Category: December 2016 – GreenMoney’s 2017 Outlook

“State of the Industry” Report Finds 50 Profiled Investors with $17.3 Trillion in Assets Moving Beyond Portfolio Diversification; Identifies Ten Investor Tools for Intentional, Systems-Related Investing

A new state-of-the-industry report finds that investors are deliberately incorporating new investment approaches to help address systems-level risks and opportunities. The study indicates that investors are intentionally attempting to influence systems-level risk factors previously ignored as beyond the impact-ability of institutional investors.

The report (http://irrcinstitute.org/research-center) identifies ten tools through which 50 major institutional investors, with some $17.3 trillion in aggregate assets, are deploying “intentional, systems-level investing.” The report also offers specific examples of investors working to impact global challenges including financial system sustainability, climate change and human rights issues.

The new study, Tipping Points 2016: Summary of 50 Asset Owners’ and Managers’ Approaches to Investing in Global Systems, examines how 28 asset owners and 22 asset managers are beginning to think about the impact of their investments and, in turn, how those investments are affected by global environmental, social and financial systems. This new systems-level thinking is additive to traditional investment scrutiny at the security and portfolio levels. Supported by the Investor Responsibility Research Center Institute (IRRCi), (http://irrcinstitute.org) the report is authored by William Burckart, Steve Lydenberg and Jessica Ziegler with The Investment Integration Project (http://tiiproject.com).

Download the full report at- http://irrcinstitute.org/research-center

“It has been more than a half century since Harry Markowitz popularized diversification and portfolio level investing, for which he later won a Nobel Prize. Since then, capital markets around the world have changed dramatically, and the global financial crisis was a game changing wake-up call. Against this dynamic backdrop, investors are evolving and realizing that global financial, environmental and social systems have major ramifications on their investments and, simultaneously, their investments have deep impacts on those systems,” said Jon Lukomnik, IRRCi executive director.

“The report illustrates the new policies and practices that investors are embedding into their business culture and investment strategies. We now have concrete evidence that investors are intentionally confronting global environmental, social and financial systems challenges in a way that makes financial sense,” Lukomnik explained.

“A lot of work is left to be done to better understand the complex relationship between systems and portfolios. But, this study demonstrates that institutional investors, whether implicitly or explicitly, understand that the world is becoming increasingly interconnected,” said report co-author William Burckart.

“Previously, investors could find ways to insulate their portfolios from certain global events. Today, even seemingly ‘local’ events can immediately and adversely affect all portfolios. Because the largest and most influential investors are recognizing this trend and beginning to consider the connection between planetary systems under stress and adversely effected portfolio performance, we are looking at a potentially critical shift in the evolution of investment,” Burckart observed.

The report highlights several investor examples in the U.S. and abroad:

• PGGM, the Dutch pension fund manager, has allocated a multi-billion dollar portion of its assets to what it describes as a “solutions” portfolio focused on four issues: climate change, food, healthcare and water.

• The Ireland Strategic Investment Fund invests in enterprises “in a manner designed to support economic activity and employment in Ireland.

• To contribute to the vitality of Montreal, the regionally focused Caisse de dépôt de Québec has invested in a combination of public transportation and downtown office buildings and hotels.

• The largest investor in the world, BlackRock, has created an impact division to design bespoke investment programs and has made a name for itself through its investment stewardship program which has taken a long-term, sustainability approach for all its portfolio companies.

• The New York State Common Retirement System has worked with Goldman Sachs to create a low-carbon equity index fund to which it has allocated $2 billion.

• The California State Teachers Retirement System has allocated $2.5 billion to an MSCI low-carbon index fund, and also has worked with the NGO Ceres to query 45 fossil fuel companies about their strategic plans under various energy/climate scenarios.

