proprietary and/or third-party risk measurement tools, such as software or data services. Usage of third-party tools is most prevalent at public funds, while endowments and foundations more often use in-house (proprietary) tools.
Corporate and public funds are embracing policy-level approaches to risk management more so than endowments and foundations. Public funds have implemented economic regime asset allocations, risk parity, and risk factor-based asset allocations, while corporate funds favor liability-driven investing and funded status-based glide path de-risking.
Strategy-level approaches to mitigate risk are easier to implement than those that alter the fund’s overall investment policy, and Callan observed higher levels of adoption of strategy changes across fund types. Public funds and foundations and endowments are most heavily implementing or considering real assets, opportunistic fixed income, absolute return and long/short equity. Corporate funds are also embracing absolute return, but long duration is the most favored strategy-level approach used to address risk.
Many fund sponsors wrestle with whether or not to tactically manage plan risk. Only 30% of sponsors have made rebalancing decisions based on risk management findings. Of those that have not done so, 82% do not plan to in the future.Public (31%) and large (25%) funds are the most likely to use tactical implementations going forward.
According to the survey, most funds (94%) do not have a formal risk budget, but explicitly address risk management in their plan governance via asset allocation, investment objectives and disciplined rebalancing.
The investment committee is the body most regularly tasked with deciding when to take action based on the findings of risk management tools. The most common actions taken were asset allocation changes (64% of respondents), manager due diligence/search (56%) and increased manager monitoring (52%). Twenty percent of respondents had not yet taken any actions based on risk management findings.
The survey was conducted in November 2012 and includes responses from 53 fund sponsors representing $576 billion in assets.
Six growing trends in corporate sustainability 2013Jaime Sakakibara
Earlier this month Ernst & Young and GreenBiz Group released a new study, entitled ‘2013 Six Growing Trends in Corporate Sustainability.’ Based primarily on a survey of the GreenBiz Intelligence Panel of executives and thought leaders engaged in sustainability, this study reveals that “companies are increasingly connecting the dots between risk management and sustainability by making sustainability issues more prominent on corporate agendas.”
David F. Larcker, Brian Tayan, Vinay Trivedi, and Owen Wurzbacher, Stanford Closer Look Series, July 2, 2019
Currently, there is much debate about the role that non-investor stakeholder interests play in the governance of public companies. Critics argue that greater attention should be paid to the interest of stakeholders and that by investing in initiatives and programs to promote their interests, companies will create long-term value that is greater, more sustainable, and more equitably shared among investors and society. However, advocacy for a more stakeholder-centric governance model is based on assumptions about managerial behavior that are relatively untested. In this Closer Look, we examine survey data of the CEOs and CFOs of companies in the S&P 1500 Index to understand the extent to which they incorporate stakeholder needs into the business planning and long-term strategy, and their view of the costs and benefits of ESG-related programs.
We ask:
• What are the real costs and benefits of ESG?
• How do companies signal to constituents that they take ESG activities seriously?
• How accurate are the ratings of third-party providers that rate companies on ESG factors?
• Do boards understand the short- and long-term impact of ESG activities?
• Do boards believe this investment is beneficial for the company?
What is socially responsible investment?dean771100
Socially Responsible Investments
Socially responsible investing is one of several similar approaches and concepts that impact how asset managers invest, in a socially responsible way. SRI's have been around for over 30 years in one form or another, and take the desire to make money and use it to create a better world. Companies which generate positive, measurable social and environmental change alongside a financial return. Keep in mind that it is a developing niche and therefore not without hiccups.
These slides discusses on the environmental, social and governance (ESG) factors for responsible investment. It briefly covers the ongoing crisis our world economy is dealing with today, which adversely affects business owners and investors alike.
When we conducted our inaugural environmental, social and governance (ESG) survey of private equity (PE) professionals last year, it was startling to see that nearly half (49%) of our general partner (GP) respondents did not have an ESG program at their firm and had no plans to create one, despite heightened concern from limited partners (LPs) on ESG issues. What a difference a year makes—not to mention the fact that we had a higher proportion of European respondents this year, who are much more progressive when it comes to ESG issues. In our second edition of the ESG survey, a majority of GP respondents (60%) now work at a firm with an established ESG program and another 26% either have an ESG program in development or plan to create one in the near future. However, there are still some PE firms that see little value in ESG programs. As one GP respondent put it: “we think [ESG] is the most asinine initiative ever to come out in the business world.”
While some PE firms eschew ESG issues and think that strong fund performance is enough to attract LP commitments, the LPs themselves are telling a different story. Eighty-four percent of LP respondents say that ESG issues are at least somewhat important when deciding whether or not to commit to a PE fund, with 18% claiming they are essential. Furthermore, 24% said they would they would commit to a fund with slightly lower historical performance if the firm had a strong ESG program. Remember, many of the largest contributors to PE funds are public pension plans, endowments, foundations and sovereign wealth funds—institutions which not only are interested in returns but also have an image to maintain. “GPs have to be more aware of investors’ desire for knowledge of their investments beyond just the financial return,” commented one LP respondent, while adding that the responsibility ultimately falls on the investors: “GPs will only change if the LPs push them to.”
