Green Bond Legislation and New Nordic Funds
Last week, SOU, the Swedish state reports commission appointed by the Swedish government, submitted a report, “To Promote Green Bonds” (trans.) for proposed legislation in the Swedish Riksdag suggesting how to promote the green bond market. Reactions so far have been mainly positive, though the inquiry itself suggests pitfalls while attempting to provide solutions. Meanwhile, Swedish insurance and pensions Company SPP is set to add a Europa Fund to its fossil-free Plus funds concept range in Q1 2018. Over in Denmark, a public offering has been made by Danmarks Økologiske Jordbrugsfond, a fund dedicated to organic farming, which has thus far received investments worth DKK 22 million, while national grocery chain Irma has made substantive investments in sustainable energy (NordSIP). Global asset manager First State is to launch a Sustainable Listed Infrastructure Fund to meet growing demand from investors, while MSCI published a paper suggesting the top five ESG trends to watch for in 2018.
Heard on E-Street
The world’s first green covered bond law has been proposed by Luxembourg’s ministry of finance to create a framework to finance renewable energy infrastructure, which will set legal standards for assets eligible as collateral for the proposed product (sustainabonds.com). The state of New Jersey divested from Danske Bank in order to comply with state law against the Boycott, Divestment and Sanctions movement against Israel; Danske has excluded two Israeli defense companies violating its social responsibility policies. “Not investing in two companies does not constitute a boycott of Israel,” Danske’s head of RI Thomas Hyldahl Kjrgaard said (Haaretz). Elsewhere, Canadian pension funds are apparently lagging behind their peers in addressing climate risks (Corporate Knights).
Quote of the Week
“We found strong evidence that companies with strong ESG profiles are really better at managing risks and opportunities. For example, we’ve seen that companies with high ESG profiles have a much lower risk of suffering from incidents like the Volkswagen case or the Deepwater Horizon disaster. This explains why high ESG ratings make for better investments — it is because they are better managed companies.” – Guido Giese, MSCI executive director of applied equity research and author to a new report “Foundations of ESG investing: How ESG Affects Equity Valuation, Risk and Performance” with findings reflecting this statement (greenbiz.com).
Question of the Week
Which large Norwegian pension fund recently reinstated a number of controversial companies into its portfolio following a review showing improvements in their sustainability efforts?
Famous Last Words
“Everybody was like ‘Hallelujah!’ and ‘Oh my God, now everything is going to change.’ But not one is talking about the elephant in the room. Everybody is doing ESG, everybody is doing integration, everybody is doing sustainability. But only about 5% or 10% of global capital is tilted towards sustainability, so the net effect is zero” – Nordea head of sustainable finance Sasja Beslik pulls no punches on the self-congratulatory mood at the One Planet conference in Paris last month (ethicalcorp.com).
Quite. Happy weekend,
Your NordSIP team
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