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“The key question is whether these current trends among fiduciaries, along with commensurate actions from policymakers and civil society institutions, will reach a tipping point where the asset management industry is sufficiently engaged to help avert the natural resources crisis,” says the report. “Some have argued that the ongoing financial crisis may not have been so deep or so protracted if institutional investors had been collectively willing to challenge the financial institutions that were at the heart of creating the systemic risks within the financial system. We also believe that one of the most important lessons from the crisis is that institutional investors’ responsible ownership needs to be strengthened in order to be fit for purpose.” Read the report here. To comment on this story, contact us. 18
Managers, U.N. Push For 'Responsible' Investing - 07/17/2009 To comment on this article click here (0) A group of asset managers has teamed up with the United Nations Environment Programme (UNEP) to push for the integration of environmental, social and governance considerations in the investment process. The initiative--focused around a report published this past week and aimed at investment advisors and service providers--is an exercise in rebranding, a move away from the old image of "socially responsible" investing toward, simply, "responsible investing" that takes into account the myriad issues affecting the long-term viability of today's publicly traded companies. The mutual fund and exchange-traded fund markets already have seen an uptick in the number of so-called green funds in recent years, launched both by firms known for socially responsible investment practices and by more mainstream, traditional asset managers. Going forward, those who worked on the UNEP report expect to see even more money flow into mutual funds, ETFs and other investments that proactively look at environmental, social and governance issues. In fact, they anticipate the examination of these practices will become a routine part of the investment process and therefore no longer be associated with what has been deemed a purely ethical or moral approach to evaluating investments. "A lot of people argue ethics are important--I'm not trying to convince people there's an ethical issue here," Paul Watchman, ceo of U.K.-based Quayle Watchman Consulting and a contributor to the UNEP report, told FA. "What I'm trying to convince them of is that there's an investment issue here. There's a real question of investment prudence." The 120-page report, Fiduciary Responsibility--Legal and Practical Aspects of Integrating Environmental, Social and Governance Issues into Institutional Investment, was produced by the Asset Management Working Group of UNEP Finance Initiative, a partnership between UNEP and more than 180 financial institutions representing some $2 trillion in assets under management. It will be detailed during a telephone briefing this week led by its major contributors. Paul Hilton, director of advanced equities research at Calvert Investments in Bethesda, Md., says his firm, which specializes in socially and environmentally responsible investing, has seen more money flowing in from investors and more attention being paid to ESG issues by mainstream mutual fund players such as Wells Fargo and Dreyfus, and data provider Bloomberg. "What we're trying to get to is the fact that whereas before people thought it was nice to tick a box, now it's a core part of the business," he said. "We're not just taking out bad companies--we're looking at big issues like climate change, water scarcity and product safety. We've gone from being an afterthought to being a core part of the debate." Going forward, Hilton expects new funds and other investment vehicles to be focused more on environmental than social or governance issues, particularly with regard to energy. Mary Jane McQuillen, a portfolio manager and director of the socially aware investment program at ClearBridge Advisors in New York, agreed one of the goals of the initiative with UNEP is to change the image of socially responsible investing. But she was reticent to push aside the ethical aspect of this type of evaluation. "I wouldn't entirely relinquish the concepts of ethics and morals as they are still implicitly part of the ESG process," she said. "I would expect the legal commentary and investment consultant feedback on ESG, as discussed in [the UNEP report], will provide strong support for a closer review of ESG factors into the investment-selection process." --Hillary Jackson 19
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Page 41 and 42: Invest Responsibly - It’s the Law
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