One of the most important findings of the report is the identification of ten tools through which investors express this intentionality: Utility, Additonality, Locality, Solutions, Standard Setting, Policy, Diversity of Approach, Self-Organization, Interconnectedness, Evaluations. Download the full report at- http://irrcinstitute.org/research-center

The Investor Responsibility Research Center Institute is a nonprofit research organization that funds academic and practitioner research enabling investors, policymakers, and other stakeholders to make data-driven decisions. IRRCi research covers a wide range of topics of interest to investors, is objective, unbiased, and disseminated widely. More information is available at www.irrcinstitute.org

The Investment Integration Project helps institutional investors understand the feedback loops between their investments and the planet’s overarching systems – be they environmental, societal or financial – that make profitable investment opportunities possible. Once this relationship is understood, TIIP provides investors with the tools to help manage the impacts of their investment policies and practices on these systems. More information is available at http://tiiproject.com

Contacts:
Kelly Kenneally, ICCR Institute
(202) 256-1445 or kelly@irrcinstitute.org

William Burckart, The Investment Integration Project
(347) 871-3984 or wburckart@TIIProject.com

Amplifying Existing, Commonly Available, Scientifically Proven Climate Change Solutions

The Ray C. Anderson Foundation has awarded a $500,000 challenge grant to Project Drawdown, a global initiative based on meticulous research and subsequent traditional and online publications that analyzes how and when we can reverse global warming. As Project Drawdown is proving, the key is to amplify existing, widely practiced, commonly available, and scientifically proven solutions.

The Foundation committed the funds in April, with a challenge to Project Drawdown to raise an additional $250,000 by the end of 2016. Project Drawdown accomplished this goal in September, triggering the first of two $250,000 grants. The remainder of the pledge will be satisfied in January 2017, just a few months before publication of the Drawdown book.

“At certain crucial moments, Foundations can be presented with the opportunity to help bring into existence something that our world desperately needs,” said John A. Lanier, Executive Director of the Ray C. Anderson Foundation and a member of the Project Drawdown Board of Directors. “Our grant to Project Drawdown is one such moment. Their work is a beacon of optimism that we can indeed bring our climate back into balance.”

Drawdown is that point in time when the concentration of greenhouse gases in the atmosphere begin to decline on a year-to-year basis.

Project Drawdown describes when and how humanity can reach climate drawdown, the point at which greenhouse gas concentrations in the atmosphere begin to decline on a year-to-year basis. By mapping and modeling one hundred substantive, scalable solutions, Project Drawdown shows that it is possible for us to reverse climate change.

“The success of the global climate change movement depends on having a rigorous, detailed, and compelling path forward,” said Paul Hawken, globally recognized environmentalist and Executive Director of Project Drawdown. “We are filling a void by doing the math on the atmospheric and financial impacts of state-of-the-shelf solutions. Our findings will be communicated through an internationally published book, an open-source database, and a growing global network of partner organizations. To date, humanity has been more adept at imagining the end of civilization than its transformation, and more inclined to throw up our hands in despair or to dream of silver-bullet technologies, however unlikely.”

It was Paul Hawken’s influence through his book, The Ecology of Commerce, that in 1994 ignited the fire within Ray Anderson to transform how Interface, his carpet tile company, did business. Sustainability became both the moral obligation and the competitive advantage for the company.

“I remember asking Ray in 2004 what one change humanity needed to make to gives us a chance at a sustainable future,” said Lanier. “He answered, ‘Solve climate change.’ I am confident that Ray would have seized upon Project Drawdown as the most important research ever conducted. If he were still with us, I doubt we could get him to stop talking about this brilliant work!”

“At its core, Drawdown is a clear and detailed case of what is possible,” said Hawken. “We are counting what counts. By collectively drawing down carbon, we lift up all of life.”

While the consummation of COP21 in Paris was extraordinary given that 195 countries came together to work on climate change, a detailed description of how to achieve their goals was missing. Project Drawdown can fill that void.

In 2015, the Ray C. Anderson Foundation awarded a $100,000 grant to Project Drawdown, allowing the Drawdown Coalition members to complete the first phase of research on 70 technological, ecological and social solutions to climate change. The Foundation’s $500,000 commitment is for Phase II and delivery, which includes conducting a three-stage peer review process, and compiling the research into two primary communication tools – an internationally published book and Drawdown Interactive, a dynamic digital platform and open source database.

