Digital library on sustainable finance
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This best practice report contains guidance on ESG integration in equity and fixed income investments, as well as case studies on how ESG integration is “done” by leading practitioners. The report intends to help investors learn how they can better integrate ESG data into their analysis and investment decision making.
This report focuses on the current state of ESG integration in the Americas. Other regional reports will focus on the EMEA and APAC regions.
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ESG integration in the Americas: markets, practices and data - EN
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Dies ist die zehnte Ausgabe der zRating-Studie zu Corporate Governance in Schweizer Publikumsgesellschaften. zRating hat in dieser Ausgabe die Corporate Governance von 176 börsenkotierten Schweizer Gesellschaften anhand von 59 Kriterien analysiert.
Sunrsie führt dank Verbesserungen einsam die diesjährige Gesamtrangliste vor Burkhalter und Schaffner an.
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This is a follow-up study by DWS and the University of Hamburg to their 2015 analysis which examined literature to find links between ESG and corporate financial performance (CFP). In this study, they find a highly significant, positive, robust, and bilateral ESG-CFP correlation. The conclusions confirm the business case for being a good firm.
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201809_ESG_Study_2018_Digging_deeper_DWS_UniHamburg (pdf 980.7 kB)Summary
This paper analyzes the approaches adopted by institutional investors to manage climate risk in their portfolios. The authors review the evidence about the adoption of these strategies, in both advanced and developing capital markets. They then analyze the pros and cons of each strategy in promoting more sustainable climate practices and identify best practices. The paper concludes with policy recommendations for capital markets regulators to incentivize the adoption of sustainable practices among institutional investors and calls for the standardization of definitions of green investments and financing tools to avoid greenwash.
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Stimulating Non-Bank Financial Institutions' Participation in Green Investments - EN
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This working paper finds that credit risk assessment and ratings tend to overstate credit risk and thereby constrain finance for clean energy projects. The cost of finance has a relatively high impact on the returns and viability of clean energy projects compared with fossil fuel-based energy projects, because the operating costs for renewable energy projects are very low. Access to institutional finance is particularly constrained in the distributed renewable energy sector, as the transaction costs are high, consumer credit risk is high or unknown, and a variety of other challenges exist.
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Managing Credit Risk and Improving Access to Finance in Green Energy Projects - EN
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The impact investing market map is designed to offer guidance and best practice on what constitutes an impact investment. It focuses on medium and large impact investing companies in the real economy and contains information (definitions, criteria, KPIs) on 10 thematic investments themes that contribute to sustainability and the SDGs.
The resource aims to bring more clarity to the process of identifying mainstream impact investing companies and thematic investments so that asset owners and fund managers can better assess opportunities in this market.
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This paper provides a snapshot of impact investment policy-making. Its purpose is to share real reflections from governments across the world and foster more collaboration on the way that policy in this area is designed and delivered.
Using evidence from over 50 interviews with policy-makers, civil society and private sector stakeholders across 17 countries, the paper provides a number of practical examples and first-hand reflections on how governments can be more effective in designing policy to support impact investing and helping this nascent market develop.
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Often overlooked in the divestment debate is the financial case for divestment. This paper makes the case for divestment as a proper financial response by investment trustees to current market conditions and to the outlook facing the coal, oil and gas sectors. It is driven principally by the likelihood that future returns from the fossil fuel sector will not replicate past performance.
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180716_Divestment-from-Fossil-Fuels_The-Financial-Case_July-2018_IEEFAorg (pdf 1.8 MB)Summary
PART 2: Physical risks and opportunities
The physical risks from a changing climate may differentially affect the financial health of businesses and impact the financial performance of sectors, creating risks and opportunities for those financing or investing in them. To date, risks and opportunities resulting from the physical impacts of climate change have received attention within the insurance sector, but have not been widely assessed in credit and lending portfolios held by banks.
