Digital library on sustainable finance
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This report offers answers of millennials engaged in impact investing, regarding their interest in the topic and their actions taken, based on a survey completed by 58 individuals. Overall millennials are interested in the issue and either take a portfolio approach, or try to align their careers and philanthropic activities with their values but still face important barriers. 10 in-depth interviews provide insights into the lives of active impact investors.
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This report is the follow-up study of the one published in 2013. Since then, there has been a surge in the number of reporting instruments identified. The research identified almost 400 sustainability reporting instruments in 64 countries versus 180 instruments identified in 44 countries in the 2013 report. Especially the level of activity of stock exchanges and financial market regulators is noteworthy in the 2016 edition.
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Carrots & Sticks - Global trends in sustainability reporting regulation and policy - EN
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Die Studie der Alternativen Bank Schweiz (ABS) und dem Verein zur Förderung von Ethik und Nachhaltigkeit bei der Geldanlage (CRIC) besteht aus zwei Teilen. Der Erste beschreibt die Wertpapierbörse vor dem Hintergrund des ökonomischen Standardmodells und den der Ökonomie eigenen normativen Auffassungen. Der zweite Teil analysiert den Börsenhandeln aus der Sicht von CRIC relevanten ethischen Problemfeldern. In einer Replik nimmt die ABS Stellung zu den einzelnen Argumenten und Empfehlungen der CRIC Analyse.
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Gut oder Börse? Überlegungen zum ethischen Börsenhandel - DE
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This report focusses on capitalised green investment banks (GIBs), analysing the rationales, mandates and financing activities of this relatively new category of public financial institution. Based on the experience of over a dozen GIBs and GIB-like entities, the report provides a non-prescriptive stock-taking of the diverse ways in which these public institutions are catalysing private investment in low-carbon, climate-resilient infrastructure and other green sectors, with a spotlight on energy efficiency projects. The report also provides practical information to policy makers on how green investment banks are being set up, capitalised and staffed.
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This report suggests a model that quantifies the impact of potential climate and energy regulation on company profitability. Thereby aiming to improve stock picking and empowering investors to engage with companies on actions they can take to become "future proof". The research finds significant effects of climate and energy regulation on company profitability, but with important differences on a firm-level within the same sectors and geographies.
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Helping the investment industry to understand the impact of their investments on sustainability challenges, is the aim of this research. Therefore, a framework is suggested based on a set of six environmental and social themes (based on SDGs), which should allow investors to calculate and communicate the social and environmental impacts of their portfolio.
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In search of impact: Measuring the full value of capital - EN
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This report includes investment strategies that can contribute to increased long-term value creation by companies and the economy as a whole. Such investments are guided by a clear investment philosophy, process and culture rather than a defined set of rules or criteria. This report outlines 10 design features which can be flexibly adapted to deliver varying degrees of long-term value; focusing foremost on active listed equity strategies.
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Taking the long view: A toolkit for long-term, sustainable investment mandates - EN
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This briefing underlines the importance that green finance is scaled, thereby 'industrialised'. This requires international harmonization of definitions, products and standards. Hence governments have a central role to play. This report discusses barriers, challenges, and makes suggestions on how to encourage the industrialisation of sustainable finance.
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The global food system is affected by changing environmental conditions (e.g. water scarcity) which will increase over the coming years, as well as the increasing demographic pressure and demand for food supplies. It is highly probable that the volatility of food commodity prices will also increase over the coming years. Furthermore, higher and more volatile food prices are key transmission mechanisms through which environmental risks and constraints (e.g. climate change) will impact national economies. If these are significant enough, they may affect a country's credit rating and risks exposure of sovereign bondholders. This report discusses how more volatile food prices, influence the different nations.
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ERISC Phase II: How food prices link environmental constraints to sovereign credit risk - EN
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The survey provides information on 75 retirement schemes, monitoring and comparing the investment behaviour, asset levels, and performances in order to help and encourage long-term financing by institutions. The importance of retirement systems has grown over the last 15 years, representing 51.8% of GDP in 2001, and 61.9% of GDP totalling USD 30.2 tn in assets. Thus, the accumulation of saving in such financial channels has never been larger. The research shows that pension schemes face a challenging environment, especially due to the low interest rates. Thus, there is an important quest for alternative investment management, uncorrelated lower volatility returns, expansion of alternatives, etc. Six key trends have been identified by the survey respondents, of which the following ones are particularly interesting:
- Emerging markets and foreign investment
- Climate change resiliency and green investments
- Social impact investing
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Swiss financial institutions manage around USD 10 bn of worldwide investments for development, equivalent to almost 30% of the total global volume (status: 30 September 2015). The study "Swiss Investments for a Better World" identifies microfinance and investments for development as a rapidly expanding area of Switzerland’s financial industry, with an impressive growth rate of 18.4% over the past year. The financial sector is therefore building a bridge between economically disadvantaged regions seeking access to financial solutions and investors aiming for a market return on their long-term investments.
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Swiss investments for a better world - The first market survey on investments for development - EN
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In the scenario of a late and sudden transition to a low-carbon economy, the financial sector can be heavily exposed to environmental risks. Methodologies are being developed to measure the carbon intensity of investments, and the industry is reflecting on the importance of carbon stress tests. This policy brief proposes a Finance and Sustainability Risk Forum in which European financial supervision can share best practices and coordinate their input to the Financial Stability Board.
