| |
In This Issue
Editor's Note
Driving Sustainable Investing Through China’s Philanthropic Sector
In Western countries, foundations have played an important role in the development of sustainable investing practices. Foundations, especially in the United States and Europe, are transitioning from a negative-screening approach—one by which foundations identify business activities that are not eligible to receive funds such as those related to gambling, alcohol, or pollution—to a positive-screening approach that focuses on investing in companies that have goals and a mission aligned with those of the foundation.
This development, however, has progressed more slowly in China due to the country's relatively young philanthropic sector and underdeveloped sustainable investment market. In this issue’s feature article, BSR Associate Stephanie Tian explores the challenges that Chinese foundations face in terms of driving sustainable investing forward as well as recommendations for how to overcome them.
Also in this issue, UN Principles for Responsible Investment’s (PRI) James Gifford shares how collaboration is critical to implementing responsible investment practices.
Feedback and comments on this newsletter are encouraged and should be directed to Julie Zhu at jzhu@bsr.org.
In Depth
Looking to China’s Philanthropic Sector to Push Sustainable Investing Forward
BSR Associate Stephanie Tian explores the challenges that Chinese foundations face in terms of driving sustainable investing forward as well as recommendations for how to overcome them.
Learn more →
|
Insight From the UN PRI
Principle 5: We Will Work Together to Enhance Our Effectiveness in Implementing the Principles
Many environmental, social, and corporate governance (ESG) issues are too large and complex for any one investor to solve alone. Therefore, collaboration—through forums like the PRI Clearinghouse (see Q2 2010 of newsletter) and other key industry initiatives—has become a key part of responsible investment implementation.
Collaboration for investors means working together to influence investee entities and policy makers by sending a unified signal on the importance of properly managing ESG issues. In the PRI’s 2010 survey, approximately 90 percent of signatories reported that they collaborate with other investors through formal investor initiatives or informal networks—a rise from 75 percent in 2009—and 223 (of 433 survey respondents) reported that they undertake specific collaborative engagements with other PRI signatories.
For example, a group of 16 institutional-investor signatories with approximately US$1.5 trillion in assets under management (AUM) worked together to engage with companies on water challenges. The investors sent a letter to a select group of companies asking them to endorse the CEO Water Mandate. As current and potential shareholders of these companies, the investors encouraged companies to consider the significant value of becoming a participant in the CEO Water Mandate. Such action from investors is now increasingly common, and is gaining a response from businesses. In this case, in the two years after the letter was sent, 19 of the 100 companies targeted have signed up to the CEO Water Mandate.
WORKING TOGETHER AT A POLICY LEVEL
Investors are also working together to shape policy. In December 2010, for instance, more than 260 investors—both asset owners and investment managers—with US$15 trillion AUM signed a statement informing the world’s policy makers of their concerns with the risks presented by climate change to regional and global economies and to individual assets. While investors worldwide are currently taking actions on their own to address climate risks and opportunities—such as considering climate risks in their existing investments; investing in assets such as renewable energy, energy infrastructure, and clean technology; pressing companies to reduce their greenhouse gas emissions; and persuading regulators to require corporate disclosure of the business impacts of climate change; among other initiatives—these efforts must be scaled up dramatically to reach the levels needed to achieve a global, low-carbon economy.
The investors supporting the statement came from various networks, including the Institutional Investor Group on Climate Change, Investor Network on Climate Risk, Investor Group on Climate Change, and the UN Environment Programme Finance Initiative. By forming a significant global group of investors, a more effective and consistent voice was presented, which ultimately helped lead to an agreement in Cancún, Mexico, for a Green Climate Fund and long-term financing commitments.
The motivation for participating in collaborative initiatives is not limited to increasing investor power and effectiveness. Investor groups are able to reduce their resource requirements through economies of scale, share the risk burden, and develop close relationships with their peers. PRI signatories believe they can achieve more by working with others, and the PRI Initiative demonstrates why this is true.
For more information, please contact Joshua Kendall at joshua.kendall@unpri.org
News to Know
-
Groups Call on Hong Kong Exchange to Ensure Zijin Mining Comes Clean About Overseas Investment Risks (March 3, Friends of the Earth)
Several civil society groups expressed concern that problems at Zijin’s Rio Blanco mine in Peru may be indicative of broader governance problems at the company. Last year, the company’s own Supervisory Committee found that the company may have overstated the value of some of its assets because of “problems [arising] from the social and environmental protection in local society, and higher political, economic, and cultural risk for overseas investments.”
On the Horizon
Upcoming Events
-
The 2011 Annual Summit of Green Companies (April 21-22, Qingdao)
Organized by the China Entrepreneur Club, and featuring the launch of the “China Green Companies Top 11 Report,” the summit will explore how companies can develop strategies and innovations to address environmental challenges.
|
|
|
