In one of its most recent guides "A practical guide to ESG integration for equity investing", Principle of Responsible Investment (PRI) outlined the following 6 principles for institutional investors who believe ESG issues can affect the performance of investment portfolios.
We will incorporate ESG issues into investment analysis and decision-making processes.
We will be active owners and incorporate ESG issues into our ownership policies and practices.
We will seek appropriate disclosure on ESG issues by the entities in which we invest.
We will promote acceptance and implementation of the Principles within the investment industry.
We will work together to enhance our effectiveness in implementing the Principles.
We will each report on our activities and progress towards implementing the Principles.
Exactly, institutional investors are one of the most powerful stakeholders that place profound influence on their investments. By doing so, their concerns and emphasis usually affect the behavior and decisions of the economy. Think of the business world as a democratic universe and that institutional investors has the power to vote with their money. Enterprises have to perform in favour of their equity holders to secure and attract injection. Therefore, investors have the rights to advocate and raise ESG issues for target companies to integrate, investigate and manage ESG within their organization. This leads to shareholder advocacy/activism, the process of using shareholder influence to help bring about positive social and environmental change in corporations.
Shareholder advocacy is typically performed by institutional investors such as mutual funds, pension fund, trusts, and investment pools. However, individual investors can also be active shareholders. Using the strategy of share holder advocacy, investors can communicate directly with companies on ESG issues iwth a view to improving companies'' ESG performance.
When shareholders propose resolutions, they are engaging company management in an issue that concerns them. Holders of publicly traded stocks (or mutual funds) may introduce such resolutions, which may concern company policies and procedures, or ESG issues.
2016年9月12日 星期一
What is SRI?
SRI stands for Socially Responsible Investment, also known in other terms such as, responsible investing, ESG investing, morally responsible investing, ethical investing, values-based investing, mission-investing, sustainable investing. It is a way of investing by taking ESG issues into consideration.
Environmental concerns regarding global warming, climate change, and pollution.
Carbon dioxide emitted by cars, factories and agricultural activities, as well as supply chain waste and production of harmful goods can all lead to environmental damage.
Social refers to the way in which business affects society. Issues include economic inequality, sweatshop labor, predatory lending, community contribution and equal trade.
Corporate governance is concerned with how a company makes decisions, how it is managed, and how it implements policies such as hiring practices, diversity policies and so on. One of the solutions to corporate governance issues is transparency, that is, a company should have a way for share holders and the public to examine its operations and decision-making in order to assure that the company is acting in a responsible manner.
According to Vigeo Rating, SRI comprises two major approaches with different underlying motivations and philosophies: Social Responsible Funds and Ethical Funds. Social responsible funds sees environmental, social and governance risk mitigation as their priority towards screening target companies. Ethical funds exclude companies whose operation relate to controversial sectors such as armament, gambling, tobacco and alcohol for example, from their investment pool.
Environmental concerns regarding global warming, climate change, and pollution.
Carbon dioxide emitted by cars, factories and agricultural activities, as well as supply chain waste and production of harmful goods can all lead to environmental damage.
Social refers to the way in which business affects society. Issues include economic inequality, sweatshop labor, predatory lending, community contribution and equal trade.
Corporate governance is concerned with how a company makes decisions, how it is managed, and how it implements policies such as hiring practices, diversity policies and so on. One of the solutions to corporate governance issues is transparency, that is, a company should have a way for share holders and the public to examine its operations and decision-making in order to assure that the company is acting in a responsible manner.
According to Vigeo Rating, SRI comprises two major approaches with different underlying motivations and philosophies: Social Responsible Funds and Ethical Funds. Social responsible funds sees environmental, social and governance risk mitigation as their priority towards screening target companies. Ethical funds exclude companies whose operation relate to controversial sectors such as armament, gambling, tobacco and alcohol for example, from their investment pool.
2016年9月5日 星期一
Who's in?
