Bridging the Gaps: ESG Integration Across the Whole Pension Portfolio - Presentation by Dr. James Gifford at the European Pensions & Investments Summit
For more information contact: emailus@marcusevans.com
Dr. James Gifford, who is the PRI Executive Director gave his presentation titled "Bridging the Gaps: ESG Integration Across the Whole Pension Portfolio" at the European Pensions & Investments Summit on 16, May 2012.
Join the 2015 Summit along with leading regional pension investors and global asset managers in an intimate environment for a focused discussion of key new drivers shaping institutional investment strategies today.
For more information contact: emailus@marcusevans.com
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Connecting Capital to Sustainability: SSD Conference 2013 (US)Colin Habberton
A review of the role of ESG criteria in the decision-making processes of institutional investors. It includes a model of the South African investment industry and the enabling conditions contributing to the rise of the research and practice of Responsible Investing.
A tour of the global ESG standards landscape, 100 days out from COP26, explaining how Inline XBRL, a building block approach to international standards consistency, and independent review of coming mandatory ESG disclosures will change reporting. Presented to the Taiwan Stock Exchange 21 July 2021.
One of my earlier ESG presentations to an Investor Relations Officers' ( #IRO ) association called the National Investor Relations Institute ( #NIRI ). This was in 2009 while I was running my own consultancy #WallacePartners and representing clients like #Trucost
GreenBiz 19 Workshop Slides: The Evolution of Social and Human Capital Manage...GreenBiz Group
Corporate managers have long heralded people as their companies’ most important assets and research confirms the vital role of human capital in long-term value creation. In recognizing the importance and value of social and human capital many corporations, their investors, stakeholders and business partners are seeking to integrate consistent, standard, and widely accepted valuation and decision making tools. This session will discuss the evolution of the Social & Human Capital Coalition. The Coalition and key stakeholders will delve into the latest trends around valuing social and human capital, as well as the application of the Social & Human Capital Protocol.
ERM partnered with a range of leading experts and institutions in June 2019 to bring the latest ESG and sustainability information to the Asian markets. Partners in this tour included, the Stock Exchange of Thailand (SET); Hong Kong Stock Exchange (HKEX); Bloomberg; Citi; Robeco; The Economist; and CDP.
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Company governance practices and failures have long been an important factor in investor
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social impacts stemming from its practices, policies and products has increased substantially.
Effective oversight and management by boards, corporate secretaries and sustainability teams
of so-called “ESG” (environmental, social and governance) issues are increasingly important to
preserving and creating shareholder value. Driven by client demand, reputational risk
management and a supportive body of financial research, many investors are demanding that
companies think more broadly about their ESG impacts, take corrective action (if required) and
disclose their ESG-related efforts. In this brief, we will examine the drivers of the growth in
ESG-related investing and engagement, explore ESG’s impact on financial products and
strategies and suggest practical advice to assist boards, corporate secretaries and sustainability
teams.
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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.
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This presentation provides the latest information about the dramatic increase in interest in socially responsible investing (also known as environmental, social, and governance (ESG) investing). Mike Wallace, a Partner with BrownFlynn, and past Director of the North American Global Reporting Initiative, will discuss the growing interest amongst retail and institutional investors in applying either values or ESG data to their investments in the stock market. He will also discuss the role of investors in pushing companies to improve ESG policies and performance on issues such as climate change, diversity, and human rights.
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Company governance practices and failures have long been an important factor in investor
analysis of a firm’s short-term and long-term value. Over the last several decades—with an
acceleration in the last five years—the relevance to investors of a company’s environmental and
social impacts stemming from its practices, policies and products has increased substantially.
Effective oversight and management by boards, corporate secretaries and sustainability teams
of so-called “ESG” (environmental, social and governance) issues are increasingly important to
preserving and creating shareholder value. Driven by client demand, reputational risk
management and a supportive body of financial research, many investors are demanding that
companies think more broadly about their ESG impacts, take corrective action (if required) and
disclose their ESG-related efforts. In this brief, we will examine the drivers of the growth in
ESG-related investing and engagement, explore ESG’s impact on financial products and
strategies and suggest practical advice to assist boards, corporate secretaries and sustainability
teams.
ESG Is No Longer Optional. What Every Private Equity Manager Should KnowNavatar
Recording: https://www.youtube.com/watch?v=K5NBmZs84gY&feature=youtu.be
Responsible investment (or ESG), once a do-good sideshow, is becoming mainstream. Private equity managers must consider a host of issues, from gender diversity to carbon emissions, or risk losing investor capital and deals. The trend is only growing.