About the Ray C. Anderson Foundation

The Ray C. Anderson Foundation is a 501(c)(3) not-for-profit organization that seeks to promote a sustainable society by supporting and funding educational and project-based initiatives that advance knowledge and innovation in sustainability. www.raycandersonfoundation.org

About Project Drawdown

Project Drawdown is a 501(c)(3) not-for-profit coalition comprised of over 200 research fellows, scientists, NGOs and advisors that is mapping, measuring and modeling the 100 most subtantive solutions to global warming and disseminating that information through a book, to schools, and governments around the world. www.drawdown.org

 Contacts:

Valerie Bennett, communications director, Ray C. Anderson Foundation

770.317.5858 or valerie@raycandersonfoundation.org

Audrey Neuman, communications coordinator, Project Drawdown

audrey@drawdown.org

As sustainability issues force their way higher up the corporate agenda, private equity houses (general partners) are now responding to demand from investors (limited partners) for a brighter focus on environmental, social and governance (ESG) factors.

Four in 10 (41%) of 111 PE general partners surveyed by PwC in its Global PE Responsible Investment Survey would be prepared to pay a premium for a target company with robust ESG metrics. Two-fifths (40%) said poor ESG performance has seen them demand a material discount or even walk away from a deal.

However, illustrating how much progress there is still to be made only 14% said they had ever received a premium for strong ESG performance at exit, perhaps because so few -38%- regularly include ESG issues in the program for exit.

PE houses also recognize other emerging risks are on the horizon, but the challenge remains to mitigate them. For example, 85% are concerned about cyber security but only 27% are taking action. 64% were concerned about gender imbalance within PE firms – but only almost half (46%) had taken action on this issue, the survey said.

Phil Case, Private equity director at PwC said: “Private equity is changing fast. Still only a relatively youthful industry, it’s reinventing itself from a perception of ‘ ruthless’ to ‘responsible’, and from opaque to transparent. This is the evidence manifesting itself from this year’s survey of 111 General Partners from 22 countries around the world. The majority of PE houses have now made a public commitment to invest responsibly (70%) and currently have a formal responsible investment policy or will do shortly (96%). With 83% also reporting to their investors on ESG activities, little is truly ‘private’. We are observing a fundamental belief in the value that effective management of environmental, social and governance issues can bring – this is the lens through which PE houses view responsible investment.”

The approach to ESG management has moved forward at pace since PwC last surveyed the general partner community industry in 2013. European firms are more advanced in their approach to responsible investment, although Asian firms have made the biggest improvement, the survey found. Slowly, but steadily, more PE houses, especially in France, are valuing the benefits of ESG initiatives. One in five now value the impact of their ESG initiatives, an increase of almost double over the last three years Private equity firms have embraced ESG management as a core part of the deal process, with 60% now saying they always screen target companies for ESG risks and opportunities.

Case added: “Few would expect the PE community to take action on a ‘nice to have’ business case and they’d be right. There is a strong financial business case for responsible investment that’s evident throughout the deal cycle. Our results this year show more emphasis on risk management as a driver, less on investor pressure. This is not due to investor interest waning -in fact we believe it continues to grow- especially in the US. There is a focus on the value gained by managing ESG issues effectively. Investors may have been the initial driving force, but it is the business reasons for adopting ESG management principles that are maintaining the momentum. Whether it’s screening targets for those potential red flag issues that might cause fines and additional costs to rectify, or reputational damage further down the line, or for those ESG opportunities to command a higher premium at exit, effective ESG management provides the right approach to reduce risk exposure and increase investment returns.”

With the ratification of the Sustainable Development Goals (SDGs) in 2015, there will be increasing pressure on business as governments introduce new regulation and policy to help them achieve these 17 global goals that tackle major world issues.

For the first time, PwC has sought to gauge PE houses’ views on the SDGs in this survey.

Malcolm Preston, global sustainability leader at PwC, said: “A surprising proportion of PE houses are engaged and taking action to align their ESG activities to the SDGs. 44% plan to assess their impact on the SDGs, PwC’s survey found. At heart, these goals tackle business risks that stem from sustainability issues – whether it’s excessive resource consumption or a reliance on carbon intensive energy and processes or poor working practices. Government will turn to business to help them deliver these goals with those aligning to the SDGs and supporting government ambitions perhaps affording more favorable treatment than those that don’t. This engagement with SDGs and the on-going relationship with government are likely to become increasingly important for investors more broadly, including private equity firms.”