In this pilot project, sixteen banks have developed methodologies in line with the Task Force on Climate-related Financial Disclosure’s (TCFD) Recommendations to assess the risks and opportunities from the physical impacts of climate change on their loan portfolios.
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NAVIGATING A NEW CLIMATE (002) (pdf 5.4 MB)Summary
This whitepaper investigates the relationship between ESG scores and characteristics of corporate bonds issuers. The authors examine the main investment implications in fixed income, focusing on corporate bond issuers, and investigate the impact of ESG factors on fixed income portfolios. The paper then aims to establish empirically whether ESG characteristics can be considered an additional, independent risk factor with respect to traditional fixed income factors. To this end, ESG scores are used in combination with traditional investment metrics such as issuer financials, default probability, liquidity measures and spread performance.
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ESG White Paper_FidelityInternational_ FINAL (pdf 550.7 kB)Summary
Diversity was once seen mainly as a manifest realisation of the quest for social justice. Today, especially in a workplace setting, it is also widely recognised as a source of competitive advantage and as an issue that acknowledges the differences that might exist not just between demographics or groups but between individuals.
This whitepaper traces diversity in the workplace over the course of almost 50 years. It revisits the research that highlighted diversity's contribution to team performance and concludes by exploring the millennial generation’s unprecedented and increasingly influential commitment to the cause.
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This whitepaper evaluates the investment performance of ESG, paying particular attention to recent performance and highlighting the difference between ESG scores that overlap with traditional risk model factors and those that don’t. The analysis indicates that, in general, increasing exposure to ESG rarely underperforms the market, and often outperforms the market, especially during the last few years.
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The academic and policy debate regarding the role of central banks and financial regulators in addressing climate-related financial risks has rapidly expanded in recent years. This Perspective presents the key controversies and discusses potential research and policy avenues for the future. Developing a comprehensive analytical framework to assess the potential impact of climate change and the low-carbon transition on financial stability seems to be the first crucial challenge. These enhanced risk measures could then be incorporated in setting financial regulations and implementing the policies of central banks.
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Climate change challenges for central banks and financial regulators - EN
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This report presents findings from the Global Impact Investing Network’s eighth Annual Impact Investor Survey. These findings reflect 229 respondents’ perspectives on the growth and development of the impact investing industry. The report includes analysis of respondents’ investment activity, asset allocations, impact measurement practices, and performance. For the first time, the report also presents trends analysis for a subset of 82 respondents that participated in the survey in 2013 and again this year. Major market developments over the course of 2017 are also described throughout the report. Key Findings:
- The market is diverse
- The impact investing industry is growing
- Impact investors demonstrate a strong commitment to measuring and managing impact
- Overwhelmingly, impact investors report performance in line with both financial and impact expectations
- Impact investors acknowledge remaining challenges that need to be addressed within the industry
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The 2018 edition, subtitled "Investment and New Industrial Policies", looks at the investment policy dimension of industrial policies. A global survey carried out for the Report shows that, over the past 10 years, more than 100 economies across the developed and developing world have adopted formal industrial development strategies, with acceleration in the last five years. Industrial policies are a key driver of investment policy measures; 90% contain specific measures, such as incentives, special economic zones, investment facilitation, performance requirements and investment screening mechanisms. The Report argues that modern industrial policies, especially those aimed at positioning for the new industrial revolution, call for a strategic review of investment policies.
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This 2018 briefing provides data gathered from a survey of affluent and high-net-worth people who give to charity to understand their interest in, knowledge of and experience with impact investing. Impact investing is catching on, particularly with Generation X and Millennials. However, the terminology of impact investing is not yet well known or understood—even by those who are making investments that can be categorized as impact investments. Investors are interested in both simple and sophisticated options for impact investing. Basic education on impact investing and guidance from financial advisors would most encourage investors to make an impact investment. Investors would consider making impact investments with assets set aside for retirement, for charitable giving or for other purposes. There is an opportunity for financial advisors to initiate a conversation about impact investing and provide much needed and valued expertise. Also, there is a gender gap in impact investing.