One of the big takeaways from this year’s survey is that more PE firms are taking the necessary steps to make ESG a fundamental part of their investment approach. For example, 28% of GP respondents indicated that their firm produces a corporate social responsibility (CSR) report, up from 18% in 2012. And while finding effective metrics to monitor ESG performance continues to be the largest hurdle for ESG efforts, PE firms continue to find new ways to measure their ESG initiatives and have increasingly utilized forums, case studies and industry events and guidelines to fill the knowledge gap.
We hope that this survey serves as a lens into the current state of ESG issues in the PE industry and provides a starting point for developing a set of best practices that can be adopted by firms of all sizes. If you are interested in participating in future editions of the survey, or have any comments or suggestions for how we can improve this report, please contact us at research@pitchbook.com.
Non-Financial Information and Firm Risk Non-Financial Information and Firm RiskAJHSSR Journal
ABSTRACT: This research aims to examine how ESG disclosure and risk disclosure affect the total risk of
companies. Using cross section data from 355 companies listed in Indonesia Stock Exchange, data regarding
ESG disclosure and risk was collected. In this research, ESG and risk disclosures are measured based on content
analysis using GRI 4 guidelines for ESG disclosures and COSO ERM for risk disclosures. Using multiple
regression, it is concluded that only risk disclosure can reduce the company's total risk, while ESG disclosure
cannot affect the company's total risk. This shows that only risk disclosure is relevant in determining a
company's total risk.
KEYWORDS: ESG disclosure, risk disclosure, firm risk
What emerged as a modern, agnostic investment approach, driven largely by the rights movements is now becoming widely accepted by investors globally. 'SRI' assets now under management could reach $34-53 trillion by 2025. Why the shift in investor attitudes and what role can women at board level play to influence the future of socially responsible investments? Read more>> bit.ly/WiF14
Climate exposure is defined as the potential gains or losses in an investor’s portfolio due to climate change. It encapsulates both climate-related financial risks as well as opportunities. Though climate exposure has many components, it can be divided into three broad subcategories: • Policy and legal exposure: The financial effects of policies designed to mitigate climate change (e.g., carbon pricing schemes) or policies designed to adapt to it (e.g., water management infrastructure and rationing) (Burton, Diringer, and Smith 2006); or litigation or adjudication related to climate change (Massachusetts v. Environmental Protection Agency 2007; Guyatt et al. 2011). • Physical and ecological exposure: The financial implications of changes to earth’s ecosystems. For example: the costs of shorter and warmer winters on the ski industry (Bebb 2015); the financial impacts of hotter weather on agricultural yields; or the economic consequences of severe weather/climatic events (e.g., Hurricane Sandy) that disrupt human economic activity. • Market and economic exposure: Human responses to the aforementioned policy and ecological changes that will reshape businesses, industries, economies, and markets (e.g., growth in clean energy technologies that threaten the fossil fuel industry) (Guyatt et al. 2011).
This report touches upon themes such as increasing complex reporting requirements, growing demand for transparency, the adoption of big data technology solutions, the management of environmental, social and governance (ESG) factors in private equity portfolio companies as well as the growing popularity of various private equity fund structures, and how this is set to change over the next 12 to 24 months.
Similar to 2016 ESG Interest and Implementation Survey (20)
Callan's director of Hedge Fund Research, Jim McKee, explores the advantages of momentum-based investing strategies, which profit from market trends in whichever direction. He discusses the rationale behind them, how they are defined and harnessed for different diversification needs, and whether they are appropriate for fund sponsors.
The Renaissance of Stable Value: Capital Preservation in Defined ContributionCallan
*Stable value funds are low-risk investment options in participant directed plans that mix capital preservation with return generation. They invest in high-quality, short- and intermediate-duration fixed income securities, and utilize wrap contracts to insulate individual plan participants from market value fluctuations.
*Stable value funds serve as an alternative to more volatile or risky asset classes and are a direct substitute for a money market fund. They typically offer a more attractive yield than money market funds, except during periods when short-term rates are rising rapidly.
*This paper describes how the underlying mix of securities and issuer characteristics have evolved since the financial crisis, and why Callan sees stable value as a healthy and important part of the U.S. retirement plan marketplace.
Introduction
In this paper, we seek to answer questions defined contribution (DC) plan sponsors and their participants may have about stable value funds, including mechanics, instruments, liquidity, and implementation considerations. We also look at risk and performance, address benchmarking issues, cover recent trends, and provide key takeaways for DC plan sponsors.
Stable value funds are popular with DC plans and 529 college saving investors. According to Callan’s DC Index™, 65% of DC plans offer a stable value fund, and typically 14% of total plan assets are in such funds when offered.
We believe stable value can be an effective investment option for DC plan participants seeking capital preservation.
Grading the Pensions Protection Act, 10 Years LaterCallan
Do you remember the Pension Protection Act (PPA)? More than 900 pages of legislation touching seemingly every part of the retirement system. It presented challenges for defined benefits plans. Defined contribution (DC) plans instead saw beneficial provisions, including the permanence of certain provisions of the 2001 Economic Growth Tax Relief Reconciliation Act (EGTRRA) and the creation of safe harbors for using target date funds as defaults and for implementing automatic enrollment.
The PPA heralded a new era for DC plans with the potential to greatly increase workers’ access to retirement income security. But looking at the PPA’s report card, we do not see “straight As” over the last decade.
Many of the provisions took years to enact, and plan sponsors still seem to struggle with them. As the PPA celebrates 10 years, we ask: Was it successful? Did it transform DC plans in the way the industry had hoped? How can we do better?
