Green Deal Or Greenwash? We Go Beneath the Surface to Get the Clearest Picture
Total Page:16
File Type:pdf, Size:1020Kb
Al Gore And David Blood reP S onSiBle CAPiTAliSM WAll ST FeelS THe HeAT MiCROFinAnCe Climate change: there is no ‘do Interview with Saker Nusseibeh, Why divestment campaigns are A victim of its own success nothing’ option CEO, Hermes Investment ballooning Management Environmental | Social | Governance From the publishers of ri: responsible-investor.com Responsible investment & insurance, sustainable banking, impact investing & social finance, corporate governance & sustainability. issue 02 Winter 2015 Magazine COP21: green deal or greenwash? We go beneath the surface to get the clearest picture Integrating sustainability isn’t something we just dip into. Why? Because sustainability is a key value driver. By asking the right questions, we identify ESG factors that can impact future performance. This enhances our approach to identifying long-term risk and reward potential. And that leads to better informed investment decisions. Surface facts alone don’t always reveal the best opportunities. Going deeper does. To find out more visit robeco.com/sustainability Important information: Robeco Institutional Asset Management B.V. has a license as manager of UCITS and AIFs from the Netherlands Authority for the Financial Markets in Amsterdam. 2 ROBE0049-PRI-Event-FullPage-240x340-FAW.indd 1 04/08/2015 15:53 Environmental | Social | Governance From the publishers of ri: responsible-investor.com Responsible investment & insurance, sustainable banking, impact investing & social finance, corporate governance & sustainability. issue 02 Winter 2015 Magazine Good COP, bad COP All eyes are on Paris this December for the outcome of proposal that developed countries further support develop- the UN COP21 climate change conference that will set the ing nations by scaling up the $100bn per year by 2020 already environmental policy agenda for the decade 2020-2030, and committed. The World Bank says there is a gap of $70bn in beyond. existing promises. Closing that gap, and prolonging the flow This second issue of ESG Magazine is the first in a of capital – to clearly economical ends – is critical to building two-part COP21 special. The first issue you are now reading the trust necessary to reach a robust deal in Paris. focuses on the fundamentals of climate change for investors: The good news is that in 2014 more money than ever international policy, investor response, fiduciary duty, CO2 before – at least $391bn – was invested in low-carbon and Hugh Wheelan, measurement and engagement, and socio/economic pres- climate-resilient actions. The bad news is that brown Managing Editor and sure. Let’s call it the ‘risks’ issue for shorthand. financing still outstrips this, and CO2 emissions show little co-founder, Response Its sister issue in March will highlight the technologies sign of abating. Globally, the IEA estimates that fossil fuel Global Media pioneering the environmental revolution, as well as the ‘subsidies’ alone are nearly $550bn per annum. leading investment responses to climate change from asset owners (pension funds/insurers) and their agents (asset Encouragingly, institutional investors are increas- managers/banks). Let’s call it the ‘returns’ issue. ingly part of the discussion about mobilising that climate In reality, of course, neither the ‘risks’ or ‘returns’ label finance; and many of the biggest will be in Paris. It is funda- satisfies for either publication given that climate change is a mental, of course, given their role as shareholders and hugely complex combination. long-term financiers that they are brought clearly into the fold. Investors have the potential – and we would argue, the As, of course, is COP21. Headline success is likely to be responsibility – to influence how seriously their investee com- judged on whether the conference can establish trust panies, particularly energy giants, take climate change, and between developing and developed countries over climate manage the difficult, but necessary transition. And, they can financing. The first step has been an upfront show of will. On mobilise vast amounts of social capital on behalf of their mitigation and adaptation, at the time of writing, 138 billions of beneficiaries to invest in green energy, buildings countries – responsible for about two-thirds of global and transport infrastructure, as well as support a practical, emissions – have produced GHG emissions reduction and vital, price on carbon in financial markets. targets, known as Intended Nationally Determined Contribu- Sadly, it’s taken all too long to get here: perhaps an tions (INDCs). Their purpose is to demonstrate how coun- indication