Portfolio Climate Risks and Investment Suspensions
Over sleepy summer days, the Estonian branch money laundering scandal engulfing Danske Bank has caused Danish academics pension fund MP Pension to suspend all investments in the bank. MP Pension holds roughly $89 million in Danske shares and said the scandal violates its policies on responsible investing. Meanwhile, a leaked document revealed a number of green proposals to be hashed out when the Danish parliament reconvenes in the Autumn anticipating another political fight on climate issues beyond the energy agreement reached before the summer recess.
NordSIP’s beach reading this week is a highly relevant report by AXA Rosenberg‘s Srilatha Singh, Ph.D. and Kathryn McDonald, who examine the positive effects of diversity on profitability, and show how Porter’s Five Forces can help explain the durability of this effect.
Apple launched its new China Clean Energy Fund to be managed by the DWS Group (previously known as Deutsche Bank Asset Management), which it will invest almost $300 million over the next four years into together with 10 initial suppliers. The fund will invest in clean energy projects amounting to over one gigawatt of renewable energy in China, corresponding to a million households. The launch comes at a time of investor worry that the escalating trade war between the United States and China could hurt Apple in China. DWS also takes a look at new concepts emerging to allow climate risks to be presented transparently to investors to ensure investments are not adding to worldwide climate risk, for example through the “normalized carbon footprint” of the MSCI ESG Index or DWS’s own ESG Xtrackers ETFs.
Heard on E-Street
The Facebook data privacy issue had already begun being identified by ESG investment screens even before the Cambridge Analytica scandal, such as those employed by Domini Impact Investments, who had already flagged the company in 2016 and finally decided to dump its stock in the immediate aftermath of the scandal (Investment News). Forbes’ Georg Kell takes an interesting look at the “Remarkable Rise of ESG”, tracing its history, its definitions and its increasing importance to investing. (Forbes). Citywire researcher Fabian Fuchs took a trip to Denmark where he found sentiments from Danish selectors to be positive on emerging market equities, neutral on a pickup in worldwide growth, negative on fixed income bonds and not particularly bothered on MiFID II (Citywire Selector).
Question of the Week
Which Swedish pension fund co-filed an ultimately defeated shareholder resolution calling for improved governance of mining giant Rio Tinto earlier this year?
Famous Last Words
When I step back from all this, I see a transformation that resembles “The Industrial Revolution” and “The Information Revolution”. If, indeed, we are witnessing the makings of “The Renewable Revolution”, it will lead to major dislocations but equally significant investment opportunities” – financial analyst Henry Miles on the possibility that we have already entered the Renewable Revolution, investment possibilities arising thereof, and the defeat, or not, of players in fossil fuel industries (Seeking Alpha).
Happy ‘revolutionary’ weekend,
Your NordSIP team
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