SDG Pressures and Accelerated Timeframes
The ability to meet the SDGs came under scrutiny at a Stockholm breakfast held by the Royal Bank of Canada AM and local representative Intervalor attended by NordSIP. SSAB, the Swedish steel manufacturer also represented at the event that accounts for 10% of the country’s CO2 emissions, has committed to becoming fossil-free by 2045. Meanwhile, Ireland issued a €3 billion green bond, with Nordic investors, among them Alecta, AP2, Danske Bank AM and Varma subscribing to 12% of the total issue. Danske is a joint lead manager for the bond. Lars Mac Key, responsible for DCM sustainable bonds at Danske, explained to NordSIP why Ireland joined a handful of green-bond issuing nations.
The UN Principles for Responsible Investment initiated procedures to delist up to possibly 10% of its signatories for failing to live up to commitments within a two-year timeframe. The concern is that “greenwashing” is enabling certain (particularly U.S.) companies to claim action by merely being signed up and drawing investments while doing nothing in actuality. SPP Fonder launched a “fossil-free Factor fund”, the first of its kind to merge both Factor and fossil-free investment funds. The fund straddles both active and passive investing, with its factors of momentum, size, value and volatility being based on research and evaluation as to how each contributes to the fund’s performance.
The Stockholm Resilience Center published a new report in which it develops the first “global model” study to determine whether the world can meet the UN SDGs without destabilising economies. Current measures do not suffice, and neither does conventional economic thinking. Kirsten Dunlop, CEO of EIT Climate-KIC, the largest public-private EU partnership addressing climate change, meanwhile, sees a silver lining in rapidly changing attitudes related to both scientific research and guidelines from, among others, the European Commission’s HLEG group as to how R&I programmes in the future can initiate whole-scale transformation as opposed to the incremental change that so far has not delivered the necessary results in the time that is left (NordSIP).
Heard on E-Street
One major obstacle to sustainable investing is very tangible: apparently only 6% of “older” investors are even familiar with ESG thinking and its concomitant elements, such as value-based, socially responsible and faith-based investing, according to a survey from Crossmark Global Investments. The survey found a strong correlation between age and familiarity with the concepts (ThinkAdvisor).
The government of Norway, whose sovereign wealth fund is now twice the size of its economy, is (finally) proposing increased oversight over the fund and a new monetary policy committee to be set up within its central bank, albeit stopping short of moving the $1 trillion fund out of the central bank altogether, a previous recommendation by a special commission analysing the unsustainability of the situation (Bloomberg). Meanwhile, Finland has achieved one of the lowest shares of fossil fuels in total energy supply among IEA member countries thanks to the strong role nuclear, hydro and bio-energy play in its energy supply; nonetheless, cost-effective measures are needed to achieve climate goals of halving oil demand and phasing out coal use by 2030 (Modern Diplomacy).
Elsewhere, Allianz Global Investor’s integrated ESG assets reached €116 billion, while Allianz also announced the entirety of the €524 billion it holds in AUM is in the process of being integrated for ESG, SRI impact or ‘ESG informed’ projects (Funds Europe), while State Street Global Advisors’ Brie P. Williams thinks sustainable ETFs tracking ESG criteria offer more than a do-good attitude, matching it with demonstrable performance and evening out doubts about ESG investing (ETF Trends).
Famous Last Words
“Sustainable investing will be a core component for how everyone invests in the future – we are only at the early stages… We are going to see evidence over the long term that sustainable investing is going to be at least equivalent to core investments. I believe personally it will be higher… When I go to the Nordics, the Netherlands and France, it is almost a requirement to look at all forms of investment with sustainability in mind” – BlackRock Chairman and Chief Executive Larry Fink on BlackRock’s plans to become a global leader in sustainable investing following its recently launched range of ESG themed ETFs. Fink also withdrew from the Future Investment Initiative conference in Riyadh last week following the assassination of Saudi journalist Jamal Khashoggi (Financial Times).
Sometimes there’s simply only one right thing to do. Happy weekend,
Your NordSIP team
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