Callan gives a grade to the performance of nine key PPA provisions over the past decade. We start with the least effective.
What’s on the minds of larger defined contribution (DC) plan sponsors? According to a recently released Callan Associates study conducted in late 2015 with almost 150 employers, fees, investments and compliance top the list. With more resources devoted to running this DC plan, what happens in the larger market usually trickles down market.
Though the number one action taken to reduce fiduciary liability was updating or reviewing their investment policy statement, followed by reviewing fees, the number one priority in 2016 will be compliance.
Other key findings from the Callan DC study include:
*61% use auto-enrollment with 1 in 5 employing re-enrollment for current employees
*88% of plans offer financial advice to employees
*75% benchmark their fees as part of fee calculation and 53% rebate revenue sharing
*86% use TDFs (target date funds) as their default option of QDIA – usage of the proprietary funds of the record keeper as their QDIA is down to 32% from 70% in 2011
*15% of plans increased the number of funds while 11% decreased the number
The DOL’s 2012 fee disclosure regs and the 2006 Pension Protection Act (PPA) were cited as the most important events affecting DC plans showing that fees and auto features paved by the PPA are keys drivers for lawmakers and plan sponsors.
Though there is a lot of noise about the pending DOL conflict of interest rule aimed at increasing oversight of DC plans as well as IRAs, most affected will be advisors, especially those selling proprietary products, and broker dealers that will have to impose greater scrutiny over their advisors that manage DC plans and IRAs.
The DOL rule could limit plan participants access to advisors and advice as well as education especially when they separate from employment but will have little impact on employers running their plan.
Target Date Funds - Finding the Right Vehicle for the Road to RetirementCallan
There seems to be no stopping target date fund (TDF) strategies, which are growing both in use within defined contribution (DC) plans and in products available. Each TDF manager differs in their underlying philosophy, which shapes construction and implementation.
The wide variety of options represents both a benefit and a challenge. As plan sponsors examine and monitor TDF options they must be aware of the differences and how these differences can ultimately affect participant outcomes.
This paper draws on Callan’s comprehensive data on TDFs and DC plans, which is gathered and analyzed annually.
We present key findings and highlight questions plan sponsors may want to consider when evaluating their TDF options.
***
Just as people rely on cars to get them where they need to go, Americans increasingly depend on TDFs to help them achieve their retirement goals. For the first time since the inception of the Callan DC Index™ in 2006, TDFs (25%) recently beat out U.S. large cap equity (24%) as the largest portfolio allocation in DC plans.
As part of Callan’s annual DC Trends Survey, more than 140 DC plan sponsors were asked about their use of TDFs. Callan also annually collects qualitative and quantitative data from target date managers representing both mutual funds and collective trusts. This paper leverages this combined data to examine the current state of the TDF universe and the differentiating characteristics that help drive outcomes.
Defined Contribution Plans and Fee Lawsuits: Stuck in the Mud or the Road to ...Callan
The message is clear for defined contribution (DC) plan sponsors: follow best practices established for plan fees or risk getting stuck in a costly and time-consuming lawsuit.
Nearly 40 401(k) fee lawsuits have been filed since 2006. The first generation of lawsuits focused on revenue-sharing violations, failure to understand specific costs, and use of retail mutual funds in 401(k) lineups. Over time these lawsuits have expanded in scope, covering everything from the prudence of offering certain stable value funds to adherence to investment policy statements.
In addition to monetary payments, settlements have typically included
requirements to:
• Competitively bid plan recordkeeping services
• Engage an outside consultant
• Utilize institutional or retirement-share classes where possible
• Add passively managed funds to the lineup
• Comply with the Department of Labor’s participant disclosure regulation
In this infographic, Callan describes select DC fee lawsuits. We suggest best practices to help plan sponsors keep their plan on the path to success.
Strategies with high active share have garnered much attention from institutional investors following the release of Martijn Cremers and Antti Petajisto’s research paper that introduced the concept.
In this paper we isolate the impact of active share on performance by focusing on “product pairs,” which are two portfolios that share many characteristics (same management team, basic philosophy, research platform, etc.) but have different degrees of concentration (concentrated vs. diversified), which translates fairly directly to a difference in active share.
We ran several analyses using product pairs identified in Callan’s database in order to better understand— and quantify—the performance differences between concentrated and diversified products managed by the same team. Our analysis reveals the inherent difficulty of identifying reliable predictors of excess return across strategies and over time. High active share may be worthy of consideration as a screening variable, but it is clearly only one of potentially dozens of factors that might influence the magnitude and direction of the excess return for any given strategy over time.
Author Gregory C. Allen is Callan’s President and Director of Research. He oversees Callan’s Fund Sponsor Consulting, Trust Advisory, and multiple other firm-wide research groups.
Greg is a member of Callan’s Management, Alternatives Review, and Client Policy Review Committees. He is also a member of the Investment Committee, which has oversight responsibility for all of Callan’s discretionary multi-manager solutions.
Emerging Managers: Small Firms with Big IdeasCallan
Everybody has to start somewhere, including investment managers. Even the largest firms with broad name recognition and substantial assets were once emerging firms.
Emerging managers generally include smaller and newer investment managers, potentially
with atypical ownership structures. While smaller asset pools can work against them in some cases, it can also work in their favor, enabling them to access opportunities that larger, more established investment managers cannot.