Explore
This posts is more of a jump point for you to explore institutions that conduct impact/social responsible investing/ESG investing and those who perform studies, evaluation and valuation procedures. I will update every time I come to a new website or institute.Investment Funds:
RobecoSAMBlackrockImpact
Banks:
Morgan Stanley-Institute for Sustainable InvestingMorgan Stanley-Sustainable Inevsting Challenge
Citi-$100 Billion Environmental Finance Goal
Credit Suisse-Sustainable Products & Services
Nordea
Research Institutes:
Wharton University of Pennsylvania Social Impact InitiativeUniversity of Maryland-Environmental Finacne Center
Sorenson Impact Center
Government Announcements:
US pension funds get ESG green lightCPP (Canada Pension Plan) Investment Board
Non-Profit/Non-Government/Organization:
Principles for Responsible InvestmentVigeo Rating, The way to responsible investment
Global Impact Investing Network (GIIN)
ImpactBase
Impact Investing Australia
What is ESG?
ESG stands for Environment, Society and Governance, three aspects of how corporations do business and manage their risk. We've all heard of oil spills, pollution, labor abuse, child laboring, audit scandals, corruption and many other incidents that create negative impact and raise attention towards environmental, social and governance issues.
Quoted from NEI "Identifying and tracking environmental, social, and governance (ESG) risks as a part of the investment process helps contribute to better long term performance and potentially eliminates problems before they become costly mistakes." Many studies indicate that corporations that perform better ESG management, have lower risks and even outperform the market in return.
Many mutual fund, PE fund and pension fund managers have taken the practice of impact investing/social responsible investing (SRI) and reported positive or even outperforming results. However, methods to quantify and evaluate ESG performances are still developing among different institutions and yet to come to standardized principles or methodologies.
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Hi, this is Winnie from Taiwan. I'm interested in sustainable finance and trying to explore as much as I can. People (at least in my country) rarely know about this new field in finance that has developed drastically over the past decade, so I thought, well, why not spread the idea a bit. I don't have much time to dig deep, but this blog is a way to share what I've read from official/academic reports and websites.
Feel free to leave comments!
Let's learn together!
*********************************************************************************
More definition from different institutions:
Investopedia
CFA Institute
Nordea
Investor Advocacy Clinic
European Association for Quality Assurance in Higher Education (ENQA)
Principle for Responsible Investment (PRI)
Media:
Green and Blue Tomorrow
Forbes-ESG-Themed Investments: What Are They And How Are They Managed?
Experimental Study Group
InvestmentNews-Why it's time to believe the hype behind ESG investing
Quoted from NEI "Identifying and tracking environmental, social, and governance (ESG) risks as a part of the investment process helps contribute to better long term performance and potentially eliminates problems before they become costly mistakes." Many studies indicate that corporations that perform better ESG management, have lower risks and even outperform the market in return.
Many mutual fund, PE fund and pension fund managers have taken the practice of impact investing/social responsible investing (SRI) and reported positive or even outperforming results. However, methods to quantify and evaluate ESG performances are still developing among different institutions and yet to come to standardized principles or methodologies.
*********************************************************************************
Hi, this is Winnie from Taiwan. I'm interested in sustainable finance and trying to explore as much as I can. People (at least in my country) rarely know about this new field in finance that has developed drastically over the past decade, so I thought, well, why not spread the idea a bit. I don't have much time to dig deep, but this blog is a way to share what I've read from official/academic reports and websites.
Feel free to leave comments!
Let's learn together!
*********************************************************************************
More definition from different institutions:
Investopedia
CFA Institute
Nordea
Investor Advocacy Clinic
European Association for Quality Assurance in Higher Education (ENQA)
Principle for Responsible Investment (PRI)
Media:
Green and Blue Tomorrow
Forbes-ESG-Themed Investments: What Are They And How Are They Managed?
Experimental Study Group
InvestmentNews-Why it's time to believe the hype behind ESG investing
2016年8月27日 星期六
Did you know CFA Institute is talking about ESG Investing?
I just found out there are a bunch of e-learning courses, blog-posts and articles on the CFA Institute website that are talking about ESG / Social Responsible Investing.
Check them out:
I'm going to watch the web-course "Fundamentals of ESG: Concepts and Principles" tomorrow and share my comments with you!