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This discussion paper explores why investors should contribute to the ‘just transition’ and how they can do so. It is the first output of the Investing in a Just Transition project, co-designed by the Grantham Research Institute on Climate Change and the Environment and the Initiative for Responsible Investment. The project will be delivered in partnership with the Principles for Responsible Investment and the International Trade Union Confederation. The purpose of this initial paper is to offer our emerging insights and seek readers’ inputs and feedback for the project’s next phase.
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The discussion paper aims to pave the way for the development of a framework for assessing and moving forward the “contribution of green bonds to scaling up the investments in green projects”. The paper focuses on the case of ‘Use-of-Proceeds Green Bonds’ (UoP GB) that represent 95% of the market in 2016. It discusses the link between increasing investment in UoP-GB on the one hand, and the growth of investments in green projects by issuers on the other hand, suggesting how this approach can be enhanced to achieve further impact.
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Based on interviews with 22 leading asset owners, this report explores the current best practices landscape, identifies barriers, and presents a framework of ten building blocks for other asset owners introducing and developing climate strategies. Our discussions covered a range of themes including the Task Force on Climate-related Financial Disclosures (TCFD) framework, culture, purpose, education, engagement, investment strategies, barriers, priorities looking forward, and practical advice for other asset owners.
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The report shows that Switzerland has already firmly established the UN's Sustainable Development Goals in its policies, although challenges still remain. It is in Switzerland's interests to contribute to the financing of sustainable development – through its official development assistance, but increasingly through strategic partnerships and the mobilisation of private resources for sustainable development.
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Switzerland implements the 2030 Agenda for Sustainable Development - DE
Switzerland implements the 2030 Agenda for Sustainable Development - FR
Switzerland implements the 2030 Agenda for Sustainable Development - IT
Switzerland implements the 2030 Agenda for Sustainable Development - EN
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In part 4 of the paper, the authors analyze extend their analysis of ESG integration across various types of equity protfolios to factor-based and active allocations. The chapter explores how asset owners and asset managers effectively integrate ESG into factor-based and actively managed allocations.
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Foundations of ESG Investing Integrating ESG into Passive Institutional Portfolios (pdf 972.8 kB)Summary
Switzerland was actively involved in developing and shaping the 2030 Agenda and its 17 goals. The goals can be achieved only through a concerted effort by the international community and the participation of all important stakeholders. Switzerland is ready to do its bit, both at a global level and through concrete measures domestically.
The present report is the first comprehensive review of the current status of implementation of the 2030 Agenda (baseline assessment) from the perspective of the Federal Administration. It documents achievements and successes and identifies challenges.
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Baseline assessment of Switzerland serving as basis for the country report 2018 - DE
Baseline assessment of Switzerland serving as basis for the country report 2018 - FR
Baseline assessment of Switzerland serving as basis for the country report 2018 - IT
Baseline assessment of Switzerland serving as basis for the country report 2018 - EN
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This paper charts the rise in interest towards ESG investing. At the same time, the authors warn that the challenge facing ESG investing is the lack of standardisation and the mixed quality of information of all three domains, especially the S domain. By drawing on internationally recognized human rights standards, the S can be strenthend, thereby improving the robustness and comparability of ESG aggregations.
The publication is aimed at investors, issuers, and human rights advocates alike.
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Money, Millennials and Human Rights: Sustaining ‘Sustainable Investing’ - EN
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This Climate Finance Policy Brief aims to demonstrate how new finance tools that build on the mandate of central banks can help the Tanzanian government to overcome these challenges. Thereby, Tanzania can not only harvest the first mover advantage, but also pioneer implementation of the Paris Agreement and Agenda 2030, particularly SDG7.
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The 16th edition of Mercer’s European Asset Allocation Report gathered information from institutional investors across 12 countries, reflecting total assets of around €1.1 trillion. The survey revealed that more European pension funds are considering the investment risks posed by climate change.
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