Many U.S. institutional investors have long track records of dedicated investments with emerging managers while others are just starting to examine the space.
Emerging manager programs are becoming more commonplace, particularly at public pension funds, as investors recognize the potential portfolio gains that can be achieved through investing with the diverse and entrepreneurial investment managers that make up the emerging manager space.
Callan has long recognized the value that diversity of professionals and firm size can bring to investment outcomes. Our founder Ed Callan was instrumental in launching Progress Investment Management more than two decades ago. In 2010, we launched Callan Connects to expand our universe of emerging manager and minority, women, and disabled owned firms.
In this interview, Uvan Tseng talks with Lauren Mathias, who oversees Callan Connects, about trends and issues in the emerging manager arena.
Managing Defined Contribution Plan Investments: A Fiduciary HandbookCallan
Employee Retirement Income Security Act (ERISA) fiduciaries face a challenging task: They must familiarize themselves with ERISA's complicated rules of fiduciary conduct. They must understand and evaluate the performance of plan investments, and in doing so, they are subject to ERISA's prudent expert and exclusive purpose standards. In this handbook we focus on defined contribution (DC) plan investment fiduciaries and some of the key issues they face.
What do Money Market Reforms Mean for Investors? A Roundtable Discussion with...Callan
Money market funds are an important source of liquidity and are critical to our financial markets.
Following the financial crisis of 2008, some money market funds “broke the buck,” with net asset values (NAVs) falling below $1 per share. The chaotic scene that ensued surprised investors, and regulators have responded by updating laws to prevent a repeat of that difficult time.
On July 23, 2014, the Securities and Exchange Commission adopted amendments to the rules that govern
money market mutual funds. The amendments address the risks of an investor run on money market funds,
while seeking to preserve the benefits of these funds. The new rules—the second wave of reforms since 2008—are effective October 14, 2014, but have a long compliance period (two years or more) to ease the transition.
New requirements include:
Institutional prime money market funds will have a floating NAV.
Portfolios must value securities according to their current market value and redeem shares based on the floating NAV.
Non-government money market fund boards will now be able to impose liquidity fees and redemption gates to address investor runs.
The 2014 changes further tighten disclosure requirements (e.g., the requirement to disclose a fund’s level
of daily and weekly liquid assets, net flows, and market-based NAV on a website) and define enhanced
diversification requirements and stress testing.
The ruling impacts many institutional investors, including sponsors of defined benefit and defined contribution plans. We assembled a group of Callan experts to highlight key provisions and their potential impacts on investors. Jim Callahan, CFA, manager of Callan’s Fund Sponsor Consulting group, sat down with his colleagues to discuss the latest money market reforms.
Roundtable participants included Bo Abesamis, Steve Center, CFA, and Jimmy Veneruso, CFA, CAIA, from Callan’s Trust and Custody, Fund Sponsor, and Defined Contribution groups.
Callan’s 2014 Investment Management Fee Survey provides a current report on institutional investment management fee payment practices and trends. To collect this information, Callan sent an electronic questionnaire to a broad sample of U.S.-based institutional fund sponsors and investment management organizations. Respondents provided fee information for calendar year 2013 (specific dates varied by organization, but the majority were as of December 31, 2013), and perspective on fee practices and perspectives for 2014. We supplemented this data with information from Callan’s proprietary databases to establish the trends observed in this report.
Callan conducted similar surveys in 2004, 2006, 2009, and 2011. We offer commentary regarding differences, where relevant, between historical survey results and the 2014 findings, along with observations reflecting both long- and short-term trends.
Seventy-two fund sponsors representing $859 billion in assets, and 211 investment management organizations with $15 trillion in assets under management, provided detailed fee practices and data on 15 asset classes. Results were supplemented by actual and published fee information sourced from Callan’s fund sponsor and investment manager databases, as well as other industry sources.
Key Findings:
*Investment management fees represent 46 basis points (bps), on average, of fund sponsors’ total assets, up from 37 bps in
2009. The difference between the median and average has climbed over this time period. Other data in Callan’s fee survey also reveals a divergence between the funds that pay the most and those that pay the least in investment management fees.
*The range between funds that paid the most (10th percentile) and those that paid the least (90th percentile) increased dramatically:
from 56 bps in 2009 to 73 bps in 2013. Differences in investment policy, and notably asset allocation, can lead to
substantial disparity in fees. While some funds are increasingly looking to low-cost, public market index strategies, others are
investing a greater portion of their portfolio in high-cost alternative assets. Other key survey findings include:
Alternatives, which are consistently the most expensive asset class, are facing fee compression: the median total asset class fee declined from 134 bps in 2009 to 99 bps in 2013, and the 90th percentile fell from 174 bps to 152 bps. Large allocations to alternatives can greatly increase overall investment management fees.
Correlations between percentage of total portfolio allocated to alternatives and fees paid (in bps) were strong in 2013 (+0.70).
Total U.S. and non-U.S. equity fees paid increased marginally from 2009 to 2011, but declined from 2011 to 2013. Median U.S. equity fees run about 60% of their non-U.S. counterparts. Non-U.S. fees are typically higher in part due to research expenses. Fixed income median expenses were flat from 2009 to 2013.
Are Defined Contribution Plans Ready for Alternative Investments?Callan
Amid the growing popularity of the defined contribution (DC) model, the DC industry continues to look for ways to optimize performance.
