Government bodies

The scores that Robeco assigns to reflect a company’s contribution to the Sustainable Development Goals (SDGs) are now available on Bloomberg terminals.

Summary

• Robeco’s SDG scores now accessible on Bloomberg terminals
• Gaining access to high-quality sustainability data grows in importance
• Move is a next step in Robeco’s SI Open Access Initiative
  

SSEE: No data, no deal: how to get a good measure of climate impact finance (Blog)

Set in the towering main chamber of London’s Guildhall, the 2023 Africa Debate conference had just heard from the President of Zambia on the importance of foreign direct investment to Zambia’s growth story over the coming years. Responding to his words, a Nigerian solar energy business owner stood up: “I want to call out the European investors in the room”, she said. “We spend all our time lately filling in ESG forms trying to get or keep funding, instead of working on our business. Why does money come with more and more conditions every year? This is a new form of green colonialism!” - cue widespread applause from the conference audience. 

Sitting at the side of the room that day, it struck me that she had pointed out a cruel paradox. We increasingly hear about the promise of new forms of finance for solving the world's ills. Green finance, ESG finance, impact finance - whatever your flavour - I had assumed that these investment strategies would ultimately decrease the amount of money flowing to things we do not want, like fossil fuels, and increase it to things we do want, like solar businesses in Nigeria. 

If all the processes around ESG finance were making it harder for her to access capital, though, does that not undermine the whole point of these new forms of finance? Since then, Dr Alex Money and I have been working on trying to answer that question, and we have just published our findings in a new Smith School working paper.

Morningstar DBRS published a commentary discussing the credit implications of Ford Motor Company's (Ford; rated BBB (low) with a Stable trend) updates to its electrification strategy.

Key highlights include the following:

• Ford's updated electrification strategy reflects evolving market dynamics and increasing uncertainty regarding future EV sales growth.
• The Company plans to launch a new electric commercial van in 2026, as well as a medium-size pickup truck in 2027 (based on a new affordable EV platform). Ford also announced the cancellation of its previously planned three-row, all-electric SUVs (to be replaced by other propulsion options).
• While initial EV sales were strong among early adopters, mainstream purchasers are showing hesitancy in buying EVs due to higher pricing levels and charging uncertainties.
• Ford's EV segment, Ford Model e, continues to incur sizable losses, which meaningfully offset the strong profitability of the Company's ICE vehicle and fleet businesses.
• While charges and potential increases in expenses and capex stemming from Ford's announcement are meaningful, these remain readily absorbed by its strong financial profile, with the Company's credit ratings unaffected.

"From a credit perspective, while Ford's announcement yesterday is credit negative, there are no changes to the Company's current credit ratings. In line with solid earnings/cash flow generation in recent years, Ford's financial risk assessment and associated credit metrics have strengthened to levels that provide moderate cushion relative to the current ratings," said Robert Streda, Senior Vice President of European Corporate Ratings at Morningstar DBRS, "However, Ford's updated strategy underlines the challenges it, as well as its peers, face in transitioning product portfolios to alternative propulsion technologies while protecting earnings and cash flow."

Nuveen: Hydrogen beyond the hype 

Due diligence questions for hydrogen sector investment

Over the past several years, hydrogen has surged on a wave of attention and financial commitments for its potential to help decarbonize the global economy. And while electrification technologies have emerged as the leading solution for a range of applications like road transport and home heating, most analyses find that about 20-30% of global CO2 emissions cannot be reduced from direct electrification alone. This is where hydrogen comes in. Managed with care from production through final end use to ensure very low emissions, hydrogen holds promise to reduce the climate impacts of hard-to-abate sectors where alternatives remain limited.

However, hydrogen is a tool, not a silver bullet. Investment in the emerging hydrogen market presents both substantial opportunities and risks associated with being an early mover in a sector where scientific, 
engineering, and regulatory considerations continue to evolve. In most cases, the financial opportunities 
associated with hydrogen stem from its potential to contribute climate benefits, making it particularly important that investors and operators of hydrogen projects consider anticipated climate impacts alongside other business considerations.

A poor outcome for investors and the climate would be several years and billions of dollars 
invested in particular hydrogen production pathways and end uses, only to see the industry move in other directions. By avoiding poor capital allocation that could result in minimal decarbonization or even increased emissions, investors can reduce their risk of unattractive returns.   

A distributed model for green ammonia can bring additional price stability, lower emissions, and a more predictable fertilizer supply to those who need it the most.

Pathways to ammonia production — currently dominated by a centralized, fossil-based, and vulnerable system — are poised to diversify to include distributed models that can be green, flexible, and resilient. Since its development in the beginning of the 20^th century by Fritz Haber and Carl Bosch (birthing the Haber-Bosch process), industrial ammonia production has remained practically unchanged. Though technological progress has been made, producing ammonia remains heavily dependent on fossil fuels and concentrated in large-scale facilities, as economies of scale lower production costs. 

While ammonia has significant growth potential in the energy transition, currently 70 percent of ammonia is used for synthetic nitrogen fertilizers. But the current production pathway is unpredictable, and sometimes unable to deliver ammonia in the volumes and prices needed. Here we chart a different path for ammonia production, one that could save on both costs and carbon emissions.