About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com structure for further details.

Source: PwC website

Two-thirds of asset managers polled pursue sustainable investing, with 64% believing its adoption will continue to grow.

Two-thirds of asset management professionals surveyed (65%) say that they are using sustainable investing strategies to achieve competitive market-rate financial return alongside positive social and/or environmental impact. Sixty-four percent believe its adoption will continue to grow, according to a new survey published in mid-November 2016 by the Morgan Stanley Institute for Sustainable Investing and Bloomberg L.P. The new Sustainable Signals: The Asset Manager Perspective report (www.morganstanley.com/ideas/sustainable-investing-asset-managers) examines the practices and perspectives of asset managers on sustainable investing and offers insights and action steps for asset managers and asset owners interested in pursuing sustainable investing strategies. The survey results indicate that this surge in sustainable investing activity has been spurred by rising investor demand and media coverage, resulting in a proliferation of new products from both specialist and mainstream asset management firms.

“Sustainable investing continues to make significant inroads in the broader investment community, led by individual and institutional investor demand for products that effectively and credibly deliver both financial and social returns,” said Audrey Choi, CEO of the Morgan Stanley Institute for Sustainable Investing. “However, as the market grows, it’s imperative we empower asset owners and asset managers with information and insights that enable them to combine the best of traditional investing practices with rigorous and material environmental, social and governance considerations.”

Sustainable Investing Trends at a Glance

Among 402 individuals surveyed at U.S. asset management firms:

89% are familiar with sustainable investing

65% practice sustainable investing

64% surveyed believe its adoption will continue to grow

Yet:

62% say proof of financial performance by sustainable investing products would increase firm’s commitment

55% say the field lacks credible data to inform decision making

51% are confident they can explain the non-financial impacts of sustainable investing to clients

“At Bloomberg, we see broader interest in sustainable investing approaches among asset managers, who are adopting new analytical approaches and differentiating their investment products. This shift is driven by both client demand and potential benefits for manager performance, both to manage ESG risk and identify sustainability-driven opportunities,” said Curtis Ravenel, Global Head of Sustainable Business and Finance at Bloomberg LP. “As a result, managers and analysts are definitely starting to demand more transparent and actionable information to enable better investment decision-making.”

For more information, please see Sustainable Signals: The Asset Manager Perspective here- www.morganstanley.com/ideas/sustainable-investing-asset-managers

The Morgan Stanley Institute for Sustainable Investing
The Morgan Stanley Institute for Sustainable Investing builds scalable finance solutions that seek to deliver competitive financial returns while driving positive environmental and social impact. The Institute creates innovative financial products, thoughtful insights and capacity building programs that help maximize capital to create a more sustainable future. For more information about the Morgan Stanley Institute for Sustainable Investing, visit www.morganstanley.com/sustainableinvesting

Morgan Stanley
Morgan Stanley is a leading global financial services firm providing investment banking, securities, wealth management and investment management services. With offices in more than 43 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com

Bloomberg
Bloomberg, the global business and financial information and news leader, gives influential decision makers a critical edge by connecting them to a dynamic network of information, people and ideas. The company’s strength – delivering data, news and analytics through innovative technology, quickly and accurately – is at the core of the Bloomberg Professional service, which provides real time financial information to more than 325,000 subscribers globally. For more information, visit http://www.bloomberg.com/company or request a demo.

In mid-November 2016 Andrew Behar, CEO of nonprofit shareholder advocacy group As You Sow, releases his first book, entitled “The Shareholder Action Guide.” Described by Robert Reich as “A valuable call to action for small shareholders to change the way big corporations do business,” the guide outlines how people can utilize their investments to shift corporate behavior.

