Digital library on sustainable finance
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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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This paper focuses on the actual and potential role of foreign direct investment (FDI) in achieving the transition to a low-carbon, just and sustainable world and, more specifically, FDI flows into developing countries. The particular implications of FDI on the environment – both potentially positive and negative – have given rise to an interest in the concept of “green FDI”. This publication attempts to aid the effort by taking stock of the current position and highlighting potential ways forward.
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Green Foreign Direct Investment in Developing Countries - EN
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The global community has spoken loud and clear: more resources must be mobilised to end extreme poverty and mitigate the effects of climate change. Blended finance - an approach to mix different forms of capital in support of development - is emerging as an important solution to help meet the ‘billions to trillions’ agenda. For development co-operation providers, the scaling up of this approach needs to be based on a good understanding of its potential in supporting developing countries meet the SDGs and Paris Agreement. This Policy Perspectives draws on recent OECD work, including the upcoming 2018 report Making Blended Finance Work for the SDGs, the draft OECD DAC Principles on Blended Finance and work under the OECD Development Assistance Committee (DAC) on measuring the amounts mobilised by official development finance interventions.
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The aim of the study is to identify the extent to which sustainable capital markets impact the way companies handle the social and environmental challenges of sustainability. A total of 3,660 companies worldwide from the oekom Rating Universe, were contacted and invited to take part in the online survey. 475 companies participated in the survey. Analysis of the survey responses served as the basis of the study.
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The Impact of Socially Responsible Investments on Companies – an Empirical Analysis - EN
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The PRI published the SDG Investment Case in partnership with PwC. The report makes the case for why the investment community should adopt an active role in achieving real world impact through implementation of the SDGs. It outlines why there is an expectation that investors will contribute to the SDGs and – crucially – why investors should want to contribute to them.
- The SDGs represent the globally agreed world’s most pressing environmental, social and economic issues.
- Large institutional investors can protect their long-term financial performance.
- Achieving the SDGs will be a fundamental driver of economic growth.
- A significant proportion of currently external costs might at some point in the future be forced into companies’ accounts.
- Providing solutions to sustainability challenges offers attractive investment opportunities.
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There are many factors that influence the investment decision-making process for individuals, ranging from household wealth, to education, to experience, to age, and even to geographic location. One factor that has been consistently under-appreciated is gender. In this report, potential sources of this gender divergence on investment decisions, and the subsequent wealth disparities, are discussed. This paper illustrates how certain factors could prevent women from achieving their financial goals over their lifetimes. It also shows how all investors – including women - can build their wealth by investing in a disciplined way and taking the appropriate amount of risk.
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woman-and-investing-report-en-global (pdf 2.0 MB)Summary
This extensive study discusses the role of sustainable finance, its growth, its capacity to increase savings over time and its ability to respond to a series of values by funding the green economy, organic agricutlure, cultural initatives, etc.
It also includes a comparative analysis of 21 key players in European ethical finance and 15 mainstraim players from the traditional banking system. The report discuss other topics such as green bonds and microcredits in Italy and in Europe in general.
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La_finanza_etica_e_sostenibile_in_Europa_IT (pdf 9.2 MB)Summary
This report finds that companies outperforming in industry-relevant ESG areas boast higher valuation multiples and margins, all other factors being equal, than those with weaker performance in those areas.
The report examines companies in five industries: consumer packaged goods, biopharmaceuticals, oil and gas, retail and business banking, and technology. It assesses not only quantitative links between ESG performance and financials, but also identifies eight key success factors that can help companies improve both their societal impact and financial performance.
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Flows of large volumes of private sector finance are imperative for enabling the success of any attempt to mainstream green finance within existing institutional approaches. This outlines a path to leveraged and blended financing. Targeted linking of financing with performance and policy conditionalities to proactively lead to green results would leapfrog toward addressing the core problem of degrading ecosystems, constrained bankability, and discontinuous investment pipelines—adversely affecting the quality of growth. The Green Finance Catalyzing Facility (GFCF) described in this report was conceptualized as a result of this objective.
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CATALYZING GREEN FINANCE A Concept for Leveraging Blended Finance for Green Development - EN
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This report explores the lessons learned in the development of impact bonds in low- and middle-income countries, bringing together the findings from interviews with stakeholders and research into the impact bond space conducted by the authors over the course of a year. Furthermore the report includes a Deal Book with detailed fact sheets for all impact bonds in developing countries, featuring both the four contracted and 24 in design phases.
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Impact Bonds in Developing Countries: Early Learnings from the Field - EN
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This report reviews how bonds are being used to finance a transition to a low carbon global economy. It includes an analysis of the growing global ‘green bond’ market but also goes beyond the green label. It sizes and analyses the ‘climate-aligned bond’ universe comprised both of labelled green bonds (use of proceeds defined and labelled as green) as well as a much larger set of bonds issued by entities enabling a low carbon economy but are not labelled green.
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Bonds and climate change - The state of the market 2017 - EN
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This document is a practical guidance for investors on the integration of ESG criteria. It describes the scope, issues of ESG materiality, and provides case studies to make the concept more tangible. While for equity analysis ESG criteria are included alongside factors such as value, size, momentum, growth, and volatility, in credit analysis they help to establish the creditworthiness of an issuer.
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The 2017 Symbiotics MIV Survey, produced on an annual basis, aims to provide comprehensive market trends and peer group analysis on microfinance off-shore investments. Its primary function is to allow microfinance investors and fund managers to benchmark themselves and improve their knowledge of the industry. It also allows academia researchers and companies to have access to unique historical information about microfinance funds.
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2017 SYMBIOTICS MIV SURVEY Market Data & Peer Group Analysis - EN
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This guidance document is addressed in particular to smaller and medium size (SME) institutional investors to gain an initial overview. For this purpose, motifs and market developments are illustrated and investment strategies and -classes are analysed. The introductory document can not and should not answer all questions related to sustainable investment, but, if possible, refer to existing publications and guides, where selected topics can be studied in depth.
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Nachhaltige Kapitalanlagen für institutionelle Investoren - DE
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In cooperation with the independent rating agency Inrate, WWF Switzerland has audited the largest Swiss retail banks in the areas of savings, investment, provisions as well as loans and financing. The company management is also considered. The rating provides for the first time an overview of the overall sustainability level of the 15 largest Swiss retail banks.
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Sustainability in the Swiss retail banking sector - DE
Sustainability in the Swiss retail banking sector - FR