What’s problematic with current ammonia production?

The current ammonia system has three main issues: high emissions, price volatility, and supply chain disruptions. Fossil-based ammonia production, which accounts for over 1 percent of greenhouse gas emissions, heavily relies on natural gas and emits as much as ~2.3 tons of CO₂ per ton of ammonia produced. Due to this feedstock reliance, ammonia prices are tied to natural gas price volatility. Russia’s invasion of Ukraine drove up natural gas prices in 2022, pushing US ammonia prices to peaks of $1,600 per ton — a threefold increase from the 2018–2020 market average.

A Vision for Energy Independence in the Mobility Sector

India has set a vision for energy independence by 2047, as part of the Atmanirbhar Bharat Abhiyaan (self-reliant India campaign). This, along with national goals such as achieving net-zero emissions by 2070, are setting a course for the country to transition away from a fossil-fuel based, import-reliant energy system to one of domestically produced, renewable sources. Since 18 percent of India’s current energy demand comes from the transport sector, ensuring that India transitions to a clean mobility system will be critical to achieving energy independence.

RMI’s India at 2047 report analysis indicates that to reach energy independence in the mobility sector, India would need to achieve 100 percent clean fuel vehicle sales penetration (primarily electric vehicles) in all vehicle segments by 2043. The analysis also demonstrates the significant impact of this transition, including reductions of:

• 91 percent of crude oil consumption in the road transport sector by 2047, demonstrating a cumulative savings of INR 160 lakh crore (US$1,923 billion);
• 57 percent of energy demand from the road transport sector in 2047; and
• 87 percent of carbon emissions from the road transport sector in 2047.

Much action is needed to get India to a future where electric vehicles (EVs) are the dominant share of vehicles on the road by 2047. 

A broad portfolio of carbon dioxide removal (CDR) approaches is essential to meet the unique needs of various geographies and industries. Within this portfolio, synthetic carbon dioxide removal (sCDR) approaches — those that rely on engineered systems powered by low-carbon energy to capture CO₂, such as direct air capture — offer advantages like a smaller physical footprint and permanence of carbon removed. However, they typically require the most energy and are more expensive when compared to other CDR methods. Electrochemistry stands poised to transform the field of CDR by significantly reducing the energy requirements, and therefore costs, of prominent sCDR pathways.

“Breaking Barriers in Carbon Dioxide Removal with Electrochemistry” characterizes the state of electrochemistry-based CDR approaches, delves into the key benefits of leveraging electrochemistry in CDR, and provides guidance for evaluating innovations in the space. In doing so, this report cuts through the complexity associated with electrochemistry-based CDR approaches, lays out the trade-offs of different approaches, and provides practical guidance for due diligence.

The next few years will be pivotal for electrochemistry-based CDR approaches. With funding lagging behind what will be necessary to test and scale these solutions, we need research and tools that unlock better understanding and evaluation of critical innovations. This report is the first of such tools, providing an independent review of technologies’ effectiveness and scalability.

Our energy system is stuck in the past. Fire has been our primary source of energy for over a million years, providing the essential heat needed to survive. This reliance on fire made sense when our principal energy needs were purely for heat. However, today’s energy demands have evolved far beyond this primal necessity.

Unlike in past millennia, we now require more work than heat: we desire mobility, motors, electrical appliances, and data processing in greater quantities than we do warmth. Despite this transformation over the past century from heat demand to work demand, our fundamental energy supply methods have not changed much, and are still mostly heat generation. This has led to incredible inefficiency, which we describe in a prior article.

We need energy sources fit for an era of work demand, not heat demand. Fortunately, thanks to the rapid growth and cost decline of solar, wind, and electrification, “firepower” faces inexorable decline.

Having a Net Zero Target does not always imply a company is ‘Paris aligned’ 

Science-based concepts and definitions for real economy company-level assessments

Analysts: Giorgis Hadzilacos, Jesica Andrews, Tanguy Sene

In response to the need for clarity in terminology and accuracy in describing climate-related concepts, this paper does not propose a new methodology. Instead, it discusses the science-based concepts and definitions that underpin a range of company-level Net Zero or Paris aligned methodologies. 

The objective of this paper is to inform the reader of the underlying scientific foundations that will permit them to evaluate the wide range of different methodologies and metrics. In particular, this paper distinguishes the terms such as carbon budgets, pathways, Net Zero alignment, and Paris alignment which whilst they have material differences, are often confounded in company reports or financial industry publications. 

Regnan: Leveling the playing field for carbon emissions

How the EU’s Carbon Border Adjustment Mechanism (CBAM) may impact companies in the aluminium sector – and potential unintended global consequences.

 The introduction of the EU’s carbon border adjustment mechanism (CBAM) into EU legislation in 2023 was intended to reduce carbon emissions via global implications. Whilst some heralded it as key to protecting European industry, others focused more on the administrative and operational burden it placed on business, the restructuring of value chains and the potential resultant winners and losers.

This paper seeks to build a nuanced picture of how CBAM may impact carbon emissions, as well as wider political and social systems. We will firstly set the scene of EU carbon policy, explore potential impacts from phasing out EU ETS free allowances (both with and without the implementation of CBAM), before examining the implications of CBAM for the aluminium sector.