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Financial risks and opportunities in the time of climate change - EN
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Due to the accelerated growth in technology-enabled innovation, the authors aim to consider the impact on the risk profile of the financial system. This report further describes the wave of innovation at hand and how it leads to opportunities for enhancing the stability of the financial system, and concludes with a set of recommendations on how to improve it.
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This report explores how businesses can utilize debt as a tool to restore, rehabilitate, and conserve the environment while creating financial value. The report explains how ecosystem services are relevant to companies, examines the state of markets for carbon, water, and biodiversity credits, discusses the suitability of debt financing for companies at various stages and sizes, and suggests recommendations for businesses and investors who want to take advantage of opportunities to invest in conservation finance.
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Within this updated report, chapter 5.2.3 identifies instruments that can be used to achieve the Green Economy vision. Instrument 6c specifically cites the incorporation of ecological and sustainability considerations within the financial market policy.
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The first Swiss Sustainable Finance study, ’Swiss Investments for a Better World’, offers a detailed overview of the structure and dynamics of the Swiss market for investments in development. The report was produced in partnership with the Center for Microfinance of the University of Zurich and Symbiotics.
The survey of asset managers, banks and institutional investors made it possible to analyse the asset allocation (incl. the structure of the portfolios), the investment characteristics (currencies, portfolio quality, regional allocation and socio-economic and environmental indicators), as well as the financial returns (incl. risk and liquidity).
The report also presents four case studies showcasing innovative approaches to the financing of education, agriculture, and SMEs in different sectors in developing countries.
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Swiss investments for a better world - The first market survey on investments for development - EN
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Investors and financial regulators are increasingly aware of climate-change risks. So far, most of the attention has fallen on whether controls on carbon emissions will strand the assets of fossil-fuel companies. However, it is no less important to ask, what might be the impact of climate change itself on asset values? In this paper, the authors use a leading integrated assessment model to estimate the impact of climate change on the present market value of global financial assets. The authors find that the expected ‘climate value at risk’ (climate VaR) of global financial assets today is 1.8% along a business-as-usual emissions path. Further estimates also constitute a substantial write-down in the fundamental value of financial assets.
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‘Climate value at risk’ of global financial assets (pdf 474.7 kB)Summary
WWF, together with Responsible Investment charity ShareAction, carried out a survey of the 20 largest Swiss pension funds. It analysed how far pension funds invest their beneficiaries’ money sustainably and whether they transparently provide them with information. Although all pension funds are in some way engaged in the topic of responsible investing, there is still room for growth to catch up to international best practice.
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In this study the authors take a closer look at extending the already well-researched approach to increasing the efficiency of fossil fuel usage to water usage. They find that resource scarcity is a complex theme to consider in investments as demand for various resources cannot be looked at individually considering the demand for resources is correlated. Results also show that carbon- and resource-efficient companies may outperform less efficient companies. Lastly, the report finds that a focus on efficiency can help companies mitigate risks on the level of regulation, resource depletion and reputation.
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Resource Efficiency: A Case Study in Carbon and Water Use - EN
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At the request of the G20, the Financial Stability Board (FSB) engaged the private and public sector to review how the financial sector can incorporate climate-related issues in financial reporting. The TCFD undertakes a coordinated assessment of what constitutes efficient and effective disclosure and desings a set of recommendations for voluntary company financial disclosures of climate-related risks that are responsive to the needs of lenders, insureres, investors, and other users. This report sets out the scope and high-level objectives together with a set of fundamental principles of disclosure. Thereby, forming the framework for the second report (to be published end of 2016) which will describe the specific recommendations and guidelines.
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Phase I Report of the Task Force on Climate-Related Financial Disclosures - EN
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This paper discusses the impact of internalizing environmental costs onto a firm's balance sheet and the consequent risks this creates for commercial banks. Two industries, thermal power and cement production, were selected for stress testing. A range of high, medium and low stress scenarios were used to assess the impact on the financial performance and credit rating. This bank-led approach is the first of its kind in China and provides a foundation for the discussions on the theoretical framework and analytical methodologies.
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Impact of Environmental Factors on Credit Risk of Commercial Banks - EN
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This report present actions under way at the European level and in selected Member States to align the rules governing the financial system with environmental sustainability. The authors stress thereby five policy priorities: capital reallocation, enhancing frameworks for risk management, clarify core responsibilities of financial institutions, improve reporting and disclosure and the need of a strategic reset, seeking to link previously unconnected initiatives.
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Building a Sustainable Financial System in the European Union - EN
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This study aims to examine how institutional investors across the world are beginning to consider the Sustainable Development Goals within investment decisions, in addition to their future plans related to the SDGs. A survey was sent to about 500 institutional investors globally of which 52 responded. The report highlights the belief that the SDG's will serve to enhance returns, mitigate risk, strengthen reputation and help achieve investment objectives of the different institutions.
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This issue is the second in a two-part COP21 special and focuses on the major outcomes of COP21 for institutional investors. It also looks at leading current investment responses to climate change from asset owners.
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ESG Magazine: Can investors lead the fight against climate change? - EN
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The Guide’s objective is to provide the reader with a clear understanding of the field of impact investment, and with the practically applicable knowledge and tools necessary for the development and implementation of an impact investment program.
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