The outperformance of defined benefit (DB) plans, and the increasing cross-pollination of DB and DC investment staff, has led some DC plans to take a closer look at alternative investments.
We examine three broad areas of alternative investments in relation to the DC market: real estate, hedge funds, and private equity.
Authors: Sally Haskins, Gary Robertson, Jimmy Veneruso
2013 Callan Cost of Doing Business Survey: U.S. Funds and TrustsCallan
Monitoring and controlling costs is a primary fiduciary responsibility for all funds and trusts. In this survey, Callan compares the costs of administering and operating funds and trusts across all types of tax-exempt and tax-qualified organizations in the U.S.
We identify practices and trends to help institutional investors manage expenses.
We fielded this survey in April and May of 2013. The results incorporate responses from 49 fund sponsors representing $219 billion in assets. In this report, we include comparisons with four similar surveys Callan conducted over the past 15 years to identify enduring, long-term trends in fund/trust management and expenses.
Major long-term trends identified include rising external investment management fees and non-investment management external advisor fees, alongside falling custody costs. Allocations have steadily shifted out of U.S. equity and into non-U.S. and global equities, real estate, hedge funds, and private equity since 1998. Other key findings include:
• In 2012, funds spent an average of 54 basis points of total assets to operate their funds. Average total fund expenses have climbed more than 50% since 1998, when Callan first collected this data.
• External investment management fees represent the lion’s share of total fund expenses at 90%. This figure has grown steadily over time, from 83% in 1998. The increase can largely be attributed to growing allocations to more expensive alternative
asset classes, namely hedge funds and private equity.
• More assets flowed to hedge funds and private equity, as the percentage of funds invested in and the average allocations to these asset classes grew. Hedge fund and private equity fees saw modest declines at the median over the last four years, while averages were fairly static. Real estate fees saw little change and the average allocation remained around 6%.
• Not surprisingly, smaller funds—defined as those with less than $1 billion in total assets—pay a premium (65 basis points, on average) to administer their funds relative to mid-sized and larger funds. Conversely, there is little difference between total expenses for the medium (47 basis points) and large funds (48.5 basis points) that responded to our survey. This can
be attributed to differences in asset allocation, as large funds tend to invest in more expensive strategies.
• External investment management fees are the primary driver of total fund expenses. These fees have risen 55% over 15 years. Non-investment management external advisor fees,1 which are the second largest average expense for U.S.
funds, have increased 115% since 1998. However, at 5% of total fund expenses, changes in this area have a more modest impact than external investment management fees.
The Outsourced Chief Investment Officer Model: One Size Does Not Fit AllCallan
As investors reach for returns in a sometimes bruising market, they are adding private equity, hedge funds,
and other alternatives, leading to increasingly sophisticated—and complicated—portfolio monitoring and
management. Heightened regulatory and compliance requirements have further increased the time and
resources required to meet fiduciary responsibilities. This has led some investors to consider delegating
investment oversight, monitoring, and management duties.
The industry press regularly reports on a large and rapidly growing outsourced chief investment officer
(OCIO) market, and some fund sponsors wonder if this model would serve them better than the traditional consulting model. Funds managed through an OCIO are beholden to the same challenging market environment and regulatory atmosphere, but the burden of balancing these challenges can be largely shifted from the investment committee to the OCIO provider. Some funds find this solution meets their needs.
In the outsourced chief investment officer (OCIO) model (also known as “implemented consulting,”
“discretionary consulting,” or “delegated consulting”), an institution shifts discretionary authority to an
advisory firm to manage some or all of the investment functions typically performed by the investment committee. The precise definition of this model varies as much as the name, making the size and scope of the marketplace difficult to pin down.
The increasing popularity of this model is in part a response to the frustration investment committees
have felt amid a shifting environment in which portfolio management requires more resources. While an OCIO offers an elegant solution, it is not a panacea for all the issues facing institutional investors, and relinquishing all fiduciary oversight is not an option.
In this paper we describe the OCIO market and Callan’s approach, which acknowledges that each investor faces unique challenges that require custom solutions. We offer two case studies and a series of questions that might assist fund sponsors in weighing the appropriateness of the OCIO model for their fund.
Risk Factors as Building Blocks for Portfolio DiversificationCallan
Author: Eugene Podkaminer
Asset classes can be broken down into building blocks, or factors, that explain the majority of the assets’ risk and return characteristics. A factor-based investment approach enables the investor theoretically to remix the factors into portfolios that are better diversified and more efficient than traditional portfolios.
Seemingly diverse asset classes can have unexpectedly high correlations—a result of the significant overlap in their underlying common risk factor exposures. These high correlations caused many portfolios to exhibit poor diversification in the recent market downturn, and investors can use risk factors to view their portfolios and assess risk.
Although constructing ex ante optimized portfolios using risk factor inputs is possible, there are significant challenges to overcome, including the need for active, frequent rebalancing; creation of forward-looking assumptions; and the use of derivatives and short positions. However, key elements of factor-based methodologies can be integrated in multiple ways into traditional asset allocation structures to enhance portfolio construction, illuminate sources of risk, and inform manager structure.
Going Global: U.S. Domestic Bias vs. The WorldCallan
How does the average U.S. pension plan’s domestic bias stack up against that of other developed countries? Taking a look at how investments really break out may surprise you. Flip the page to see more detailed discussions of the evolution in global equity markets and emerging markets as well as global population trends. We also highlight seven key aspects of non-U.S. investing that you may want to consider when assessing your asset allocation strategy.