Through case studies of three aluminium manufacturing companies, we will seek to understand variations in potential CBAM application and resulting risks and opportunities to business models, before finally exploring potential second and third order unintended consequences that were not captured in the CBAM policy construction.

Ammonia (NH₃), in its role as a key ingredient in nitrogen fertilizers, is essential to feeding the world. It is also a solution for the decarbonization of hard-to-abate sectors as an energy carrier for hydrogen and a clean fuel for maritime shipping.

In 2021, around 180 million tons of ammonia were manufactured globally, 70 percent of which went into creating nitrogen fertilizers, with the remaining share used as an industrial chemical for pharmaceuticals, textile manufacturing, and mining. Soon, ammonia will play an even larger and more consequential role in food and energy systems worldwide.

The colors of ammonia and what they mean

Today, ammonia manufacturing depends on fossil fuels, creating an emissions profile that accounts for over 1 percent of annual global greenhouse gas (GHG) emissions. Through an industrial technique called the Haber-Bosch process, nitrogen and hydrogen are directly combined to form NH₃. Currently, hydrogen is almost exclusively produced from natural gas and coal. As a result, ammonia production is heavily concentrated in low-cost coal and natural gas regions, such as the US Gulf, China, and Russia.

RMI analysis suggests that ammonia produced from natural gas generates 2.3 tons of carbon dioxide (CO₂) emissions per ton of NH₃, even more so with coal which can reach up to 3.9 tons of CO₂ emissions per ton of NH₃. Like hydrogen, ammonia is popularly categorized in colors: black, brown, gray, blue, and green. The color distinction is used to indicate the ammonia’s production pathway.

This simple color categorization is not necessarily a determinant of carbon intensity, but it is rather a useful shorthand. Ammonia produced from coal-derived hydrogen is generally referred to as “black or “brown”, and ammonia produced from natural gas-based hydrogen is considered “gray” because of its high carbon intensity.

ClearBridge's latest report covers key areas of their stewardship activities including:

• ESG integration 
• Engagements highlights 
• Proxy voting highlights and season 
• Advancing the UN Sustainable Development goals

Halma's latest sustainability report covers key areas of their activities including:

• Case studies of healthy innovation for social impact
• Support for our people 
• Protecting our environment 
• TCFD statement 

First Sentier's latest responsible investment report covers key areas of their activities including:

• Focus areas and approach 
• Climate change 
• Human rights and modern slavery 
• Diversity, equity and inclusion 
• Nature and biodiversity

KBI's latest responsible investing report covers key areas of their activities including:

• Commitment and governance - net zero commitment, equality, diversity and inclusion
• Active ownership, engagement and proxy voting 

NRG's latest sustainability report covers key areas of their activities, including:

• Facilitating an intentional energy transition 
• Environmental 
• Social 
• Governance

Robeco: A more Flexible approach to multi-asset investing

Robeco has launched a new strategy that offers a more flexible yet targeted approach to investing across different asset classes.

Summary

• New Flexible Allocation strategy targets a return of cash plus 4%
• Approach allows diverse asset mix of equities, bonds or alternatives
• Strategy targets retail and wholesale investors looking to beat inflation

The magnificent outperformance and stratospheric valuations of a few Big Tech stocks have many investors worried about an investment bubble. Laurens Swinkels and Peter van der Welle analyze a century’s worth of market cycles and find bubbles behave differently, and they are not always bad.

Summary

• Magnificent Seven and Big Tech outperformance is raising bubble worries
• Historically, around half of bubbles have not burst
• Though downside risk is elevated, a crash is unlikely

Corporate scandals can lead to loss of stakeholder confidence and may have long-term reputational or financial consequences.

A new research paper evaluates the link between scandals that can range from involvement in bribery to fatal workplace accidents and the company’s alignment with the Sustainable Development Goals (SDGs).

EDF+Business: Coal: A crucial methane opportunity (blog)

"Canary in a coal mine." This idiom is a reminder that coal mining releases toxic gasses that pose a danger to canaries -- who played the role of early air safety monitors -- and humans. One of these gasses is methane, which is also a major cause of climate change.

The oil & gas industry is well understood to be a source of methane emissions. But coal mining has received much less attention, despite the fact that its methane emissions have an estimated warming impact equivalent to 730 million cars on the road each year. Yet, avoiding coal mine methane is relatively affordable: 90% could be eliminated at a cost of just $20 per ton of CO2e, according to the IEA.

Our new blog and detailed presentation bring together background on science, economic and policy angles of coal mine methane and provide questions the finance community can use to engage coal mining and steel companies to manage climate risk and advance sustainability goals around methane.

Phasing out coal is critical to achieving climate goals over the long term. But in the near term, addressing coal mine methane is a powerful and overlooked lever for reducing the warming we are experiencing today.

In this month's commentary Ted Franks considers the complex and controversial relationship between gas and electricity pricing. Did you know that the cost of solar power has fallen by around 80% in the last decade? So why isn’t electric heat being adopted more quickly? Ted explains how the playing field isn’t level with a key metric to understand being the electricity-to-gas price ratio. Read the full article to find out more.

