Digital library on sustainable finance

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TITLE Stimulating Non-Bank Financial Institutions' Participation in Green Investments
AUTHOR Asian Development Bank Institute
PUBLISHED Aug 2018
LANGUAGES EN 
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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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TITLE Managing Credit Risk and Improving Access to Finance in Green Energy Projects
AUTHOR Asian Development Bank Institute
PUBLISHED Aug 2018
LANGUAGES EN 
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Summary

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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TITLE The Financial Case for Fossil Fuel Divestment
AUTHOR Sightline Institute and Institute for Energy Economics and Financial Analysis
PUBLISHED Jul 2018
LANGUAGES EN 
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Summary

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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TITLE Navigating a New Climate. Assessing credit risk and opportunity in a changing climate: Output of a working group of 16 banks piloting the TCFD Recommendations.
AUTHOR UNEP Finance Initiative & Acclimatise
PUBLISHED Jul 2018
LANGUAGES EN 
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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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TITLE The impact of ESG investing in corporate bonds
AUTHOR Fidelity International
PUBLISHED Jul 2018
LANGUAGES EN 
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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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TITLE Broad Diversity as a Driver of Meritocracy
AUTHOR Invesco
PUBLISHED Jul 2018
LANGUAGES EN 
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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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TITLE Climate change challenges for central banks and financial regulators
AUTHOR Emanuele Campiglio, Yannis Dafermos, Pierre Monnin, Josh Ryan-Collins, Guido Schotten and Misa Tanaka
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE 2018 Annual Impact Investor Survey
AUTHOR Global Impact Investing Network (GIIN)
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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:

  1. The market is diverse
  2. The impact investing industry is growing
  3. Impact investors demonstrate a strong commitment to measuring and managing impact
  4. Overwhelmingly, impact investors report performance in line with both financial and impact expectations
  5. Impact investors acknowledge remaining challenges that need to be addressed within the industry

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TITLE World Investment Report
AUTHOR UNCTAD
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE Impact Investing: At a Tipping Point?
AUTHOR Fidelity Charitable
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE Investing in a just transition – Why investors need to integrate a social dimension into their climate strategies and how they could take action
AUTHOR Nick Robins, Vonda Brunsting and David Wood
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE Shooting for the moon in a hot air balloon?
AUTHOR 2° Investing Initiative
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE Winning Climate Strategies: Practical Solutions and Building Blocks for Asset Owners from Beginner to Best Practice
AUTHOR Asset Owners Disclosure Project
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE Switzerland implements the 2030 Agenda for Sustainable Development
AUTHOR Swiss Federal Council
PUBLISHED Jun 2018
LANGUAGES DE  FR  IT  EN 
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Summary

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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TITLE Foundations of ESG Investing. Part 4: Integrating ESG into Factor Strategies and Active Portfolios.
AUTHOR MSCI
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE Baseline assessment of Switzerland serving as basis for the country report 2018
AUTHOR Swiss Federal Council
PUBLISHED Jun 2018
LANGUAGES DE  FR  IT  EN 
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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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TITLE Money, Millennials and Human Rights: Sustaining ‘Sustainable Investing’
AUTHOR John G. Ruggie and Emily K. Middleton
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE Financing 100% Renewable Energy for All in Tanzania
AUTHOR World Future Council
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE European Asset Allocation Survey 2018
AUTHOR Mercer
PUBLISHED Jun 2018
LANGUAGES EN 
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Summary

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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TITLE Foundations of ESG Investing Part 2: Integrating ESG into Benchmarks
AUTHOR MSCI
PUBLISHED May 2018
LANGUAGES EN 
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Summary

In Part 2 of this paper, MSCI examines four key criteria for an index that serves as a benchmark, whether at the total portfolio level or for individual allocations. They test whether ESG indexes can be used for these purposes, using a “best-in-class” approach index that selects index constituents with strong ESG ratings and an index with a re-weighting methodology that relies on ESG ratings and changes in ESG ratings. While not indicative of future performance, these ESG indexes enhanced risk reduction and led to better risk-adjusted returns during the study period. While the best-in-class methodology had stronger ESG characteristics than the tilted approach, the former had a narrower investment universe.

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TITLE Got it Covered? Insurance in a changing climate
AUTHOR Asset Owners Disclosure Project
PUBLISHED May 2018
LANGUAGES EN 
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Summary

This survey utilises the framework provided by the Task Force on Climate-related Financial Disclosures (TCFD) to benchmark responses from the world’s 80 largest insurers to the AODP survey on climate-related risks and opportunities. As such, the organisation hopes to contribute to the debate surrounding the role of the insurance sector in addressing climate change, resulting in real improvements across the sector. The survey also offers recommendations to both regulators and insurers.

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TITLE Sailing from different harbours G20 approaches to implementing the recommendations of the Task Force on Climate-related Financial Disclosures
AUTHOR Cambridge Institute for Sustainability Leadership (CISL)
PUBLISHED May 2018
LANGUAGES EN 
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Summary

This analysis reviews the progress made by the national regulatory agencies of G20 members in making the recommendations relevant to their national contexts. It considers actions taken by the national (and international in the case of the EU) regulatory authorities in underlining the relevance, and taking steps towards potential implementation, of the TCFD recommendations.

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TITLE Implementing the TCFD recommendations: a guide for asset owners
AUTHOR Principles for Responsible Investment (PRI)
PUBLISHED May 2018
LANGUAGES EN 
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Summary


Asset owners will need high-quality and timely data on climate-related risks to help guide them through the energy transition. The FSB Taskforce on Climate–Related Financial Disclosures (TCFD) provide a global framework to translate non-financial information into financial metrics. The TCFD has been endorsed by over 238 companies, including 150 financial institutions representing a combined market capitalisation of over US$6 trillion and US$81.7 trillion assets under management. Yet, what would adopting the TCFD recommendations mean in practice for asset owners?

This publication provides technical guidance on:

  • actions for asset owners;
  • example of peer asset owner practice on implementing the TCFD recommendations and reducing exposure to climate risk;
  • questions to engage consultants or fund managers on TCFD;
  • climate scenarios.

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TITLE The Green Bond
AUTHOR Skandinaviska Enskilda Banken AB (SEB)
PUBLISHED May 2018
LANGUAGES EN 
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Summary

This paper gives an overview of the current developments in the Green Bond Market. Following an unbridled winter, the green bond market shifted towards a more tentative pattern of issuance growth through the spring, with brighter growth prospects emerging from some slightly overcast patches by April. The report's 2018 base-case issuance scenario is maintained at USD 175 bn for 2018, with the possibility to surprise to the upside once again and cross to USD 210 bn.

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TITLE Foundations of ESG Investing. Part 3: Integrating ESG into Passive Institutional Portfolios
AUTHOR MSCI
PUBLISHED May 2018
LANGUAGES EN 
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Summary

Part 3 of the research paper series focuses on how ESG can be integrated into passive allocations using MSCI ESG Ratings. While not indicative of future results, the MSCI ESG Ratings provided better risk-adjusted returns from August 2010 to December 2017 than the MSCI ACWI Index. MSCI used existing best-in-class selection-based index methodologies for the creation of hypothetical global and regional passive allocations. In the global and regional allocations, the authors found that ESG integration led to a reduction in risks and an increase in valuations compared to their respective parent index.

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