Digital library on sustainable finance
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This paper builds on the requirements for sound due diligence as explained in the Thun Group of Banks' 2013 Discussion Paper and focuses on situations where banks may be directly linked to negative human rights impacts under UNGP 13b of the UNGPs. It further clarifies the interpretation of UNGP 13a, and specifies that the Paper was drafted from the perspective that financial institutions will generally be directly linked in the case of adverse human rights impacts (UNGP 13b).
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In this first benchmarking, Climate-KIC, I4CE and PwC compare the financial centres of G7 countries: Frankfurt (Germany), London (United Kingdom), Milan (Italy), New York (United States), Paris (France), Tokyo (Japan) and Toronto (Canada). The main indicators were transparency of information; availability of green finance; green intensity; integrity of green finance; and the dynamics of the green financial centres. Though working with partial data only the report attempts to highlight the strong points of certain financial centres with respect to developing green finance. This first benchmark shows that green finance is currently traceable mainly through stock exchanges and notably via green bonds. A first conclusion is the need of diversifying green financial products and of developing their traceability and comparability at an international level. This concerns mainly green lending, private equity, insurance and green investment funds.
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The purpose of this directory is to provide policymakers and global and regional market participants a simple, easy-to-use reference guide as to which international and regional governments and industry bodies have implemented or are implementing major initiatives on green, sustainability and climate change.
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This report presents findings from the GIIN’s first comprehensive survey of the state of impact measurement and management (IMM) in the impact investing industry. It captures data from 169 impact investing organizations to provide valuable insights into why impact investors measure and manage their social and environmental impact, how they do so, and challenges that remain. By providing critical data and transparency regarding IMM practice, this report enables investors to better understand this core element of impact investing.
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The State of Impact Measurement and Management Practice - EN
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Swiss Sustainable Finance has prepared a handbook on sustainable investments for Swiss institutional asset owners. One year after the publication of the handbook in German and French, SSF updated and translated the publication into English.
The handbook contains relevant information for institutional asset owners and consists of 21 chapters, 8 case studies, a glossary, and over 30 visuals. It offers a comprehensive overview of the various available sustainable investment strategies and it contains concrete tips helpful in implementing a sustainable investment policy.
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The High-Level Expert Group on Sustainable Finance, established by the Commission, has published its first report setting out concrete steps to create a financial system that supports sustainable investments. The Commission will explore some key early recommendations to take further steps towards a low carbon, more resource-efficient and sustainable economy. The report is part of broader efforts to map out an EU strategy on sustainable finance, a priority action of the Capital Markets Union (CMU) Action Plan.
For more information visit the group's website
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This follow-up report of "The cost of inaction: Recognising the value at risk from climate change"from July 2015 reviews issues concerning climate-related financial disclosure. In more detail, it investigates the mandates of ten different international, EU and UK financial institutions, all with very different focuses and mandates, to consider what role they play, or could play, in supporting climate-related financial risk reporting. The report also looks at the recommendations put forward by the TCFD and considers how climate-related financial disclosure can be set into the UN’s broader Sustainable Development Goals (SDGs), rather than being siloed into green finance-related policies and regulations.
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THE ROAD TO ACTION Financial regulation addressing climate change - EN
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This report provides information for investors, banks and companies about the most attractive climate investment opportunities, while offering governments a set of best practice policies and measures that have been proven to attract private investment. Engaging the private sector in climate-smart investments will be essential to achieving the goals of the Paris Agreement.
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Creating Markets for Climate Business: An IFC Climate Investment Opportunities Report - EN
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Quarterly reporting remains essential in providing investors with the transparency they need and in keeping management teams accountable for their performance. On the other hand, consensus earnings estimates will continue to be a feature of markets regardless of what companies choose to disclose. If companies do not issue guidance, a mismatch between reported earnings and consensus indicates an inaccurate forecast rather than an earnings “miss.” This paper is aimed not at reporting or consensus estimates, but at the issuance of quarterly earnings guidance alone.