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
when will pi network coin be available on crypto exchange.
2016 ESG Interest and Implementation Survey
1. Knowledge. Experience. Integrity.
2016 ESG Interest and Implementation Survey
In September 2016, Callan conducted our fourth annual survey to assess the status of environ-
mental, social, and governance (ESG) factor integration—including responsible and sustainable
investment strategies and socially responsible investing—into investment decision making in the
U.S. institutional market. The results reflect responses from 84 unique institutional U.S. funds rep-
resenting approximately $843 billion in assets.
The survey reveals a growing trend of incorporation of ESG factors. In 2016, 37% of all survey respon-
dents have “incorporated ESG factors into decision making,” up from 29% in 2015 and 22% in 2013.
Some of this increase appears to be driven by funds in the health care sector, which saw particularly
high adoption rates (62%). Endowments (53%) and foundations (48%) continue to be the highest
adopters relative to other fund types, though corporate funds saw a material uptick in incorporation
relative to a year ago, doubling from 15% in 2015 to 30% in 2016.
By fund size, large funds (greater than $3 billion in assets) tend to have higher rates of adoption of
ESG factors into investment decision making than smaller funds. The largest funds (with more than
$20 billion in assets) had the highest adoption rates at 71%.
The most common implementation of ESG is to add language to the investment policy statement
(cited by 53% of respondents that incorporate ESG). The greatest barrier to funds incorporating ESG
into investment decision making continues to be a lack of clarity over the value proposition (cited by
63% of respondents that do not incorporate ESG).
CALLAN
INSTITUTE
Survey
December 2016
2. 2
Respondent Overview
Callan surveyed U.S. institutional investors on environmental, social, and governance (ESG) factors,
defined for the purposes of the survey as: socially responsible investing (SRI) (including divestment),
sustainable investing, responsible investing, and other associated terms. We collected responses from
84 U.S. funds and trusts that collectively represent approximately $843 billion in assets.
Exhibit 1 details survey respondents by fund type: 27% are corporate funds, 29% public funds, 25%
foundations, 18% endowments, and 1% other. Exhibit 1 also shows respondents by fund size. Thirty-
three percent have $500 million or less in assets, 37% have between $500 million and $3 billion, and the
remaining 29% have greater than $3 billion. Fifteen percent of respondents are in the health care industry,
an area that reflects higher adoption of ESG. While the 2016 respondent pool is smaller than 2015 (242
funds with $2.4 trillion in assets responded in 2015), the respondent pool makeup is similar by fund size
and type. In 2016, a greater percentage of foundations weighed in (25% in 2016 vs. 10% in 2015) while
fewer public funds and other fund types responded. By fund size, a greater percentage of medium funds
responded in 2016 than 2015, and a smaller portion of large funds weighed in.
Defining ESG
In 2016, Callan sought to determine how respondents define ESG, as we have found that definitions
can vary widely in the industry. Logically, defining ESG is often the first step a fund takes in exploring
implementation. While just over one-third (35%) of respondents cited a literal definition (i.e., “environ-
mental, social, and governance issues”; or “sustainability related issues”), an almost equal percentage of
Exhibit 1 Respondents by Fund Type
Corporate
27%
Endowment
18%
Foundation
25%
Public
29%
11% 17%
Corp. DC
Corp. DB
Large
29%
Small
33%
$500mm-$
3bn
$3bn-$20bn21%
>$20bn 8% <$500mm
Medium
37%
Other 1%
Respondents by Fund Size
Note: Throughout this report, charts may not sum to 100% due to rounding.
3. 3Knowledge. Experience. Integrity.
respondents (33%) do not define it at all (Exhibit 2). Nearly every respondent that does not define ESG
also does not currently incorporate it into investment decisions. Fewer respondents cited specific factors/
missions (e.g., ex-tobacco, religious screens) or highlighted one pillar (e.g., environmental issues only).
Some of the “Other” definitions of ESG include: compliant with the PRI principles; applying the Prudent
Investor Rule in judging the quality and reasonable diversification of investments; and considering invest-
ments based on non-investment criteria.
ESG Factor Adoption Rates
Our survey asked whether or not the fund had incorporated ESG factors into investment decision mak-
ing. The language was intentionally broad in order to capture the prevalence of ESG considerations in
the institutional investment arena. The percentage of respondents that have incorporated ESG factors
into decision making continues to grow and hit 37% in 2016, up from 29% in 2015 and 22% in 2013
(Exhibit 3). Foundations and endowments are the highest adopters relative to other fund types: 48% of
Exhibit 2 How do you define ESG?
All Respondents
Specific Pillar
(E S or G)
Specific Factor/
Mission
OtherDo not defineLiteral
35%
33%
15%
6%
11%
Exhibit 3 Have you incorporated ESG factors into your investment decisions?
