Evaluating Climate Risk – and Commitment
NordSIP sat down with DWS (formerly Deutsche AM) Director of Passive Product Development Gerald Koch to discuss how to best evaluate climate risk and what it means for portfolio construction. The distinction between transition and physical risk in evaluating climate risk is given vivid empirical illustration as Koch discusses how the analysis is then extended and implemented at the portfolio level.
We also caught up with Pelle Pedersen, Head of Responsible Investing at Danish Pension manager PKA, who has decided to leave his position and set off on a quest of his own, helping companies that aim to achieve positive impact and reach sustainable development goals.
Denmark is again facing criticism for being “unambitious” and “absent from the climate debate by the Climate Action Network, other NGO’s and MEP’s, this despite the government and general country line about being a global leader in combating climate change. This hasn’t been the case for some years, the charges warn, with Denmark slipping down country rankings to a few places above Saudi Arabia in the CAN annual survey. Meanwhile, a report from Human Rights Watch implicated Norway’s Sovereign Wealth Fund in financing war crimes via investments worth $200 billion in Israeli banks that finance settlements in the West Bank, stipulated as illegal by the United Nations. “This is not a new issue for us… this needs to be assessed in a broader context than just Israeli settlements,” a written response read.
More encouragingly, a new AIMA/CAIS report finds that hedge fund managers are gradually reconciling themselves to principles for responsible investments, according to the sample taken for the study. The report, which surveyed 80 asset managers with a collective $550 billion in hedge fund AUM, finds managers increasingly heeding investor calls for higher reporting standards and alignment with the PRI. Finally, Columbia Threadneedle Head of Commodities David Donora suggests how responsible investments relate to commodities, an asset class not particularly well defined in terms of ESG, and explains how the very practical nature of commodities necessitates practical approaches to derivatives.
Heard on E-Street
SEB appointed Ben Powell to head its Climate & Sustainable Finance business in Norway. Powell was previously the head of Funding for the International Finance Corporate, the private sector arm of the World Bank (Investment Europe). Amundi, Europe’s largest asset manager, created a Chief Responsible Investment officer role and appointed Stanislas Poittier, most recently global head of sustainable development at Crédit Agricole and formerly a special adviser to Michel Rocard and Christine Lagarde, to the position (IPE). The European Fund and Asset Management Association (EFAMA) has integrated stewardship principles into a revised version of its Code of External Governance, first published in 2011, to bring language in line with the revised EU Shareholder Rights Directive (SRD) and to assist asset managers in adopting best practices (IPE).
Too busy to keep an eye on absolutely everything? SDG Knowledge Hub’s Stefan Jungcurt perfectly summarises Nordic Clean Energy Week events Clean Energy Ministerial (CEM 9) and Mission Innovation Ministerial (MIM 3), and how they stacked up to the SDGs, here.
Question of the Week
What group of investment professionals appear to be lagging on ESG?
Famous Last Words
“The rise in the average temperature for May corresponds quite precisely to the predictions made by climate scientists in relation to greenhouse gases” – Jesper Theilgaard, former weather announcer, on the warmest May ever measured in Denmark, which many Danes took to be wonderful. By contrast, the first day of March this year was colder in the sunshine state of Florida than in Alaska. The good weather in Denmark points to something far worse on the horizon (Berlingske).
Your NordSIP team
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