Key Takeaways

Market Overview

Key Takeaways

Market Overview

FaithInvest: From aid to investment - Learnings for faith-based NGOs,  foundations & other grant recipients

How should we fund international development in an era of growing humanitarian needs and tighter aid budgets? That was the question at the heart of a conference co-hosted by FaithInvest and Christian Aid's Salt Business Network in May 2023. This discussion document presents the results of our research to find out what interest, if any, NGOs have in using non-grant financing mechanisms, known as grant alternatives.

The international development sector spends well above US$200 billion each year, and faith-based agencies are some of the biggest NGOs (non-governmental organisations) working to deliver change for the world’s poorest peoples. But growing humanitarian needs, climate change and conflicts mean the aid sector is under pressure as never before.

At the same time, there are growing demands for the world to move beyond aid – putting agency back into the hands of the poor and enabling countries to develop their own long term self-reliance and sustainability.

The Liveable Futures conference brought together faith based NGOs managing projects supporting more than 100 million people a year and business networks managing nearly £600 billion worth of funds in London in May 2023. The aim was to look at the potential for alternative ways of funding aid – often called grant alternatives – in addition to grants and philanthropy.

This discussion paper seeks to shed a light on the use of grant alternatives as methods of investing in traditionally grant-funded activities and programmes. Overall, we found low current usage, but very high interest and future expected usage, and identified a few key impediments to address along the way. 

Key points

Impact investing, here assimilated to Sustainable Investments as per SFDR 2(17), and ESG risk mitigation strategies can contribute to the same environmental and social goals, but the intentions and mechanisms to get there is not the same. This is one of the reasons there is so much confusion around this and many mix up ESG risk mitigation and impact investing strategies and call it all for “ESG investing”. Let’s try to clear this out.

Impact investing versus ESG risk mitigation

Characteristics of Impact investing

Impact investing starts with an intention to have a positive impact on environmental and social goals. The real impact investor is ready to forsake risk adjusted financial returns, but not risk adjusted returns including the intended environmental and/or social impact. Of course, it is hard to get impact returns and financial returns into the same scale, but on a principal level the total counts for impact investors. From one strategy to another, the weight of the non-financial returns in the targets can vary a lot, from close to zero to anthropology where no financial return is targeted. This can at times make it hard to know what you are buying as an asset owner.

Claiming that real impact investing does not forsake expected risk adjusted financial returns does not make sense, all positive impact carry a cost. Assets under management in impact strategies would be dominant if returns were expected to be the same as for equivalent non-impact strategies and topped with environmental and/or social returns. More is always better in the financial world, right?

Contributions to environmental and social goals are often proxied into “SDG contributions”.

"Millani's ninth Semi-Annual ESG Sentiment Study of Canadian Institutional Investors highlights asset managers and owners are no longer just considering ESG factors in their investment assessments but now expanding to the broader impacts (positive and/or negative) of their investments. This shift aligns with a growing adoption of double materiality assessments by issuers, a trend we observe in Canada and internationally.

​Our findings were obtained from 37 interviews conducted in June 2024 with asset owners and managers across Canada totaling over CA $5.4 trillion in AUM."

Summary (Episode 1 in French)
In this episode, our host Milla Craig, President and CEO of Millani, speaks with Stéphanie Lachance, Partner and Head of Sustainable Investing at Fiera Comox, to explore new avenues of value-generating sustainable finance in a context where limiting the integration of ESG criteria is a response to compliance needs that are already outdated.

Summary (Episode 2)
In this episode, our host Milla Craig, President and CEO of Millani, talks with Tom Rand, sustainable finance expert, co-founder and managing partner of ArcTern Ventures, who analyses the current capitalism systems and takes us beyond the energy transition. Together, they uncover some of the myths and hidden blind spots stopping business leaders and investors from moving forward faster toward green growth.

The enduring effects of the COVID-19 pandemic, geopolitical tensions stemming from the Russian invasion of Ukraine, and the humanitarian crisis in Israel have profoundly shaped investor sentiment and practices.

To understand how emerging market investors can continue to direct capital sustainably to the parts of the world that require it the most, we convened six seasoned professionals over lunch on a chilly January day in Stockholm.

Although emerging markets typically evoke heightened awareness of risk, for emerging market specialists, recent global changes don’t necessarily translate to increased risk; instead, they underscore the need for specific skills.

Take, for instance, a large asset owner like AP3: recent geopolitical turmoil necessitated a reassessment of the fund’s global allocation. Their team’s methodology resulted in a country ranking based on relative risks, ultimately leading to China’s exclusion. Similarly, other investors, including a sovereign debt manager at Ninety One and a listed equity manager at Premier Miton, also rely on country rankings. On the other hand, for a private debt investor at Cardano, geographical choices are intrinsically linked to having “boots on the ground.”

What our investor group unanimously agrees upon are the tremendous opportunities inherent in engaging with companies and, in some cases, even with governments. Whether it is communicating with management to obtain reliable data or dictating more stringent terms for refinancing (linked, for example, to environmental targets), investors wield a wide array of tools to affect change.

