We recently visited a conference on the subject Sustainable Finance and got a glimpse of the latest developments in the responsible investment community. Speakers and panelists represented institutional investors, asset managers, ESG data and research providers, AGM activist to name a few. Here are some more of the highlights and key insights summarized.
From green to blue, to all the colors of the rainbow?
Green bonds are growing globally. The EU, in parallell with others, are working to find common classifications on what can be considered green, what can be considered an impact investment etc. At the same time we start seeing blue bonds. Starting with the Seychelles sovereign blue bond. And here in the Nordics, the Nordic Investment Bank issued a blue, Baltic Sea Bond early in 2019. The bond will be linked to investments in water resource management and protection. And then comes most likely the rest of the colors, as the SDG bonds are expected to rise in numbers and value. Here the UNDP is currently working on their SDG Impact certification, another effort to ensure third party verification of what is stated as sustainable projects.
It’s not all about pension funds. And not all pension funds.
“I’ve worked with these issues for almost 20 years. And in the last 2 years, more has happened in this area than in the previous 18 years” said Marie Baumgarts, from SEB. A very evident sign supporting that statement is that if we look back a couple of years it was mainly the state pension funds and value driven pension funds that where driving ESG issues. Now we see many great examples of private equity, asset managers and retail investors driving ESG issues. What we did not see much representation of was the pension funds from corporations, which in many cases may be have a relatively large sustainability impact (good or bad) even in relation to that of the actual corporation.
Efficient activism is on the rise
Here in the Nordics, we have not seen so much of AGM activism. But in countries like the US, the UK and Australia stakeholder resolutions and other AGM activities focused on sustainability is more common. As an example, in 2018 46 % of the votes in the AGM of the Australian Energy company Origin voted for a lobbying review (where the review was to cover climate and energy lobbying) , as a result of a stakeholder resolution brought forward by the Australasian Centre for Corporate Responsibility (ACCR). The organization holds a small portfolio of shares in ASX listed companies. Share Action, a UK based NGO involved in AGM activism, has as an example had focus on Living wage issues and through AGM dialogue convinced corporations to review wages from a living wage perspective.
After climate change comes…?
It was very obvious that climate change is – and of course should be – on top on everyone’s mind. But there were also voices raised, hoping for more focus on social issues. Both in terms of investor engagement with companies, but even more so when it comes to impact investing. Another alarming issue where investors may become more efficient drivers for change, is the issue of biodiversity loss. How can investors help us tackle that alarming issue?