The challenge today is formalizing ESG policies to meet heightened standards. In this webinar, Navatar in conjunction with Invest Europe, brought together leading ESG thinkers from the industry to discuss how GPs should present their ESG framework to investors, what to consider during pre-investment due diligence, and ultimately portfolio monitoring and exit.
We address:
- Why your ESG strategy can make or break a deal
- What LPs want to see in your policies/practices
- Bringing your ESG DDQ to the next level
-Automation, plastics and other emerging ESG risks
Speakers:
- Maaike van der Schoot, Responsible Investment Officer, AlpInvest Partners
- James Holley, Head of ESG, Bridgepoint
- Graeme Ardus, Head of ESG, Triton Partners
- Jaideep Das, Partner, ERM
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.
Portland Rotary: The state of socially responsible investing and the drivers...Mike Wallace
This presentation provides the latest information about the dramatic increase in interest in socially responsible investing (also known as environmental, social, and governance (ESG) investing). Mike Wallace, a Partner with BrownFlynn, and past Director of the North American Global Reporting Initiative, will discuss the growing interest amongst retail and institutional investors in applying either values or ESG data to their investments in the stock market. He will also discuss the role of investors in pushing companies to improve ESG policies and performance on issues such as climate change, diversity, and human rights.
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We were asked to speak to a group of CITI clients about the latest trends in #sustainability and #ESG. This presentation provides the latest information on the growth of the #ESG market, as well as real examples of corporate ESG data and how it is being presented to and used by intermediaries like Bloomberg, MSCI, Sustainalytics and others, as well as by asset owners and managers.
ESG Meets FinTech – A Strategic Analysis Executive SummaryMEDICI Inner Circle
MEDICI’s new ‘ESG Meets FinTech – A Strategic Analysis’ covers the impact of financial technology on Environmental, Social, and Governance (ESG) criteria. It analyzes the various dimensions of ESG and sustainability in the context of FinTech.
Balanced Rock Investment Advisors educational presentation on alternative investment strategies that reflect personal values.
Presented @ Brookline Library - 10.15.2015
ESG & Impact Investing: Navigating the EssentialsJedrick Theron
A report that will help readers navigate the world of ESG and Impact Investing. It will help readers with coming to an understanding of development finance institutions, the benefits of ESG in investing and company management and how best to implement ESG and impact investing into practice.
Misplaced expectations from climate disclosure initiativesNadia Ameli
The financial sector’s response to pressures around climate change has emphasized the role of disclosure, notably through the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. This Perspective examines two dimensions of the expectations behind transparency and disclosure initiatives: the belief that disinvestment is driven by disclosure; and that investment ‘switches’ from high- to low-carbon assets. We warn about the risk of disappointment from inflated expectations about what transparency can really deliver and suggest some areas that research and public policy should examine to mobilize the required capital to meet climate goals.
ESG research and corporate sustainability assessment proof the correlation between sustainable management integration and superior financial performance
Topics that are needed innovation in ESG Imperative for sustainable management, investing, and development. Related references are provided for consulting innovation insights.
I. Innovation Agenda for ESG Metrics
II. Innovation Agenda for ESG Sustainability Analyses
Impact Investing Masterclass – Deck for Future VC 2021Dama Sathianathan
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Similar to Bridging the Gaps: ESG Integration Across the Whole Pension Portfolio - Presentation by Dr. James Gifford at the European Pensions & Investments Summit
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http://www.oecd.org/finance/COP21session-GovernanceofinstitutionalinvestmentsFiduciarystandardsforaddressinggreenfinanceandtheportfolioimpactofclimatechange.htm
http://www.oecd.org/daf/
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Bridging the Gaps: ESG Integration Across the Whole Pension Portfolio - Presentation by Dr. James Gifford at the European Pensions & Investments Summit
1. Bridging the Gaps: ESG integration across
the whole pension portfolio
Dr. James Gifford, PRI Executive Director
16 May 2012
2. About responsible investment
What is responsible investment?
• Integration of environmental, social and governance (ESG) factors into investment
processes
• Shareholder dialogue with companies
• Engagement with policy makers
• Investing in the green economy, microfinance, impact investing
• Various forms of portfolio screens
• Not undermining the system
1
3. About responsible investment
Why?
• Protect and enhance investment returns
• Risk management, help identify ‘red flags’ and ‘black swans’
• Climate change & corporate governance are material financial issues
• Stewardship is necessary to make the agency chain work
• Greater pressure and focus from clients, beneficiaries, stakeholders, regulators
• Protect your reputation
2
4. Some academic findings
• Companies with high ESG scores are found to have less company specific risk
(Boutin-Dufresne and Savaria, 2004; Lee and Faff, 2009; Bauer, Derwall and Hann,
2009).