In responsible investing, faced with the choice between engaging and excluding, preference should go to the former, resorting to the latter when necessary. This principle also applies broadly to capital allocation in emerging markets. Thus, these markets merit a place in every sustainable portfolio but require expert handling. Whether you’re embarking on or continuing your journey into this dynamic investment space, we trust this conversation will help you along the way.

S&P Global: Sustainability Insights: Electric Shock: How Engine Technology Affects Auto ABS Risk

Key Takeaways

New InfluenceMap research finds that the oil and gas industry has used a playbook of narratives and arguments to systematically oppose, weaken, and delay the energy transition since at least 1967. Analysis of historical data on engagement with climate advocacy from three of the most powerful oil and gas industry associations in the United States and Europe – the American Petroleum Institute (API), FuelsEurope, and Fuels Industry UK – finds that these groups have for decades been using the same playbook in their advocacy against renewable energy and electric vehicles.

Within the ever-evolving global landscape, sustainability can play an important role in driving economic growth, societal advancement and environmental preservation. We believe that investing sustainably in clean energy infrastructure projects is instrumental to shaping today’s world and to building a more prosperous future for generations to come. In Nuveen Infrastructure’s 2023 clean energy sustainability report, we highlight key sustainability activities advanced by our clean energy team over the course of the year.

2023 report highlights include:

• Detailed overview of avoided emissions across our equity and credit strategies
• The importance of physical climate risk considerations and how we are responding to impacts in our portfolio
• Biodiversity case studies including how we aim to protect marine life during offshore wind construction
• How we are partnering with local communities 
• Areas where we are refining our job creation methodology 
• 2024 sustainability roadmap 

As the investment environment in real estate continues to navigate challenges, investors are seeking ways to diversify allocations to affordable housing. Impact investment strategies such as affordable housing have long been known for delivering positive social and environmental changes, however, the economic benefits of U.S. affordable housing remain misunderstood by many investors.

What does affordable housing offer investors?

The U.S. affordable housing sector is an attractive investment strategy within commercial real estate and an effective diversifier among housing investments given the sector’s economic resilience compared with other property types. The essential need for housing remains steady throughout economic cycles given the limited supply of affordable units and lack of housing starts, including in recessionary environments. 

An investment in affordable housing can provide investors the opportunity to achieve attractive risk-adjusted returns while demonstrating direct and positive social and environmental impact. Additionally, the durability of rental income in the sector is supported by strong market demand and government subsidies, offering greater stability than traditional real estate. 

Affordable housing can offer investors attractive portfolio diversification through three key areas.

1. Strong income stream

2. Favorable risk-return profile

3. Resiliency across economic cycles

As leading companies look to deeply decarbonize their supply chains to meet their climate goals, lower-carbon steel and concrete stand out for many as clear yet complex targets for reducing their emissions. These materials sectors are emissions-intensive and limited lower-carbon supply exists, as the transition to lower-carbon steel and concrete production technologies can require large capital investment. Many companies today may struggle to directly buy lower-carbon concrete and steel at scale because: 1) they do not contract directly with materials producers, and/or 2) they do not have physical access to lower-carbon materials for a particular use case.

Book and claim is a chain of custody model that allows companies to directly invest in impactful interventions within materials sectors, addressing their supply chain emissions without having to directly purchase those physical products. Under a book and claim system, the environmental attributes (i.e., carbon intensity) of a product are decoupled from the physical product unit and sold separately as a certificate.

An organization can purchase this certificate and claim the environmental attributes without directly purchasing the unit of physical product that the environmental attributes represent. This model has the opportunity to widen the pool of buyers that can invest directly in the lower-carbon materials markets and can send a powerful demand signal necessary for materials producers to finance and build out additional lower-carbon production infrastructure necessary to meet 1.5°C-aligned sectoral climate targets.

"The modern treasury and finance operation has so much more to offer any forward-looking business, beyond its traditional core competencies.

Sustainability is one such area, encompassing not only the current issues at the heart of business resilience, but the defining transformational and growth opportunities of our generation.

In this Citi GPS report, two pieces of proprietary research were conducted in conjunction with Citi’s Services business.

In our first analysis, we found that companies with the most sophisticated treasury operations tend to be the most advanced in their sustainability journey.

Our second piece of analysis looks at net-zero-alignment across the supply chains of 1,500 companies, highlighting the risks of supply chain lock-out and, conversely, the opportunity to drive broader systemic change via innovative financial instruments such as sustainable supply chain finance."

In 2023, over 10 million EVs were sold globally – a 30% increase on the previous year, putting the total number of electricity-powered cars on the road to 30 million. One of the key developments noted by some of the world’s top industry practitioners at BNP Paribas’ second annual Global Electric Vehicle and Mobility Conference in Hong Kong was that EV costs are continuing to decline, while new technologies are coming to market, amidst an uptick in growth.

Thursday 26 September 2024
12.00pm — 12.45pm (BST)

As the world gets warmer and parts of it become uninsurable, we ask whether insurers can effectively model and price climate risk. We will explore who does, and who should, bear the cost of climate change, and what is needed from the industry to enable the transition to a net zero economy.

