TBLI Weekly - June 7th 2022
Your weekly guide to Sustainable Investment
Upcoming TBLI events
This week's featured TBLI event:
Radical Truth - TBLI Podcast
Money is power. Wealth taxation means democratisation of power.
Marlene Engelhorn (29) comes from a family of wealth. She has been active in campaigning and raising societal awareness about the dangers of wealth concentration is a few hands.
There is nearly 4x more wealth than there is GDP. This vast wealth is concentrated in very few hands who often use that wealth to avoid paying taxes and influence the political process at the detriment of society. This needs to change.
What will you learn?
You can't abolish poverty without abolishing uber-wealth Why is a wealth tax critical to society? Why are seven digits in private wallets more important than the common good?
Click here to listen to the episode on Anchor.
You can find also find our podcast here:
TBLI Better World Prize
Annoucing the TBLI Better World Prize: The People's Choice Award for Best ESG Management System
Creating a more effective way to measure the sustainable performance of companies and investment vehicles.
Starting in 2022, this annual award will provide more accountability within the financial sector, and call out those who are greenwashing.
More info
TBLI's Hall of Shame - Best Greenwashing institution results are in- with Blackrock as #1, Goldman Sachs as #2 and J.P Morgan as #3 the biggest greenwashers.
- A people's choice selection voted on by ESG thought leaders, impact investors in TBLI's network.
For the full results, click here
That socially responsible fund may not be as ‘green’ as you think. Here’s how to pick one
Investment funds that promote values like the environment and social good have become more popular. But trying to pick a so-called ESG fund — especially one that aligns well with your interests — may seem about as easy as drying a towel in a rainstorm. “I think it can be really hard to know where to start,” said Fabian Willskytt, associate director of public markets at Align Impact, a financial advice firm that specializes in values-based investing. Luckily, there are some simple steps investors can take to get started and invest with confidence.
Funds that allocate investor money according to environmental, social and governance issues held $357 billion at the end of 2021 — more than four times the total three years earlier, according to Morningstar, which tracks data on mutual and exchange-traded funds. Investors poured $69.2 billion into ESG funds (also known as sustainable or impact funds) last year, an annual record, according to Morningstar. These funds come in a variety of flavors. Some may seek to promote gender or racial equality, invest in green-energy technology or avoid fossil-fuel, tobacco or gun companies, for example. Women and younger investors (under 40 years old) are most likely to be interested in ESG investments, according to Cerulli Associates survey data. About 34% of financial advisors used ESG funds with clients in 2021, up from 32% in 2020, according to the Financial Planning Association.
There are now more than 550 ESG mutual and exchange-traded funds available to U.S. investors — more than double the universe five years ago, according to Morningstar.
“An individual investor has a lot more [ESG options] and can build a portfolio in ways they couldn’t 10 years ago,” said Michael Young, manager of education programs at the Forum for Sustainable and Responsible Investment. “Almost every [asset] category I can think of has a fund option, so we’ve come a long way.” But fund managers may use varying degrees of rigor when investing your money — meaning that environment-focused fund you bought isn’t necessarily as “green” as you think. Here’s an example: Some fund managers may “integrate” ESG values when picking where to invest money, but it may only play a supporting (and not a central) role. Conversely, other managers have an explicit ESG mandate that acts as the linchpin of their investment decisions.
But investors may not know the difference. The Securities and Exchange Commission proposed rules last week that would increase transparency for investors and help make it easier to select an ESG fund. The rules would also crack down on “greenwashing,” whereby money managers mislead investors over ESG fund holdings.
How to diversify and invest sustainably with Singapore's first low-carbon ETF
The Lion-OCBC Securities Singapore Low Carbon ETF provides an opportunity to investors to build green portfolios for returns that also benefit the environment
Climate change, the defining crisis of the twenty-first century, is humanity’s biggest long-term threat, and the global transition to a low carbon economy is now more urgent than ever. Apart from adopting climate-friendly habits on a personal level, individuals should also ensure that they are investing their money in a way that benefits the planet.
Doing your part to make a positive impact on the world
As the climate crisis intensifies, there has never been a greater urgency to invest in companies moving towards low carbon emissions.
Southeast Asia is one of the regions that is particularly vulnerable to climate change, and ASEAN could see GDP growth reduced by 7.5 per cent annually until 2070 due to disruptive forces like natural disasters. Singapore, too, is susceptible to the impact of climate change such as rising sea levels, heat waves, increasing rainfall intensities and risks losing up to 46 per cent of its GDP in a worst-case scenario.
At present, the world is clearly not doing enough to combat or mitigate climate change. As governments, including Singapore’s, review their climate targets, individuals and businesses need to do whatever they can to reduce carbon emissions and slow global warming.
The average Singaporean is highly aware of environmental issues, according to the inaugural OCBC Climate Index released in 2021. It scored a national average of 6.7 points. The index is a measurement of the levels of environmental sustainability awareness and climate action among the 2,000 Singaporeans aged between 18 and 65 surveyed. For those who are wondering how to live more sustainably, the answer is that improvements can be made in almost every area of daily lives, from diets and holiday choices to investment decisions. Investors can examine their habits and actions to see where they can make more sustainable choices.