• Corporations with better employee relations or proactive environmental management
practices are found to have lower cost of debt and higher credit ratings (Bauer et al.,
2009; Bauer and Hann, 2011).
• ESG criteria are found to provide an insurance like protection for firms in legitimacy
crisis (Godfrey, Merrill and Hansen, 2009).
• Shareholder engagement on corporate governance and strategy can deliver abnormal
returns (Becht et al., 2008)
3
5. Principles for Responsible Investment
What is the PRI?
• The PRI is a partnership between the UN and investors that promotes responsible
investment within all areas of investment
• A framework of six principles which guide ESG integration
• Grounded in fiduciary duty
• Voluntary and aspirational
• Shared learning, implementation support and engagement
• A forum for discussion and action
4
6. The PRI Initiative
The PRI is not:
About sacrificing returns to save the world
About philanthropy
About exclusion of “unethical” stocks from portfolios
A prescriptive/compliance-based standard
5
7. The PRI Initiative
From niche to mainstream
Over 1000 signatories with greater than USD $30 trillion AUM
1200 35
1000 30
25
800
20
600
15
400
10
200 5
0 0
Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12
Number of signatories Assets under management (US$ trillion)
6
9. Implementation support: ESG integration across
the whole pension portfolio
Fixed income Listed equity Property Private equity Infrastructure
Inclusive Investing Small
Commodities Hedge funds
finance with impact investors
8
10. Fixed Income
Corporate and Sovereign Fixed Income work streams
Challenges to confront:
• How does analysis of ESG issues reduce default risk?
• How do you engage when you don’t have voting rights?
• Can ESG issues impact the creditworthiness of countries?
• Should ratings agencies do more to integrate ESG risks?
• Can ESG analysis improve understanding of risks associated with fixed income
derivatives?
Asset Owner sovereign fixed income assets subject to ESG integration has risen from
38% in 2010 to 50% in 2011.
9
11. Fixed Income
Corporate bonds
• Assess company's management of ESG risk – focus on downside or risks of default,
and integrating into investment decisions
• Consider the extent credit ratings reflect ESG risks
• Monitor issuers for ESG risks and raise them
• Screen issuers based on ESG / ethical criteria
• Look at new areas such as environmental bonds
Sovereign Bonds: Assessing country risk from an ESG perspective:
• Natural capital, human rights and how it is changing
• Commitment to standards – ILO, the EITI, World Bank
• Emissions profile in light of a price on carbon
10
12. Listed Equity
Responsible investment in passive management
• Exercising ownership rights in pooled passive funds –
Environment Agency Pension Fund
• ESG criteria for RFPs and mandates – FRR, HESTA
• Appointing a specialist engagement and voting overlay
provider – National Reserve Pension Fund of Ireland
• Use of enhanced passive investments – VicSuper
• Tilted indices – Northern Trust Global Investments
• Implementing an international voting strategy – LGIM
• Active dialogue with passive managers – Lothian
Pension Fund
11
13. Listed Equity
Active ownership through the Energy
PRI Engagement Clearinghouse efficiency
Examples of ongoing collaborative Board
diversity
shareholder dialogue coordinated by the PRI:
• Annual collaborative engagement with UN
Global Compact companies on disclosure
Executive
• Anticorruption practices
pay/bonu Carbon
• Emission reductions targets s emissions
• Pilot project to implement the UNGC/PRI
guidance on responsible business in high
risk and conflict-affected countries
12
14. Property
Property working group
• Links between environmental performance of
buildings and financial performance of
investments
• Strategic allocation: regional diversity of
impacts due to environmental, demographic
and consumer trends
• Stock selection: energy efficiency, tenant
engagement or labour strategies Ongoing
dialogue with investees: significant influence as
a direct investor
13
15. Property
2011 Property Report on Progress
• Property popular among PRI signatories with 40% investing in non-listed real estate
and 23% investing in listed real estate.
• Non-listed real estate has shown the most improvement – compared to other asset
classes in the area of translating RI policy into practice – increase from 28% in 2010
to 36% in 2011.
• In non-listed real estate 42% of signatories who integrate use ESG research and 38%
apply it to portfolio construction.