Greenbank’s head of ethical, sustainable and impact research Kate Elliot will chair the session, with Greenbank assistant investment manager Joel Swift and guest speaker Isabelle L'Héritier, senior campaigner and organiser at Insure Our Future presenting. 

Agenda:
―    Introduction from Kate Elliot
―    Joel Swift, Assistant Investment Manager, Greenbank
―    Isabelle L'Héritier, Senior Campaigner and Organiser, Insure Our Future
―    Panel Q&A

Green Shoots is Greenbank’s lunchtime webinar series where we are joined by specialist guest speakers to explore a sustainable investment topic. 

In light of investor interest and the crucial role of sustainability in corporate performance and strategy, this guide supports companies in the process of integrating material sustainability factors into their equity stories, outlining key concepts, examples from company communications and questions for reflection, on the following themes.

• Purpose
• Business model
• Strategic focus & ambition
• Market positioning
• Product/service offering...

It intends to help companies develop investor relations communications, as sustainable business transformation, supported by the Corporate Performance and Accountability System (CPAS), is being integrated into investor relations strategy, messaging and activities.

The guide does not provide comprehensive mapping to current or emerging reporting standards and requirements or criteria associated with fixed income engagements and products. 

This blog summarises some of the highlights from LGIM's latest Climate Impact Pledge report, which you can read here.

LGIM believe climate change is an important systemic risk to their clients’ portfolios. With the world recently experiencing its first annual average temperature overshoot of 1.5˚C, it is more important than ever to tackle this issue.

Our Climate Impact Pledge (CIP) assessments and engagements show there is much more that companies can do to mitigate climate risks to achieve net-zero carbon emissions by 2050. Over the years, we have seen some progress, but overall we consider that the transition must accelerate. This year, we have engaged with more companies than ever before.

We publish our expectations and engage with companies, on behalf of our clients, to encourage them to mitigate the systemic risks of climate change.

The Climate Impact Pledge assesses over 5,000 companies across 20 ‘climate critical’ sectors. These assessments can lead to vote sanctions, which are typically a vote against the company chair. Within this universe of companies, LGIM has engaged directly with a group of 100 ‘dial movers’, identified for their size and potential to galvanise climate action in their sectors. Where the rate of progress is too slow, vote sanctions and, where appropriate, even divestments can be applied. This is an example of our ‘engagement with consequences’ approach.

CIP by the numbers

• 5,000+: the number of companies across 20 ‘climate critical’ sectors covered by the CIP
• 100+: the number of selected ‘dial-mover’ companies for direct engagement chosen for their size and potential to galvanise action in their sectors
• 86%: the percentage of the total carbon emissions attributable to LGIM’s corporate debt and equity holdings covered by the CIP

What’s new?

In April 2024, we communicated with over half of the 5,000+ companies assessed under our CIP quantitative assessment, our largest engagement campaign to date on any topic.

We have put a focus on three emission-intensive sectors by integrating baseline expectations relating to methane emissions disclosure and no new thermal coal which will drive our climate-related voting for companies in the oil & gas, mining and utilities sectors.

In this year’s report we also highlight progress and improvements made by investee companies.

As the climate changes, we are likely to experience more and more days with extreme temperatures. Most of the time, the impact of droughts or heatwaves will be local, but what if major waterways like the Panama Canal or the River Rhine have to shut down due to low water levels? In that case, global supply chains get disrupted and that, as we learned in recent years, can have a significant impact on inflation.

Serhan Cevik and Gyowon Gwon from the IMF tried to model the impact extreme temperatures have on supply chains and inflation in six large economies (USA, UK, Eurozone, China, Japan, and Korea). Based on the economic impact of past episodes of extreme temperatures, they showed that for most economies supply chain pressures from extreme temperatures are minimal. The chart below shows the response of the local supply chain pressure index (SCPI) to temperature shocks. The dark blue line is the median impact, while the light blue area shows a 68% confidence interval.

Only in the US can we find some material impact on supply chains from extreme temperatures. This is likely due to the importance of inland waterways like the Mississippi and the Great Lakes as well as the importance of the Panama Canal for US supply chains. Similarly, China shows a little bit of supply chain reaction to temperature extremes due to the importance of local waterways for inland supply chains.  But overall, the results are so small that we can safely ignore the influence of global temperature extremes on supply chains.

Which does not mean that we can ignore their influence on the economy overall. The second chart shows the impact of extreme temperatures on headline inflation. Here we see – and this may surprise some readers – that extreme temperatures reduce inflation.

CFA Society New York podcast - Compound Insights with host Robert Rowan, Episode “Major Changes for Sharia Bonds”

July 29, 2024 – Patrick Drum, MBA, CFA^®, CFP^®, portfolio manager and senior investment analyst at Saturna Capital, was a featured guest on the CFA Society New York podcast Compound Insights with host Robert Rowan. The episode “Major Changes for Sharia Bonds” aired on July 1, 2024, and examines the macro changes and research challenges presented by Islamic bonds, or sukuk.

Patrick Drum delves into the structure and function of Islamic-compliant financial certificates, more commonly known as sukuk. Mr. Drum notes that the sukuk market is approximately 850 billion US, which is currently estimated to be larger than the European Eurodollar conventional fixed-income market, and is comprised of approximately 27 different currencies. Mr. Drum provides insights into how sukuk, which adhere to Islamic law, present unique opportunities and risks for investors.