of how ‘financially’ seriously the environment has tries plan to do their bit to hold the global average tempera- been taken to date. ture rise below the 2°C threshold. Investors would do well to Let’s hope though that we have a good COP21, which study these plans carefully. takes clear, practical steps in which markets and investors After the upfront commitment comes the money talk. are brought on board to be good rather than bad cops in This, as ever, could be the fly in the ointment, particularly the climate finance. This issue’s ESG visual highlight Each issue of ESG Magazine features a series of images or photos that we believe speak louder than words on an ESG issue. This month, one of our main Feature articles features the award-winning ‘infographics’ of the Carbon Tracker Initiative. The financial NGO coined the phrases ‘unburnable carbon’ and ‘stranded assets’ to back up its stellar research work calculating the CO2 locked up in the projected fuel reserves of fossil fuel companies, and then extrapolating by how much the CO2 in the atmosphere would beyond the mooted 2°C danger point if it was all burned. The research was seminal in waking investors up to the valuations of energy companies today, which are heavily based on the future projected reserves they can extract for use. A key part of its messaging has been its infographic imagery, examples of which you can see on pages 35 and 36 of this issue, or in full at Carbon Tracker’s website: http://www.carbontracker. org/cti-in-the-media/ The work of Carbon Tracker will feature prominently in the discussions in Paris. Indeed, it’s hard to remember what we were talking about before their clear, insightful research, terminology and visuals were produced. 1 ESG Magazine Issue 2, Winter 2015 Magazine Response Global Media Ltd ESG Magazine Managing Editor: Hugh Wheelan Tel: +44 (0) 20 3640 9153 Email: [email protected] Responsible Investor Editor, Responsible Investor: Daniel Brooksbank, London Tel: +44 (0) 20 7709 2089 Email: [email protected] Senior Reporter: Vibeka Mair Tel: +44 (0) 20 3640 9154 Email: [email protected] Senior Correspondent: Jan Wagner, Frankfurt Tel: +49 (69) 548 06184 Email: [email protected] Response Global Media Publisher: Tony Hay Tel: +44 (0) 20 7709 2092 Email: [email protected] Business Development Manager: Simon Wilton, Subscriptions & Delegates Tel: +44 (0) 20 3640 9158 Email: [email protected] Business Development Manager: Aneta Atanasova, Sponsorships & Advertising Tel: +44 (0) 20 7709 2036 Email: [email protected] Sales Executive: Jeff Horlor, Sponsorships & Advertising Tel: +44 (0) 20 3640 9157 Email: [email protected] Office Manager & Subscriptions: Gabrielle Fox, London Tel: +44 (0) 20 7709 2093 Email: [email protected] Publishing Assistant: Paul Verney Tel: +44 (0) 20 7709 2088 Email: [email protected] Events Leader: Chido Tagarira Tel: +44 (0) 20 7709 2094 Email: [email protected] Events Leader: Banu Tuyakbayeva Tel: +44 (0) 20 7709 2067 Email: [email protected] Events Co-ordinator: Rupert Davies Tel: +44 (0) 20 3640 9156 Email: [email protected] Editorial Assistant & Researcher: Margaux Gatty Tel: +44 (0) 20 3640 9155 Email: [email protected] Correspondence: Response Global Media Limited, Tower Bridge Business Centre 46-48 East Smithfield, London E1W 1AW Tel: +44 (0) 20 7709 2093 Email: [email protected] ESG Magazine is published by Response Global Media Limited. No part of this publication may be reproduced in any form without prior permission of the publishers. Printed by Hastings Printing Company, Drury Lane, St Leonards-on-Sea, East Sussex TN38 9BJ, UK 2 01. trenDs 02. FEATURE 03. analysis 6 Trend map 17 The green financing gap 42 Balanced assets The percentage of fossils fuels per What’s on the agenda at COP21 It’s time for investors to start region that need to be kept in the and what’s likely to be agreed? reporting on both portfolio and ground to keep the temperature system-level performance rise under 2°C 18 Al Gore and David Blood There is no ‘do nothing’ option 46 Academic research 8 Ass et Classroom The ESG Magazine digest of the The energy efficient frontier 21 Accept the climate bet best of the latest cutting-edge Anticipating the transition to a studies on sustainable finance 10 Insuranc e low-carbon economy – new The Principles for Sustainable benchmarks for investors 48 E SG interview: Saker Nusseibeh, Insurance is raising its profile Chief Executive Officer, Hermes ahead of COP21 24 A breach of trust? Investment Management Pension funds owe legal and The 2008 financial crisis was a 12 B anking fiduciary duties to consider failure of governance and asset Big banks dig in on coal financing climate risks management 13 Micr ofinance 25 What gets measured gets 50 S moke