Alternative Sustainability and Quantitative SDGs
This week, NordSIP sat down with Martin Källström, Head of Alternative Investments at the Swedish state pension fund AP1, and obtained perspectives on how his team engages with managers on sustainable investing. Different parts of ESG criteria are applicable to different types of funds, he explains, but despite a good general awareness of sustainable investing in the Nordic hedge fund industry, some managers still need to be educated, something Källström does by leaning on AP1’s extensive experience. NordSIP also spoke with Kathryn McDonald, Head of Sustainable Investing at Rosenberg, a U.S.-based quantitative division of AXA Investment Managers, ahead of an event presented by NordSIP and quant fund management firm IPM on May 17 in Stockholm featuring Rosenberg. McDonald discusses her journey into sustainability and her latest project using the UN SDGs as a basis for quant models to help harness billions in public market investments to address pressing global issues.
Denmark’s opposition Social Democrats rolled out their ambitious energy and environment initiative following the government’s energy plan the previous week. The centrepiece of the proposal is The Global Future Foundation, a new DKK20 billion state-owned fund that will invest in green solutions globally. The initiative will be a central part of the party’s platform for general elections due within a year, ensuring that the green transition will be front and centre on the electoral agenda. Danmarks Grønne Investeringsfond (Denmark’s Green Investment Fund) is financing EcoClean Nordic, a Danish startup company that has developed a range of cleaning detergents that are 100% natural, sustainable and are certified by the ECOCERT environmental certification, to a tune in the millions of DKK in order to help the company scale throughout Europe. Finally, Swedish National Pension Fund AP7 co-filed a shareholder resolution together with the Church of England Pensions Board and others calling for improved governance over mining company Rio Tinto’s membership of coal lobbying organisations. While the resolution was defeated by the company board and proxy voters, it drew 18% of shareholder support, making it the largest vote for a shareholder resolution related to climate change in Australian corporate history.
In this week’s green bond review, Nordea‘s Anna Reuterskiöld points out some interesting development in the proportion of green bonds relative to the overal SEK-issuance, particularly helped by the real estate sector.
Heard on E-Street
The UNPRI published a two-part paper on Responsible Investment and blockchain last month, with the first part offering a technical primer on blockchain and the second part exploring how blockchain could transform the financial system and its implications for investors (UNPRI). The Luxembourg Green Exchange (LGX), a green bond-dedicated platform launched in 2016 by the Luxembourg Stock Exchange, is welcoming SRI funds for trading to ease global efforts to meet the SDGs (Investment Europe). HSBC launched two index funds – HSBC MSCI Europe Select SRI index and HSBC MSCI World Select SRI index in cooperation with MSCI ESG Research, both of which exclude investments in controversial sectors (Investment Europe). BBVA issued the largest green bond from a Eurozone bank last week, a €1bn seven-year senior non-preferred deal that inaugurated a new SDG-aligned framework and attracted over €2.5bn in demand (Sustainabonds). Finally, Carslberg topped the Danish financial publication Økonomisk Ugebrev CSR reporting list (ØU). Cheers!
“…it’s very easy to re-badge current corporate social responsibility (CSR) projects as ‘good news’ SDG stories and then use these narratives to justify stock picking. In that respect, SDGs could be manna from heaven for ESG mis-selling, possibly even the next sub-prime. Not only has this little societal value, but it will almost certainly rebound on the industry.” – Raj Thamotheram, in Both Sides of the Mouth (Investments & Pensions Europe), doubts Impact investors alone can make the difference.
Question of the Week
Which former CIA director said the following: “In our business, we’ve learned that successful commercial investment results depend heavily on a variety of ESG factors. If you don’t manage ESG risks or seize opportunities to improve ESG fundamentals, you inevitably lose out financially”?
Famous Last Words
“Facebook needs 3 years to fix the data and privacy issues, but just found time to launch a dating feature and take on Tinder?” – Nordea Head of Sustainable Investment Sasja Beslik on Twitter following the news that Facebook will expand into a dating service that, again, will rely on highly sensitive personal information being shared with third parties. Nordea’s Sustainable Investment unit blacklisted Facebook last month following revelations of the Cambridge Analytica scandal.
You’ve been warned.. Enjoy the (long) weekend,
Your NordSIP team
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