All Respondents
2013201420152016
Yes 22%
No 78%
Yes 26%
No 72%
Not sure 2%
Yes 29%
No 68%
Not sure 3%
Yes 37%
No 60%
Not sure 4%
4. 4
foundations and 53% of endowments indicate they use ESG factors (Exhibit 4). Corporate funds saw a
material increase in prevalence, from 15% in 2015 to 30% in 2016. Corporate defined benefit plans saw
the largest jump, from 7% to 29%, during the same year that followed the Department of Labor’s bulletin
clarifying that investment strategies that consider ESG factors can be in compliance with fiduciary duty
under ERISA. Public funds now have the lowest rates of ESG incorporation at 25%, a modest decrease
from 2015 (27%) that Callan views as a reflection in the survey sample (fewer public funds responded to
our survey in 2016 than in 2015).
Exhibit 4 Respondents that have incorporated ESG into investment decisions
By Fund Type
2013 – 2016
By Fund Size
2016
0%
20%
40%
60%
80%
2013 2014 2015 2016
53% Endowment
48% Foundation
37% All
33% Corp. DC
30% Corporate
29% Corp. DB
25% Public
>$20bn$3bn-$20bn$500mm-
$3bn
<$500mm
39%
29%
33%
71%
5. 5Knowledge. Experience. Integrity.
Survey respondents are from across the U.S.: 31% Central, 25% Northeast, 18% Southeast, 14% Pacific,
and 12% Mountain. The Pacific region has the highest percentage of funds incorporating ESG factors at
58% (Exhibit 5), followed by the Central (46%) and Northeast (33%). Respondents from the Southeast
and Mountain regions have the lowest adoption rate at 20% each.
An additional 22% of respondents that have not yet incorporated ESG into investment decision making
are currently considering doing so (Exhibit 6). This is double the amount considering this decision in 2015
(11%), suggesting the momentum gained in the past few years will continue.
Exhibit 6 If you have not incorporated ESG into investment decisions, are you considering it?
All Respondents
Yes 22%
No 78%
Exhibit 7 Respondents that are considering incorporating ESG into investment decisions
By Fund Type
FoundationEndowmentPublicCorporate
14%
24%
29%
30%
Pacific (12 funds)
Mountain (10 funds)
Central (26 funds)
Northeast (21 funds)
Southeast (15 funds)
58%
20% 46%
20%
33%
Exhibit 5 Funds that are incorporating ESG factors in investment decisions by region
All Respondents
6. 6
Implementation
In 2016, for the first time Callan asked investors that have incorporated ESG factors into investment deci-
sions specifically how they had done so. The top implementation method for survey respondents was to
add language to the investment policy statement (53%). Callan finds that adding language to investment
beliefs or policy statements is frequently a first step that many institutional investors take when pursuing
an integrated approach to incorporating ESG factors in investment decisions.
The next most prevalent implementations are to incorporate a screening process and to communicate to
investment managers that ESG is important to the fund (47% each). A negative screening process can be
put into place to address a specific issue (e.g., screen out investments related to tobacco or fossil fuels),
but positive screening is also becoming more prevalent (e.g., screen to include only securities that have
best practices in a specific sector). Engagement/proxy voting ranked fourth with 43% of investors utilizing
this method. Only 10% of respondents indicated they became a Principles for Responsible Investment
(PRI) signatory; this global initiative tends to be more prevalent with investment management firms oper-
ating in the U.S. Callan’s 2016 survey of investment managers revealed 40% had signed the PRI.1
1 Asset Managers and ESG: Sensing Opportunity, Bigger Firms Lead the Charge. Callan. June 2016.
Became a Principles for Responsible
Investment (PRI) signatory
Explored or conducted carbon
footprinting, tracking, or other analysis
Scored investment managers using ESG metrics
Hired a manager/strategy for impact investing
Divested from a certain industry,
sector, or other area
Added language to investment beliefs
Hired a manager/strategy that
has incorporated ESG
Other
Engagement/proxy voting
Communicated to investment managers
that ESG is important to the fund
Incorporated a screening process
Added language to investment policy statement 53%
47%
47%
43%
33%
30%
30%
27%
17%
13%
13%
10%
Exhibit 8 How has your fund implemented the incorporation of ESG factors into the investment decision
making process?
7. 7Knowledge. Experience. Integrity.
Reasons to Use ESG Factors
Exhibit 9 shows motivations for incorporating ESG into investment decision making. The order of these
factors has changed little over the past two years, and the top reasons cited for incorporating ESG factors
into investment decisions remain: “My fund has other goals besides maximizing risk-adjusted returns, and
we believe that ESG factors can help us attain these other goals” (41%) and “The fund’s Investment Policy
Statement dictates that we consider ESG factors” (34%). Nearly one-third of respondents indicate they
expect to achieve higher returns (31%) and an improved risk profile (31%), or that their fund must consider
ESG factors as part of their fiduciary responsibility (31%).
0% 20% 40% 60% 80% 100%
33%
0%
33%
10%
33%
80%
40%
14%
50%
29%
83%
0%
50%
17%
29%
30%
33%
50%
14%
17%
57%
17%
20%
Public
Corporate Endowment
FoundationAll Respondents
Other
We expect to achieve higher
returns over the long term
We expect to achieve an
improved risk profile
My fund must consider ESG factors
as part of our fiduciary responsibility
The fund's Investment Policy
Statement dictates that we
consider ESG factors
My fund has other goals besides
maximizing risk-adjusted returns,
and we believe that ESG factors
can help us attain these other goals
31%
31%
31%
34%
41%
24%
30%
Exhibit 9 Why has your fund incorporated ESG factors into investment decisions?
