Digital library on sustainable finance
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The European SRI Transparency Code (the Code) focuses on SRI funds distributed publicly in Europe and is designed to cover a range of assets classes, such as equity and fixed income.
In the reviewed version, applications to sign up to the Code will be in line with key elements of the recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD), Article 173 of the French TECV Act and the latest recommendations made by the High-Level Group of Experts on Sustainable Finance (HLEG) in its final report published in January 2018.
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The guideline gives start-up founders, investors and other users an indication regarding the sustainability potential of start-ups. Clear criteria and a transparent evaluation will enable the most objective and transparent verification of the sustainability potential. The evaluation provides a total value as well as a differentiated result of different sustainability dimensions. Also, the guide offers contextual adaptability of the scoring scheme (e.g., for different sectors and objectives), diversity and differentiation in use, and a positive cost-benefit ratio for all stakeholders.
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This study seeks to remedy the unclear relationship between environmental and financial performance by empirically investigating the risk-return relationship of low-carbon investment and characteristics of carbon-efficient firms. Based on 74,486 observations of U.S. firms from January 2005 to December 2015, the authors construct a carbon efficient-minus-inefficient (EMI) portfolio by carbon intensity, revenue-adjusted GHG emissions at firmlevel. They find that the EMI portfolio generates positive abnormal returns since 2010, which cannot be explained by well-known risk factors. The findings demonstrate that an investment strategy of “long carbon-efficient firms and short carbon-inefficient firms” would earn abnormal returns of 3.5–5.4% per year.
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The report examines climate management by 59 of the world’s largest banks finds urgent shortcomings that threaten to undermine efforts to support the transition to a low-carbon economy. Despite progress in some areas and several examples of individual best practice, the sector is failing to capture the risks and opportunities of climate change. The report supports the engagement letter – backed by over 100 investors with almost $2 trillion in assets under management – sent to over 60 banks last September asking about alignment with TCFD.
The investors call on banks to take four actions:
- Disclose their climate risk in line with TCFD recommendations
- Publish a company-wide, forward-looking strategy aligned with the Paris Agreement
- Set clear targets to increase and promote low-carbon products or services
- Disclose public policy positions related to climate change, and to influence their trade associations to take progressive positions on climate legislation.
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This guide provides a framework for Asset Owners who appoint and monitor external managers to assess whether their managers’ investment policies and processes are consistent with their ESG expectations. It aims to support them in their dialogues with managers so that they gain a clear understanding of the ESG risks and opportunities affecting their portfolios and how their managers are addressing them. This publication is in French.
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The report examines critical ESG risks in 10 sectors, which are classified under four broad themes, including: Water Management, Climate Change, Stakeholder Governance and Consumer Protection. Based on this analysis, many of these issues will potentially reach a tipping point and might pose a threat to shareholder value in the year ahead. For every theme the study contains at least one example from industry players. This story selections are meant to provoke new thinking about risk and sector attractiveness, particularly over the long run.
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Active ownership is generally regarded as one of the most effective mechanisms to reduce risks, maximise returns and have a positive impact on society and the environment – for passive and active investors. This publication provides an overview of the steps investors should consider to develop their active ownership policies and practices, with the ultimate goal of understanding corporate ESG risks and opportunities, defining their expectation for higher business performance and raising standards in the listed equity market. The aim of the guide is to offer all PRI signatories with practical tools, global best practices and references to be co-owners of investee companies and catalysts of change when needed.
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There is a growing consensus amongst leading investors globally that we are moving irreversibly towards a low carbon economy. With this Guide, WWF wishes to support asset owners and show how they can align their electric power sector investments with the objectives set in the Paris Agreement. The Guide focuses on coal and renewable power: such focus does not stem from a disregard of the challenges in gas power or heating, but from the recognition that coal and renewables offer both the most visible and urgent climate-related risks and opportunities to asset owners.
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Asset owner Guide on Coal and Renewable Electric Power Utilities - EN
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Moxie future has launched the first survey specialising on the responsible investment behaviour of women and the barriers they face. The survey was answered by 2536 women in Australia, China, Germany, UK and US, whereof respondents from China showed the highest interest in responsible investing. Also, 83% care about where their money is invested, 69% feel a sense of urgency to invest responsibly, and 63% are motivated to be responsible investors.