Patrick Drum elaborates on the structural differences between sukuk and conventional bonds, including their low volatility and risk-adjusted returns. He also discusses the sukuk market's primary currency players and their influence on global investment strategies. The episode addresses the challenges of researching sukuk, including the nuances of Islamic-compliance and the evolving standards set by organizations like the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Mr. Drum shares his experience with the research process, emphasizing the importance of understanding underlying asset structures and credit analysis.

The discussion touches on the impact of oil market fluctuations on sukuk performance and the broader economic diversification efforts within the Gulf Cooperation Council (GCC) region. Mr. Drum highlights how these efforts are reshaping investment dynamics and offering new opportunities for global investors.

Montanaro's latest stewardship report covers key areas of their activities:

• Purpose, strategy and culture 
• Governance, resources and incentives 
• Stewardship, investment and ESG integration 
• Engagement 
• Collaboration

Regnan's latest sustainability report covers key areas of their activities including:

• Portfolio level metrics - sustainability indicators 
• Engagement case studies 
• Voting activity 
• Exclusion policy

Currys: Annul Report & Accounts 2023/24 (Sustainability pages 36-49)

Curry's latest report covers key areas of their sustainability strategy, including:

• Sustainability approach, priorities and achievements
• Circular economy
• Climate action
• Our communities
• Our suppliers

FirstGroup's latest report covers key areas of their activities:

• Overview 
• Carbon and energy
• Low and zero emission vehicles
• Our facilities 
• Value chain

Natura & Co: Sustainability Compendium FY 23

Natura's latest sustainability report covers key areas of their activities including:

• Materiality 
• UN Sustainable Development Goals
• Environmental Indicators
• Social indicators
• Governance & Economic Impact
• Climate Action

Verisk Maplecroft: Whitepaper -- Transforming equity analysis with asset-level geospatial risk data

Following the launch of Verisk Maplecroft’s Asset Risk Exposure Analytics (AREA), our latest whitepaper explores how geospatial risk data can help investors and banks make better decisions by revealing the hidden climate, sustainability and political risks that exist across the operational footprint of listed companies.

AREA provides a new, objective, data-driven approach to assessing corporate risk and sustainability by combining the global locational data of 50k+ publicly listed companies and 4+ million assets with industry-leading geospatial analytics covering 85 climate, environmental, human rights and political risks.

The paper covers how asset-level geospatial risk data can:

• Provide a missing, transformative perspective on corporate risk exposure, including key sustainability concerns such as biodiversity and human rights
• Enable more informed investment selection, risk management at the security and portfolio level, corporate engagement and sustainable investing
• Empower investors and banks to more effectively meet regulatory requirements and client expectations

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WHEB Asset Management

WHEB is a pioneer in sustainable and impact investing.  Our mission is ‘to advance sustainability and create prosperity through positive impact investments’.  We do this through a single, long-only, global equity strategy, investing in companies that provide solutions to sustainability challenges.  With a track record of nearly 20 years, we are one of the early innovators in listed equity impact investing.

Sustainability and impact investing define our whole business as well as the investment philosophy. As a Certified B Corporation, WHEB is part of a global movement of stakeholder businesses, which consider the impact of business decisions on our employees, clients, suppliers, the community, and the environment, as well as our shareholders. Our mission is supported by a strong culture and core values that guide our behaviour. 

For more information about WHEB Asset Management see www.whebgroup.com

Management Accountant role

WHEB is seeking a part-time Management Accountant to provide maternity leave cover for our Management Accountant.  This is an exciting and varied role and is a great opportunity for a management accountant with an interest in sustainability who is keen to work in a successful and supportive team.

We are looking for someone to join in early October. This will be a Fixed Term Contract to cover maternity leave, working 24 hours per week. The role is based in our office in central London with opportunities for office/home/hybrid working arrangements. WHEB supports and encourages all employees who want to adopt flexible working practices, and so there would be flexibility in this arrangement.

The role will comprise responsibilities across management accounting and finance process support.  The successful candidate will also provide direct support to the Director of Operations for operational and administrative tasks and projects.

You will be expected to:

Management Accounting:

·        Prepare monthly management accounting reports using Xero software;

·        Assist with production of financial forecasting models for the annual budget process;

·        Assist with statutory audit of financial books and records;

·        Support financial processes, including expense administration and processing;

·        Provide ad hoc financial reports to internal and external stakeholders;

·        Liaise with suppliers and administer purchasing activity;

·        Process purchase invoices, including verification of accuracy, approval and payment;

·        Generate sales invoices for management fees where required;

·        Provide administrative support to the Operations team.

Fund Accounting:

·        Prepare / reconcile monthly/quarterly management fee invoice calculations;

·        Oversee preparation of fund interim and annual financial statements;

·        Liaise with fund administrators (fund accountants, transfer agencies, CRMs);

·        Develop internal processes to improve quality and efficiency, and support cross-functional information/reporting requirements (operations, investment, client relationship).