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This ESG Magazine Issue 9 looks at why and how companies, investors and related bodies are already starting to play their part in promoting the SDGs. It also looks at how a selection of the goals can fit clearly into the risk/return profiles of institutional investors, according to market practitioners. Governments could help enormously here by making SDG goal targets part of public procurement programmes where feasible: that would be a direct financial signal to investors. There is still a very real danger that the SDGs could become the ultimate catch-all for greenwashing – SDG-washing if you like – whereby every business and finance activity is hitched, however tenuously, to a goal.
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This study looks at how foundations are applying mission-related investing and their corresponding needs in Switzerland and Liechtenstein. Over 50 foundations were surveyed. The findings are presented in this report in addition to key recommendations on how to bring about further progress. See the German version for the full version.
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Creating impact with a foundation's Assets: Mission (Im)Possible? - DE
Creating impact with a foundation's Assets: Mission (Im)Possible? - EN
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The objective of this Roadmap is to propose an integrated approach that can be used by all financial sector stakeholders—both public and private—to accelerate the transformation toward a sustainable financial system. This approach can bring policy cohesiveness across ministries, central banks, financial regulators, and private financial sector participants to focus efforts. The ultimate vision that the Roadmap seeks to reach is one of a financial system that integrates sustainability considerations into its operations, including the full costing of positive and negative externalities that sustainability implies, leading to a reorientation of the flow of resources toward more inclusive and sustainable activities.
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This review highlights the environmental performance of the Swiss economy in 2017. It focused on biodiversity, water, and green growth and contains 42 recommendations for Switzerland. Switzerland received good marks for its economy's relatively low energy consumption in OECD comparison and its improved domestic resource efficiency. Switzerland also received positive ratings for its participation in numerous international environmental bodies and initiatives as well as for its commitment to a more sustainable financial world.
Short versions:
- OECD Environmental Performance Review: Switzerland, abridged version
- OECD Umweltprüfberichte: Schweiz, Kurzfassung
- Examens environnementaux de l'OCDE: Suisse, version abrégée
- Rapporti dell’OCSE sulle performance ambientali: Svizzera, versione abbreviata
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OECD Environmental Performance Review: Switzerland - Highlights 2017 - DE
OECD Environmental Performance Review: Switzerland - Highlights 2017 - FR
OECD Environmental Performance Review: Switzerland - Highlights 2017 - IT
OECD Environmental Performance Review: Switzerland - Highlights 2017 - EN
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This analysis illustrates the clear business case of a good ESG performance of companies. Roughly 90 % of academic studies find a non-negative relation between ESG criteria and financial performance with an overwhelming share of studies showing positive results.
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To help investors engage companies on this issue, the PRI has released this guidance, which aims to empower private equity, infrastructure and real estate investors to improve the risk profile of their portfolios and maximise their returns by promoting effective management of ESG risks in the supply chains of their portfolio companies. Considering ESG risk in the supply chain of investee companies can be a daunting task, particularly in private markets where company capacity to manage supply chains, transparency and disclosure may be limited. This guide provides initial steps investors can take to assess and manage supply chain risk.
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Managing ESG risk in the supply chains of private companies and assets - EN
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The growth of green finance depends on both promoting green finance products as well as greening mainstream financial markets. A green finance action plan is offered to guide stock exchanges in the implementation of green finance strategies. This voluntary action plan provides exchanges with a checklist of 12 action points within 4 action areas. It can be used as a self-assessment tool to identify areas where stock exchanges can initiate or expand their activities on green finance. Real world examples are provided for each action item to assist with implementation.
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This report, launched at COP23 in Bonn, intends to give an overview of current discussions in this area, drivers of the transition and potential pathways for actively managing it from the perspective of a financial institution. It also tries to address urgent and legitimate questions on behalf of private and institutional investors, regarding potential investment risks and opportunities related to the evolving “low carbon transition process”.