*********************************************************************************
Hi, this is Winnie from Taiwan. I'm interested in sustainable finance and trying to explore as much as I can. People (at least in my country) rarely know about this new field in finance that has developed drastically over the past decade, so I thought, well, why not spread the idea a bit. I don't have much time to dig deep, but this blog is a way to share what I've read from official/academic reports and websites.
Feel free to leave comments!
Let's learn together!
*********************************************************************************
Hi, this is Winnie from Taiwan. I'm interested in sustainable finance and trying to explore as much as I can. People (at least in my country) rarely know about this new field in finance that has developed drastically over the past decade, so I thought, well, why not spread the idea a bit. I don't have much time to dig deep, but this blog is a way to share what I've read from official/academic reports and websites.
Feel free to leave comments!
Let's learn together!
*********************************************************************************
2016年8月25日 星期四
What is Sustainable Finance?
According to Swiss Sustainable Finance, Sustainable finance refers to any form of financial service integrating environmental, social and governance (ESG) criteria into the business or investment decisions for the lasting benefit of both clients and society at large.
A broad range of financial services can be integrated into sustainable-related practices.
Investors follow sustainable, responsible and impact investment strategies to fuel possitive impact on environmental, social and governance (ESG) aspects while generating profit. Cases can be impact-investing private equity firms that balance between purpose and profit, foundations that invest their endowments with an eye towards their own charitable purpose, pension funds that seek certain social or environmental goels, M&A deals that involve ESG due diligence tied to dicision strategies, and more.
As from a corporate finance perspective, positive ESG impacts can be fulfilled via operation within the business model, strategies and policies. Questions are raised to concern how firms react to the global trend and awareness of ESG and eventually sustainability:
1. How are the products manufactured and delivered? Is the process demaging/polluting the evironment or negatively influecing the community?
2. How does the corporation treat its employees, clients and the community it is located?
3. Does management meet transparency when making significant desicions?
Details will be introduced in following posts.
*********************************************************************************
Hi, this is Winnie from Taiwan. I'm interested in sustainable finance and trying to explore as much as I can. People (at least in my country) rarely know about this new field in finance that has developed drastically over the past decade, so I thought, well, why not spread the idea a bit. I don't have much time to dig deep, but this blog is a way to share what I've read from official/academic reports and websites.
Feel free to leave comments!
Let's learn together!
*********************************************************************************
Knowledge gained from
-Swiss Sustainable Finance
-Impact Investing & Finance - Social Impact, Wharton
-Annual Impact Investor Survey 2016, GIIN
A broad range of financial services can be integrated into sustainable-related practices.
Investors follow sustainable, responsible and impact investment strategies to fuel possitive impact on environmental, social and governance (ESG) aspects while generating profit. Cases can be impact-investing private equity firms that balance between purpose and profit, foundations that invest their endowments with an eye towards their own charitable purpose, pension funds that seek certain social or environmental goels, M&A deals that involve ESG due diligence tied to dicision strategies, and more.
As from a corporate finance perspective, positive ESG impacts can be fulfilled via operation within the business model, strategies and policies. Questions are raised to concern how firms react to the global trend and awareness of ESG and eventually sustainability:
1. How are the products manufactured and delivered? Is the process demaging/polluting the evironment or negatively influecing the community?
2. How does the corporation treat its employees, clients and the community it is located?
3. Does management meet transparency when making significant desicions?
Details will be introduced in following posts.
*********************************************************************************
Hi, this is Winnie from Taiwan. I'm interested in sustainable finance and trying to explore as much as I can. People (at least in my country) rarely know about this new field in finance that has developed drastically over the past decade, so I thought, well, why not spread the idea a bit. I don't have much time to dig deep, but this blog is a way to share what I've read from official/academic reports and websites.
Feel free to leave comments!
Let's learn together!
*********************************************************************************
Knowledge gained from
-Swiss Sustainable Finance
-Impact Investing & Finance - Social Impact, Wharton
-Annual Impact Investor Survey 2016, GIIN
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