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Understanding Female Investors - Women using capital to change the world - EN
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This KOIS Invest report, comissioned by the Blended Finance Task Force, finds that private investment is not at the scale needed to tackle the sustainable land use (SLU) that comes with growing demand for food and energy. There needs to be a paradigm shift in the way in which (i) private sector investors view investment opportunities in SLU and how (ii) public and philanthropic investors engage to catalyse private capital in the Sustainable Development Goals (SDGs). The most common refrain in SLU is the lack of ‘investable’ project opportunities, even though they exist, in the form of early-stage SLU venture capital investments. To make the risk level more palatable to investors, collaboration with public finance institutions - a blended finance approach - is essential.
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This Climate Policy Initiative report, comissioned by the Blended Finance Task Force, analyses opportunities where blended finance can mobilise large scale private capital for clean energy. It evaluates, by geography and clean energy sector, the most significant opportunities for impact on both climate change and energy access per dollar invested; the risks and barriers that prevent investment; and how blended finance could be deployed to address investor needs. The report finds the greatest opportunities for blended finance in clean energy are in Sub-Saharan Africa and South and East Asia, with a subset of eight countries alone offering more than USD 360bn in investment potential in clean energy by 2030.
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Blended Finance in Clean Energy: Experiences and Opportunities - EN
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The Blended Finance Taskforce commissioned Convergence to support in segmenting the private sector ecosystem for getting a better understanding how to drive more institutional investment towards the Global Goals in developing countries. This resulting report provides ananalysis of the investment motivations, requirements, and constraints of six segments of institutional investors: I) pension funds, ii) insurance companies, iii) sovereign wealth funds, iv) commercial banks and investment banks, v) private equity firms, and vi) asset/wealth managers. Blended finance structures must create assets that fit within the mandates, constraints, and risk-adjusted return preferences of each institutional investor segment.
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The flagship report of the Blended Finance Taskforce created by the Business and Sustainable Development Commission presents the perspective of the private sector towards Blended Finance. The report offers five key take-aways:
- Momentum is building around the $50+ billion blended finance market.
- There is a window of opportunity for private institutional investors.
- The MDBs and DFIs will be critical to scaling the blended finance market and can do so by setting ambitious targets to mobilise external private finance.
- Developing countries which generate high quality infrastructure assets will not be short of financing.
- There is a major opportunity for the world to increase its underlying rate of growth, deliver the Sustainable Development Goals (including climate) and strengthen long-term returns for savers.
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The report provides a thorough assessment of the current state and priorities for blended finance for achieving the SDGs. It argues that while blending has potential to scale up commercial finance, its deployment by the development finance community needs to be based on a common framing and principles, as well as additional evidence and analysis. Therefore, the report describes concepts and definitions, lays out the main actors and instruments and shares learnings from past experiences.
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Making Blended Finance Work for the Sustainable Development Goals - EN
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The UBS whitepaper constitutes a blueprint for directing private capital towards the SDGs. It points out the specific SDGs where private wealth can play a larger role, which are zero hunger; quality education; good health and well being; affordable and clean energy; industry, innovation and infrastructure; and climate action. Yet, in order to attract the needed investment the transparency of data ought to be increased to facilitate the identification of investment opportunities.
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In this final report, the HLEG makes eight recommendations to be considered by the Commission to improve the contribution of the financial system to sustainable and inclusive growth. Those are:
- establishing an EU sustainability taxonomy, starting with climate mitigation;
- clarifying investor duties to extend the time horizons of investment and bring greater focus on environmental, social and governance (ESG) factors into investment decisions;
- upgrading disclosures to make sustainability opportunities and risks transparent;
- empowering and connecting Europe’s citizens with sustainable finance issues;
- developing official European sustainability standards for some financial assets, starting with green bonds;
- establishing ‘Sustainable Infrastructure Europe’ to deploy development capacity in EU member states for infrastructure necessary for a more sustainable economy;
- reforming governance and leadership of companies to build sustainable finance competencies;
- and integrating sustainability firmly in the governance of financial institutions as well as in financial supervision.
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Financing a Sustainable European Economy - Final Report - EN
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This document gives a explanation of Social impact bonds and provides the reader with a historical perspective on the investment vehicle. Furthermore it describes current best practices as well as difficult experiences with regards to Social Impact Bonds (SIBs) in a European environment. With this German publication, authors hope to initiate a discussion on both the risks an opportunities of issuing SIBs in Switzerland.
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This research maps out the legal implications of launching a Social Impact Bond (SIB) in Switzerland as well as its taxation. Since Swiss issuances are still lacking for reference, the authors provide learnings of a recent SIB project by the International Committee of the Red Cross supported by SECO, amongst other donors.