Multiple responses allowed. Other responses include: to maximize endowment contributions; to address political factors/risk; faith-
based motivation; sustainability is part of the long-term investor’s considerations; and alignment with mission.
8. 8
Reasons Not to Use ESG Factors
More than half (60%) of U.S. institutional investors that responded to our survey have not incorporated
ESG factors into investment decision making, down from 78% in 2013 (Exhibit 3). The main reasons
remain unchanged relative to two years ago and include: ESG’s value proposition is unclear (63%), a
dearth of research tying ESG factors to outperformance (37%), and a perceived disconnect between ESG
factors and financial outcomes (37%) (Exhibit 10). Compared to other fund types, fewer foundations cite
an unclear value proposition (50%) as a reason to not incorporate ESG factors.
Multiple responses allowed. Other includes: not a board mandate; we consider many factors, but we don’t explicitly label/discuss ESG
as a separate subject; we found there is no excess performance, and choose not to limit our investment opportunity set; our committee
believes their responsibility is to maximize return given an acceptable level of risk.
Exhibit 10 Why has your fund NOT incorporated ESG factors into investment decisions?
0%
10%
20% 30% 40% 50% 60% 70% 80%
71%
50%
65%
43%
43%
71%
41%
43%
40%
29%
29%
43%
14%
0%
14%
29%
30%
7%
21%
10%
20%
14%
12%
29%
40%
24%
0%
0%
18%
29%
20%
0%
All Respondents
0.0% 12.5% 25.0% 37.5% 50.0% 62.5% 75.0%
Other
My fund does not have the time
and/or staff resources to devote
to exploring this area
Track records are too short
for these types of strategies
Benchmarking is too difficult
(unclear how to measure financial
and non-financial success)
I don’t know how ESG factors
would fit in the fund's strategic
asset allocation
My fund will not consider any
factors that are not purely financial
in our investment decision making
I have not seen ample
research tying ESG
factors to outperformance
It is unclear what the
value proposition is
63%
37%
37%
27%
20%
14%
20%
8%
Public
Corporate Endowment
Foundation
9. 9Knowledge. Experience. Integrity.
Personal Views on ESG
Personal views around ESG have changed little over the last several years. Asked to rank a number of
statements according to their personal opinions, respondents agree most on the concept that engage-
ment is more effective than divestment (Exhibit 11). Just over half of respondents (55%) also support the
idea (agree or strongly agree) that ESG investing can have a substantial positive impact on humanity.
Respondents are roughly split into thirds around whether considering the sustainability of the environment
is part of a fiduciary’s duty: a larger percentage agree with this statement (39%) than disagree (31%) and
the remaining 30% have no opinion. Respondents most strongly disagree that ESG investing is a short-
term trend or that it will never be embraced by the U.S. market. Overall, opinions about ESG appear to be
ESG investing might work
in other countries, but the
U.S. market will never
embrace it
ESG investing is a
short-term trend
ESG investing can most
likely enhance long-term
returns
Engagement is more
effective than divestment
Overall, ESG factors are
just as important as
traditional fundamental
factors (e.g., profitability
and valuation) when
evaluating companies
Considering the
sustainability of the
environment is part
of a fiduciary's duty
Financial outcomes aside,
ESG investing can have a
substantial positive impact
on humanity
(society, environment, etc.)
Strongly disagree
Disagree
No opinion
Agree
Strongly agree
4%
27%
42%
24%
3%
14%
41%
31%
8%
6%
8%
31%
30%
17%
14%
4%
28%
24%
31%
13%
20%
42%
32%
6%
1%
14%
24%
44%
17%
1%
8%
28%
55%
7%
Rank the following statements on a scale of 1 to 5 (1=strongly disagree, 5=strongly agree) to reflect
your personal views:
Exhibit 11
All Respondents
10. 10
crystallizing; in 2015, 40% or more respondents indicated “no opinion” on three statements while in 2016,
the only statement that did not elicit an opinion from more than 40% of respondents was: ESG investing
can most likely enhance long-term returns. This suggests that industry educational efforts are helping
inform investors about the facts needed to form thoughtful opinions about the issues.
Conclusion
While most U.S.-based institutional investors have not yet incorporated ESG factors into decision mak-
ing, steadily increasing rates of usage and changing viewpoints suggest the movement to consider ESG
is gaining traction. Since Callan began conducting this annual survey in 2013, ESG adoption has been
most prevalent in endowments (from 22% in 2013 to 53% in 2016) and foundations (from 31% in 2013 to
48% in 2016). While public funds saw a material increase in usage in 2014 and 2015, adoption leveled off
from 2015-2016 at around one-quarter of public funds. Alternately, corporate funds’ incorporation rate of
ESG factors surged in the past year, doubling from 15% to 30% in 2016, after previously showing little an-
nual change. In October 2015, the Department of Labor issued a bulletin clarifying that investments that
consider ESG factors can be in line with a fiduciary’s duty provided they meet the same risk and return
standards that other investments adhere to.2
ESG issues have received much attention in the last year. Climate change, fossil fuel-free investing, and
the Department of Labor’s Interpretive Bulletin are a few examples of issues that have occupied investors’
minds and been covered by the press. Should trends in Callan’s ESG survey continue, we can expect to
see more attention to these issues and others related to ESG in the future.
2 See Callan’s white paper “The Department of Labor Weighs in on ESG: Key Takeaways from Interpretive Bulletin 2015-01.”
November 2015.
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