• Requests for ESG disclosure are becoming more common within both listed and non-
listed real estate. In 2011, 55% of survey respondents made standardised and/or
systematic requests for ESG disclosure in non-listed real estate, up from 45% in
2010. For listed real estate this figure was 46%, up from 39% in 2010.
14
16. Private Equity
GP Support, PE in Emerging Markets, Exits Research
• PE is well-suited to active ownership and consideration of ESG issues
• Dialogue between GPs and LPs is growing
• LPs consider ESG in mandates with intermediaries, internal due diligence and fund
selection process
• GPs take into account ESG risks and opportunities when making decisions on
investment in portfolio companies
• Rise from 69% to 84% among PRI Investment Managers integrating ESG into
private equity
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17. Private Equity
Responsible Investment In Private Equity: A Guide For Limited Partners
Guide outlines how LPs, GPs and portfolio companies each have a role in promoting
better and more consistent integration of ESG factors into private equity investment
decisions.
Substantive guidance for how an LP might integrate ESG considerations into:
• investment policy and investment decisions
• ownership activities, i.e. monitoring and engagement
• the disclosures sought from a GP and underlying portfolio companies
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18. Infrastructure
Infrastructure Best Practice and Case Studies working groups
• Investments (and ESG) risks include environment (carbon risk), labour relations,
leverage, regulation, demand risk, sovereign risk and capital growth
• ESG issues are part of long term risk management but if well managed ESG can be a
source of value creation
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19. Infrastructure
Responsible investment in infrastructure:
A compendium of case studies
• ESG and the long-term ownership of
infrastructure assets – AustralianSuper
• Formulating an ESG policy and integrating it into
the due diligence process – IFM
• Developing an infrastructure ESG toolbox - AMP
Capital Investors
• Developing a process to integrate ESG in
investment-decisions - PGGM Investments
• ESG training for direct infrastructure investment
teams - Colonial First State
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20. Commodities
• The relevance of responsible investment policies to the commodities asset class is a
widely discussed topic.
• Academic and practitioner debate regarding responsible investment in commodities is
ongoing.
• A wide range of ESG issues involved in the production and trade of commodities, e.g.
local pollution and human rights issues
• Investor concern about speculative trading of soft commodity derivatives
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21. Hedge Funds
Hedge Funds working group
• Responsible investment in hedge funds is only just emerging as a practice
• Engagement from asset owners and fund of hedge funds is critical to encourage single
hedge fund managers to consider ESG issues in investment process
• Challenges for RIs to consider: fund governance, transparency, derivatives, short
selling and leveraging
• RI helps mitigate some of these risks, support sustainability, build trust and integrity in
the industry and align interests between AOs and hedge fund managers
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22. Hedge Funds
Responsible investment and hedge funds discussion paper
Questions:
• How can investing in hedge funds be used to implement an overall RI strategy?
• How does a hedge fund fit into the context of a universal owner?
• How can signatories collectively apply the six PRI Principles to bring further
developments for RI in the hedge fund context?
• What is the fiduciary duty of a hedge fund manager and how can this be aligned with
the fiduciary duty of the asset owner?
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23. Principles for Investors in Inclusive Finance
• Investor-led response to industry challenges such as loan defaults and over-
indebtedness.
• Framework for responsible investment in inclusive finance, intended to protect long-
term returns and the reputation of this young industry.
• Principles launched in January 2011
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24. Principles for Investors in Inclusive Finance
Principles for Investors in Inclusive Finance case studies
Principles:
1. Range of services responsAbility
2. Client protection Oikocredit International & SNS Impact investing
3. Fair treatment Grassroots Capital Management
4. Responsible investment Finance in Motion
5. Transparency Incofin
6. Balanced returns Orchard
7. Standards Triodos Investment Management
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25. Small and resource constrained signatories
Asset Owner Toolkit: how to integrate ESG criteria in manager
selection, agreements and monitoring
• At the head of the investment chain, asset owners have a key role in promoting RI.
• This toolkit offers asset owners on how to drive the RI agenda forward by Integrating
ESG analysis in the manager selection, agreement and monitoring processes.
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26. Small and resource constrained signatories
Asset Owner Toolkit
• How FRR (France) incorporates RI/ESG-related issues into their process for selecting
both passive and active mainstream equity managers.
• How StatewideSuper (Australia) worked with consultants to help them assess the ESG
capacity of potential IMs
• Questions to assess a fund manager’s ESG management systems form the CDC
toolkit (UK)
• How ChristianSuper (Australia) include ESG criteria in the IM selection and monitoring
process.
• Five questions that AOs can ask of IMs during the due diligence process from Dr.
Andreas Hoepner of St Andrews
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27. Implementation Support
Upcoming research and tools:
• Implementation Support tool for GPs: Due diligence questions
• Fixed Income: The business case for RI in FI Corporates and Sovereigns
• Case study compendium on how signatories are supporting the green economy
• Case study compendium on how signatories are managing ESG issues associated
with investment in farmland
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