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Swiss Legal and Tax Implications of Social Impact Bonds - EN
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Based on analysis of over 29,000 incidents that took place from 2014 to 2016, the report identifies prominent incident categories, where incidents are occurring, and which industries are most involved. The report also considers how incident analysis can be integrated into portfolio strategy, including industry tilts, beta analysis and security selection, as well as corporate engagement processes.
Sustainalytics’ incident collection framework covers 45 incident categories and 60,000 sources of information worldwide, and provides comprehensive insight into company activities that generate undesirable social or environmental effects. The key findings from Sustainalytics’ report include:
- Quality and safety and business ethics are the two most common ESG incident types, accounting for 30 percent of all incidents;
- The banking industry accounts for 19 percent of all incidents, more than twice the amount of the next most exposed industry (food products);
- Adjusting for differences in industry size, the automobile industry is the most incident prone, and real estate is the least; and
- Over 40 percent of incidents occur in the U.S., the highest concentration of any country.
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This publication provides a concise, accessible summary of finance flows to renewables around the world. The study examines finance flows worldwide in 2013-2016, broken down by technology, financial instrument and region.
Although investment in renewables dipped in dollar terms in 2016-2017, they have continued to gain ground against conventional energy sources, particularly for new power plants. The report finds that private sources provide the bulk of renewable energy investment globally – over 90% in 2016. Conventional debt and equity are the most prominent financing instruments
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IRENA_Global_landscape_RE_finance_2018 (pdf 3.6 MB)Summary
WWF works with many stakeholders to tackle the challenge that climate change presents. With this Climate Guide to Asset Owners, WWF wishes to support asset owners and show how they can align their investments with the objectives set in the Paris Climate Change Agreement (‘Paris Agreement’). This document is structured to assist asset owners in their efforts to address climate change. It demonstrates that the financial evidence and regulatory environment have created a favourable context for taking action on climate change; and that asset owners can count and build on extensive strategic advice and existing good practice from peers. On that basis, WWF presents operational recommendations on how asset owners can accelerate their progress and seek to achieve carbon mitigation in line with the Paris Agreement. The document ends with the next steps planned by WWF.
Read English summary here
WWF works with many stakeholders to tackle the challenge that climate changepresents. With this Climate Guide to Asset Owners, we wish to support assetowners and show how they can align their investments with the objectives set inthe Paris Climate Change Agreement (‘Paris Agreement’).WWF recognises that addressing climate change is a multi-year effort, and thatasset owners are at different stages on this path. Yet the pace and scale of actionrequired to comply with the Paris Agreement does not leave room forprocrastination: the cost of the transition increases with every year of inaction.This document is structured to assist asset owners in their efforts toaddress climate change. It demonstrates that the financial evidence andregulatory environment have created a favourable context for taking action onclimate change; and that asset owners can count and build on extensive strategicadvice and existing good practice from peers. On that basis, WWF presentsoperational recommendations on how asset owners can accelerate their progressand seek to achieve carbon mitigation in line with the Paris Agreement.The document ends with the next steps planned by WWF.
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WWF climate guide to asset owners: aligning investment portfolios with the Paris Agreement - DE
WWF climate guide to asset owners: aligning investment portfolios with the Paris Agreement - EN
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This ShareAction UK report captures the current state of the European banking sector’s response to climate-related risk and the low-carbon transition. It aims to provide share- and bondholders in the 15 largest European banks with an overview of where the sector is positioned on climate-related risks and opportunities. The report is structured around four key areas:
- Climate-related risk assessment and management
- Low-carbon products and services
- Public policy engagement and collaboration with other actors on climate change
- Governance structures and strategy on climate-related risks and opportunities
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The UNEP Inquiry has published this report with the official launching of the international network for Financial Centres for Sustainability. The report maps out the action areas, as well as strategic priorities which the group will address in the following years.
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Accelerating Financial Centre Action on Sustainable Development - EN
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The PRI has published this review with the aim to drive a deeper discussion in the industry about the inclusion of ESG issues as a standard part of consulting advice and which additional ESG integration investment services are needed. The report also sets out barriers to this practice and identifies preliminary interventions.
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This report outlines the key megatrends that are impacting the global economy, financial system and the UN Sustainable Development Goals (SDGs). Over the past several months the authors have engaged with PRI signatories, market participants and other key stakeholders to gauge investor responses and strategies for dealing with current and future outcome volatility caused by the megatrends. The study finds that technological advances and environmental changes are seen as the most impactful global megatrends that represent major opportunities and threats to investment institutions. However it also shows that social inequality and global capital flow issues, including public sector deficits, emerge as rival concerns for senior global investment industry figures.
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Responding to megatrends: investment institutions trend index 2017 - EN