More than 91 million Americans own shares of stock or are invested in mutual funds, and the vast majority of them abdicate their power to hold corporations accountable. The fact is, every public corporation holds an annual meeting and every shareholder has the right to vote on a slew of resolutions on issues that directly impact their lives and the futures of their families: a living wage, deforestation, climate change, animal rights, plastics polluting our oceans, CEO Pay, toxic chemicals in our products and foods, GMOs, fracking, human trafficking and slavery, and the list goes on. If you own even one share, you get a vote. If you own $2,000 worth of shares, you can file a resolution to directly address the board of directors.

Do you know about the priest who got Joe Camel to stop selling cigarettes to kids? What about why Steve Jobs created “A Greener Apple?” It was shareholders – like you – who used their power to make change.

Want to make misbehaving corporations mend their ways? You can! If you own even one share of their stock, corporations have to listen to you. If you have a workplace 401(k) you can have an impact.

This new book tells the story of shareholder advocacy and shows you how to use your power to hold corporations accountable.

“The Shareholder Action Guide” illustrates just how investments can translate into influence and can inform and empower shareholders to fight for a better world. Learn more at www.shareholderactionguide.org

Eaton Vance Corp. (NYSE:EV) announced in late October 2016 the execution of a definitive agreement to acquire the business assets of Calvert Investment Management, Inc. (Calvert), an indirect subsidiary of Ameritas Holding Company. In conjunction with the proposed acquisition, the Boards of Trustees of the Calvert mutual funds (Calvert Funds) have voted to recommend to Fund shareholders the approval of investment advisory contracts with a newly formed Eaton Vance affiliate, to operate as Calvert Research and Management, if the transaction is consummated.

Calvert is a recognized leader in responsible investing, with approximately $12.3 billion of fund and separate account assets under management as of September 30, 2016. The Calvert Funds are one of the largest and most diversified families of responsibly invested mutual funds, encompassing actively and passively managed U.S. and international equity strategies, fixed income strategies and asset allocation funds managed in accordance with the Calvert Principles for Responsible Investment. As a responsible investor, Calvert seeks to invest in companies that provide positive leadership in their business operations and overall activities that are material to improving societal outcomes.

Founded in 1976, Calvert (www.calvert.com) has a long history in responsible investing. In 1982, the Calvert Social Investment Fund (now Calvert Balanced Portfolio) was launched as the first mutual fund to oppose investing in South Africa s apartheid system. Other Calvert innovations include the first responsibly managed fixed income and international equity funds, and pioneering programs in shareholder advocacy, corporate engagement and impact investing.

“I am extremely pleased that Eaton Vance has chosen to make Calvert the centerpiece of its expansion in responsible investing,” said John Streur, President and Chief Executive Officer of Calvert. “By combining Calvert’s expertise in sustainability research with Eaton Vance s investment capabilities and distribution strengths, we believe we can deliver best-in-class integrated management of responsible investment portfolios to investors across the U.S. and internationally. Eaton Vance is the ideal partner to help Calvert fulfill its mission to deliver superior long-term performance to clients and achieve positive impact.”

“As part of Eaton Vance, we see tremendous potential for Calvert to extend its leadership position among responsible investment managers,” said Thomas E. Faust Jr., Chairman and Chief Executive Officer of Eaton Vance. “By applying our management and distribution resources and oversight, we believe Eaton Vance can help Calvert become a meaningfully larger, better and more impactful company.”

Completion of the transaction is subject to Calvert Fund shareholder approvals of new investment advisory agreements and other closing conditions, and is expected on or about December 31, 2016. Because the transaction is structured as an asset purchase, liabilities in connection with Calvert s previously disclosed compliance matters and other pre-closing obligations will remain with the seller. Terms of the transaction are not being disclosed.

“The acquisition of Calvert provides significant potential benefits to Eaton Vance shareholders, both long-term and near-term,” said Laurie G. Hylton, Vice President and Chief Financial Officer of Eaton Vance. “Calvert is a leading brand in one of the most promising categories of investing, and we expect to help them achieve substantial growth over time. Reflecting the current profitability of acquired operations and anticipated cost savings, we also expect the transaction to be immediately accretive.”