The Successful Applicant

 The successful applicant will have, as a minimum:

 Significant experience in a management accounting role;

·        ACCA/CIMA/ACA qualified;

·        Experience with Xero accounting software, with a highly numerical skillset;

·        Problem-solving attitude;

·        Ability work under own initiative and take independent lead on projects;

·        Ability to multi-task and work to deadlines;

·        Excellent written and oral communication

·        Analytical and critical thinking skills; and

·        A demonstrable interest in sustainability.

The successful applicant will also be able to demonstrate our values, in particular:

·        Teamwork - work in a small, close-knit team;

·        Leadership - demonstrate a driving and responsible attitude, working with a high degree of autonomy and ownership;

·        Continuous Improvement – having a passion for progress and sharing learning;

·        Passionate about Impact - a demonstrable understanding of sustainability;

and,

·        Integrity – honest in approach and treat all stakeholders fairly.

Equal opportunities and flexible working

WHEB is an equal opportunities employer and strongly encourages candidates from diverse backgrounds to apply. The role would be suitable for candidates looking for a part-time position.

Based at our office in central London, the position will offer considerable opportunity for flexible working, including both office and home-based work. For more information on WHEB’s policies and culture please see https://www.whebgroup.com/about-us/working-at-wheb/

Process

Applicants should send a covering letter outlining their motivations for applying to this role along with their CV to This email address is being protected from spambots. You need JavaScript enabled to view it.

The deadline for applications is 27^th September 2024.  We regret that it may not be possible to contact unsuccessful applicants.

JobPost: Client Relationship Manager - WHEB Asset Management (Close 27 Sept)

WHEB is a pioneer in sustainable and impact investing.  Our mission is ‘to advance sustainability and create prosperity through positive impact investments’.  We do this through a single, long-only, global equity strategy, investing in companies that provide solutions to sustainability challenges.  With a track record of nearly 20 years, we are one of the early innovators in listed equity impact investing.

Sustainability and impact investing define our whole business as well as the investment philosophy. As a Certified B Corporation, WHEB is part of a global movement of stakeholder businesses, which consider the impact of business decisions on our employees, clients, suppliers, the community, and the environment, as well as our shareholders. Our mission is supported by a strong culture and core values that guide our behaviour. 

For more information about WHEB Asset Management see www.whebgroup.com

UK Client Relationship Manager role

WHEB is seeking a UK Client Relationship Manager to join the team, based in London.  WHEB works with a wide range of investors from across the spectrum including large institutional investors, wealth managers and intermediaries, as well as direct investors.  We treat our clients as our partners, and this role will be at the forefront of creating strong relationships with both potential and existing clients.

This position is a hybrid role with responsibility for client relationships as well as a responsibility for managing the responses to client and potential client questionnaires and due diligence requests. The successful candidate will work as part of a small team and share responsibilities with other team members.

The responsibilities include but are not limited to:

 ·                  Helping to manage WHEB’s client relationships (including institutional, intermediary and retail);

·                  Identifying new potential clients – contributing to structuring and managing our sales pipeline;

·                  Responding to RFPs from potential clients and questionnaires from existing clients;

·                  Updating and maintaining consultant databases;

·                  Regular travel around the UK to visit clients; and

·                  Arranging and attending client/consultant meetings with the Investment Team.

The Successful Applicant

 The successful applicant will have, as a minimum:

 ·        Investment industry experience;

·        Enthusiasm to travel regularly around the UK to meet clients and build networks;

·        A passion for sustainable investment and positive impact;

·        Knowledge of Salesforce CRM would be beneficial;

·        A good level of proficiency in Powerpoint;

·        Excellent people skills with a demonstrated focus on meeting the needs of clients; and

·        Accuracy and attention to detail.

The successful applicant will also be able to demonstrate our values, in particular:

 ·        Teamwork - work in a small, close-knit team, where debate and reasoned discussion are expected and rewarded;

·        Leadership - demonstrate a driving and responsible attitude, working with a high degree of autonomy and ownership;

·        Continuous Improvement – having a passion for progress and sharing learning;

·        Passionate about Impact - a demonstrable understanding of – and passion for – sustainability;  and,

·        Integrity – honest in approach and treat all stakeholders fairly.

Equal opportunities and flexible working

WHEB is an equal opportunities employer and strongly encourages candidates from diverse backgrounds to apply. Based at our office in central London, the position will offer considerable opportunity for flexible working, including both office and home-based work, and we will consider part time working. For more information on WHEB’s policies and culture please see https://www.whebgroup.com/about-us/working-at-wheb/

Process

Applicants should send their CV and a covering letter (which is important as we want to understand what applicants would bring to this role and why it is right for them) to This email address is being protected from spambots. You need JavaScript enabled to view it.

 The deadline for applications is Friday 27^th September 2024.  We regret that it may not be possible to contact unsuccessful applicants.

Risk, Compliance and Internal Controls Manager - Principles for Responsible Investment - Applied (beapplied.com)

Deputy Company Secretary (Family Leave Cover - 12 month Fixed Term Contract) - Principles for Responsible Investment - Applied (beapplied.com)

Senior Responsible Investment Ecosystem Manager - UK & Ireland - Principles for Responsible Investment - Applied (beapplied.com)

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