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Transition to a Low-Carbon Economy: How it impacts Investors and the Sectors they invest in - EN
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Contributing to the growth and development of the SME sector has both important economic and social impacts, and these businesses, both formal and informal, have a critical role to play in the achievement of the Sustainable Development Goals (SDGs). Their impact is particularly strong through employment creation, providing significant opportunities for populations in developing countries. For this report, BlueOrchard conducted a survey on a sample of financial institutions (FIs) lending to SMEs across different regions with the objective to identify differences and commonalities of SME markets across various countries and the needed improvements in terms of services and financing for SMEs in emerging and frontier markets.
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The meta-study evaluates over a dozen studies and finds that investors who aim for market-rate returns can achieve them, given a diligent fund manager selection. First, market-rate returns are achievable in impact investing, with returns distributions among market-rate-seeking impact investments comparable to those of analogous conventional investments. Second, small funds do not necessarily underperform relative to their larger peers. And third, the impact investment market includes opportunities for investors with varied risk appetites, investment strategies, and target returns. The report is also meant to provide data for helping to standardize the impact measurement frameworks and therewith increasing the credibility of the industry.
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Evidence on the Financial Performance of Impact Investments - EN
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In this research insight paper MSCI proof that ESG metrics and financial performance do not only have a correlation, but also a causal relationship. It does this by examining how ESG information embedded within companies is transmitted to the equity market. Using a standard discounted cash flow model, the authors provide evidence for a causal relationship ESG and financial performance. The reason is that changes in ESG ratings accurately predicted changes in financial variables. All in all, ESG-rated companies tended to show higher profitability, higher dividend yield, less systematic volatility and lower values for beta.
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Foundations of ESG Investing – Part 1: How ESG Affects Equity Valuation, Risk and Performance - EN
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Market-based solutions to climate change are advocated by financial actors and policy makers in order to foster a smooth transition to a low-carbon economy. However, a first important limiting factor to this approach is widely recognized to be the imperfect information on investors’ portfolios’ exposure to climate-related risks. A second limiting factor arises from the fact that in the context of the low-carbon transition, it is not clear how to measure the market share of participants because many economic sectors produce greenhouse gases (GHG) emissions or induce them along the supply chain. This hampers the ability of policy makers to ensure fair competition policies and the ability of major investors to assess the effects of their own portfolio reallocation.
To address these two gaps, this paper proposes two novel and complementary indices: (i) the BGHG exposure, capturing the exposure of single investors’ portfolios to climate transition risks, and (ii) BGHG holding, capturing the market share of each financial actor weighted by its contribution to GHG emissions.
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Vulnerable yet relevant. The two dimensions of climate-related financial disclosure (pdf 542.2 kB)Summary
The factsheet is part of the series "Focus" published by SSF. This edition tackles the topic of controversial weapons and what investors need to consider. It also provides an overview of the Swiss and international situation related to controversial weapons financing and investments. Additionally, it covers potential risks linked to not adequately addressing related issues for financing, investing and underwriting activities.
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2017_12_13_SSF_Focus_Controversial_Weapon_Exlusions_E_final (pdf 1.8 MB)Summary
This report responds to feedback that investors could, and should, do more to support companies on recommendations of the PRI and the GC, building on work by other organisations also tackling this problem. It presents three main strategies, each including recommendations focused on measures that companies can adopt to address the problems caused by market short-termism, and actions that investors can take to support companies in those efforts.
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Coping, shifting, changing 2.0: Corporate and investor strategies for managing short-termism - EN
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The objective of this report is to provide a general overview of how banks see their role and how they could further increase their support for sustainable economic growth. It takes stock of current banks’ activities in the Environmental and Climate Change (ECC) dimension of sustainability, the current environment in which banks operate, and the main obstacles to increasing banks’ involvement in financing environmentally sound investments. Furthermore, it suggests what needs to be done for these obstacles to be removed, and how the current regulatory and supervisory frameworks should be modified to reflect the ECC-related risks.
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In the context of the Paris Agreement, Swiss pension funds and insurance companies were invited by the Federal Office for the Environment FOEN and the State Secretariat for International Financial Matters SIF to test the climate compatibility of their portfolios. The offer attracted widespread interest. The Swiss financial sector remains insufficiently focused on climate-friendly investments. The testing of climate compatibility can contribute to the realignment of financial flows.
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