Eaton Vance is a leading global asset manager whose history dates to 1924. With offices in North America, Europe, Asia and Australia, Eaton Vance and its affiliates managed $343.0 billion in assets as of September 30, 2016, offering individuals and institutions a broad array of investment strategies and wealth management solutions. The Company s long record of providing exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today s most discerning investors. For more information, visit www.eatonvance.com

Statements in this press release that are not historical facts are forward-looking statements as defined by the United States securities laws. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to uncertainties and other factors that may be beyond the Company s control and could cause actual results to differ materially from those set forth in the forward-looking statements.

Article Source: Calvert website

Index growth signals evolving Next Economy as companies embrace sustainable business strategies

Green Alpha ® Advisors, an asset management firm specializing in innovation-driven, fossil fuel free equity portfolios, announced in mid-November 2016 that it has added 26 new stocks to its Green Alpha Next Economy Index (GANEX).

The GANEX, established December 30, 2008, is the longest-running broad-based, fossil fuel free market index in the U.S., providing investors with a time-tested benchmark of investment performance through different market cycles. It is rebalanced annually using a modified market cap weighting system, and currently holds 104 public equity securities.

“In the past 12-18 months, we have seen an acceleration of innovation by businesses around the globe and across several sectors that have enabled us to expand the Next Economy (TM) universe,” said Green Alpha Co-Portfolio Manager Jeremy Deems. “These investments offer smart solutions that simultaneously address core systemic risks and improve economic productivity. We believe companies like these will be the greatest growth drivers of the twenty-first century.”

New stocks in GANEX include:

Codexis, Inc. (NASDAQ: CDXS): Codexis engineers enzymes for pharmaceutical and chemical production. Codexis’ technologies enable scale-up and implementation of biocatalytic solutions to optimize process development, from research to manufacturing. In Next Economy terms, Codexis provides the possibility of moving beyond petrochemicals for many crucial industrial applications.

Ormat Technologies, Inc. (NYSE: ORA): Ormat is a provider of alternative and renewable energy technology. To date the company has built over 150 power plants and installed over 2,000 MW worldwide. The firm owns and operates 697 MW of geothermal and recovered energy based power plants. While geothermal isn’t as widely distributable as wind or solar, it does have the advantage of capably supplying non-intermittent baseload power, and makes a great addition to solar and/or wind as cogen where available.

Fortinet Inc. (NASDAQ: FTNT): Fortinet is a leading provider of cyber security solutions for enterprise, service provider, and government organizations around the world. Fortinet is one of four new GANEX components that focus on cyber security. In Next Economy terms, a cyber-connected economy will improve efficiency and cyber security will be critical to ensuring the successful long-term growth of a sustainable economy.

Ameresco Inc. (NYSE: AMRC): Ameresco is an energy services business that provides energy efficiency and renewable energy solutions to businesses and institutions throughout North America and the United Kingdom. The firm’s sustainability services include upgrades to a facility’s energy infrastructure and the development, construction and operation of renewable energy plants.

About the Green Alpha Next Economy Index (GANEX)
GANEX was developed using traditional, bottom-up research paired with a compelling, macroeconomic growth thesis based on scientific, demographic and climate trends. Green Alpha begins the investment process by asking, “Does this company, in aggregate, contribute to or mitigate the systemic risks of climate change, resource scarcity or income inequality?” The resulting list of Next Economy candidates are then vetted using time-tested growth and valuation methodologies.

The GANEX is an indexed product, designed to reflect and benchmark the Next Economy. It exists to:

• Define all aspects of the Next Economy: green, self-sustaining, eco-efficient, fossil fuel free
• Demonstrate the diversity, growth, breadth and depth of the Next Economy
• Provide a universe of Next Economy companies from which to draw for actively managed portfolios
• Serve as a performance benchmark for sustainable active, public equity investment strategies

About Green Alpha Advisors, LLC

Green Alpha follows science and innovation, not the crowd. We have been redefining asset management since 2007 by investing for the Next Economy, one in which solutions to our greatest systemic risks drive economic growth and allow the economy to thrive indefinitely. We believe companies that create or enable innovative solutions to the risks of climate change, resource scarcity and widening inequality are the greatest growth drivers of the twenty-first century. Green Alpha is proud to be a certified B Corp.