Investing in sustainable companies offers investors the opportunity to support climate-friendly business practices and participate in the transition to a low-carbon economy.
More specifically, Environmental, Social and Governance (ESG) investing enables investors to ensure that their money goes towards companies that have been assessed in terms of their performance as a steward of the environment, as well as how they manage relationships with employees, suppliers, customers, and the communities where it operates. The governance aspect deals with the company’s leadership, executive pay, audits, internal controls, and shareholder rights.
Read full article
Durreen Shahnaz: Climate change is a feminist issue
In her own words, the founder of Impact Investment Exchange tells us why climate change and feminism come hand in hand.
stared at the painting. I squinted my eyes, and tilted my head, but could not figure out why the painting did not look right. I like to think of myself as a painter, but when I try to take flavours from my favorite feminist painter, Frida, I struggle. Frida could effortlessly blend with oil, her political views, agony, and love as spirited attempts to express her own reality. I chewed on the end of my paintbrush, wondering how she did so time and again. The answer stared back at me from in between the interplay of green and blue textures. Aha, it was Orange! The painting needed a pop of exuberance to make the green and blue more appreciable. I threw that canvas and began anew.
My painting experience is no different from what we are experiencing in the world today. If we could, we would just throw away all that hasn’t worked and start afresh, but fixing the world is slightly more challenging than fixing a painting. (Related: Can the art world reduce its carbon footprint?)
The planet has begun to face noticeable effects of climate change. As erratic weather events, first-of-their-kind epidemics, and struggling economies become more commonplace, those in the global south are pushed deeper into poverty and face resultant losses to basic amenities, livelihoods, and life itself. To add to this, Covid-19 has further exacerbated income inequalities and set back the progress we made towards the 2030 Sustainable Development Goals (SDGs).
Now, with the herculean task of limiting the average global temperature rise to 1.5 deg C above pre-industrial levels at hand, we’re seeing fanatic strokes to fill the climate finance canvas. It is not surprising then that sustainable or “green” investing reached an AUM of $35.3 trillion in 2020, more than a third of total assets under management. However, just like my painting, the underlying currents of blues and greens need a bold splash of Orange to make finance truly work for those who need it the most. Women are that missing Orange.
Read full article
Funding needed for climate disasters has risen ‘more than 800%’ in 20 years
The funding needed by UN climate disaster appeals has soared by more than 800% in 20 years as global heating takes hold. But only about half of it is being met by rich countries, according to a new report by Oxfam.
Last year was the third costliest on record for extreme weather events such as droughts, floods and wildfires with total economic costs estimated at $329bn, nearly double the total aid given by donor nations.
While poor countries appealed for $63-75bn in emergency humanitarian aid over the last five years, they only received $35-42bn, leaving a shortfall that Oxfam condemned as “piecemeal and painfully inadequate”.
As diplomats sit down in Bonn on Tuesday for the first session of climate talks on “loss and damage” – costs related to all climate destruction – Danny Sriskandarajah, Oxfam GB’s chief executive, described the finance gap as “unacceptable”.
He said: “Rich countries are not only failing to provide sufficient humanitarian aid when weather-related disasters hit. They are also failing to keep their promise to provide $100bn a year to help developing countries adapt to the changing climate, and blocking calls for finance to help them recover from impacts such as land that’s become unfarmable and infrastructure that’s been damaged.
“Wealthy countries like the UK need to take full responsibility for the harm their emissions are causing and provide new funding for loss and damage caused by climate change in the poorest countries.”
Read full article
Why Impact Investors should bet on Agriculture
The shock to the global food system sparked by the war in Ukraine is hitting sub-Saharan Africa especially hard. That’s because the region’s imports of commodities like wheat, maize and rice and finished food products have soared over the last few decades, reaching some $35 billion by 2020.
But this weakness can be transformed into a source of strength if investors recognize the enormous opportunity for domestic agribusiness companies to capitalize on Africa’s rapidly growing consumer food markets. It’s one of those rare moments where investors can do well by doing good. They can generate significant financial returns across an agribusiness sector likely to be worth $1 trillion by 2030 while supporting domestic companies that can reduce Africa’s exposure to price volatility in global markets.
Seeking out business opportunities that also provide social benefits is sometimes referred to as “impact investing”— and right now the African agribusiness sector is a bonanza for impact investors.
Donor countries and development banks have long understood that agriculture is essential for reducing poverty and hunger across the continent. Up to 98 percent of rural households in many countries in sub-Saharan Africa engage in farming, which accounts for at least two-thirds of their income. The sector is key for driving food security and employment.
But where donors see opportunity, equity investors have frequently seen risk. In the short-term, agribusinesses require more start-up capital for new equipment, seeds and inputs. Even once the business is off the ground, unpredictable weather cycles can impact crop yields, which can mean less money coming back into the business.
This is where bold new partnerships and smart risk-taking come in. With the right mix of financial support, donors and investors can ensure agribusiness entrepreneurs in Africa can thrive and contribute to a sustainable food future across the continent.
If donors shoulder the risk of up-front investment, they will have a catalytic role in mobilizing longer-term financing from impact investors. For example, here at Heifer International, we’ve committed $17.2 million in impact capital to farmer-owned agribusinesses globally over the past three years, which is generating more than $69 million from external investors.