Sunday, October 5, 2014

Climate Week Recap - Investors & quot; Decarbonisation & quot; ...

What was it for a week.

Hundreds of thousands of peaceful demonstrators climate spoke on Sunday in the streets of New York and the world also. But is this message for investors?

There are certainly a number of new announcements and commitments summarized in this week and here the climate summit.

What can it be important for investors and business news is the announcement of a new $ 100B "coalition decarbonisation portfolio" of the United Nations Environment Programme, or UNEP what does.

Incredibly, pledged $ 500B global assets "Carbon" in its portfolio by 20% or $ 100 billion to reduce. The devil is of course very well be in the details. The China International Capital Corporation choir in favor of low-carbon investment in advertising. The obligations are performed by some serious players, including Swedish Pension Fund Amundi AP4 and in France.

A real iteration of this decarbonization is perhaps the parallel announcement of $ 10000000000 funding catalytic Bank of America to "accelerate investment in clean energy to reduce carbon dioxide emissions." Bank of America has "mobilize climate financing scale" $ 70 billion in commitments to, as shown here, for example, and includes respected opinion leaders Abyd Karmali (which is a great chapter on cap and trade for our first wrote a book about sustainable investments).

But how do these investors decarbonisation? "Are they the necessary energy transition, the Bank of America and other investors are increasingly made from links to climate finance, you must be a growing part of $ 100T are on the market, to unite the world through time?

Or are we talking about portfolios? It is an important issue, since many decarbonisation was decarbonisation of the economy without portfolio.

For example, databases that have the carbon footprint of the portfolio typically do not cover the use of products such as cars from Toyota and Ford say or produced power in the use of the iPhone or TVs of the brand,

If you do not consider the whole chain of the company and its products, you can lose the most pressure. Procter & Gamble celebrates found that the heat of the laundry was by far the most important component of our global presence, products include used products were launched and cold wash to the tracks to reduce the wide road. Decarbonisation portfolio reflect this or not? This seems to be a very important issue.

The data are not always available, and if it is, can not be guaranteed or accurate or complete, the lack of any requirement to disclose as open this information. Worldwide it is not limited to data in many countries such as Russia or China.

None of this means that it is a bad idea, but more thought and detail required, or it could just be greenwashing of the day and it would be a real shame.

We also saw many level commitments more countries this week and continue to build an advantage to Paris in 2015, when we see what promised additional measures and implemented by the United Nations as it moves to a carbon price. The idea of carbon prices has also led to a call for global investors this week, including the largest investor in the world BlackRock, total reality of $ 24 billionth While this is not a carbon price (or who or when charging consumers or shareholders or taxpayers, etc.) guarantee dynamics is built by some form of action.

The Carbon Tracker Initiative 20-30 years before we run out of our carbon budget, to protect us, and to see many more things like that.

Winners and losers emerge certainly, but as we have seen with the natural gas in recent years, which can be very difficult to predict the result.

The likely outcome seems the least common business in the future.

Saturday, September 27, 2014

The problem with the sale of oil

Bill McKibben wrote an excellent article for Rolling Stone in the fundamental work of the Carbon Tracker Initiative in 2011, and we should all be grateful for the attention of the statement. If you can not read the article in the bill, please, and I am proud to have introduced our carbon Tracker at the time of research. As a member of the Council of the Carbon Tracker Initiative me it is good to see that our work will continue to grow, and in the light of recent findings of the IPCC, the need for energy transition, it could be clearer by investment decisions not now.

Energy is the most important component of the annual carbon dioxide emissions that change, need especially on the consumer side of things. However, the sale of the movement of the oil is seriously flawed and should in my opinion as soon as possible to be checked.

Oil consumption is systemic. It's what we plastic shipping, so the only way to fly in especially abroad. Get rid rid of some providers is a personal decision, and that's good (I did it myself), but the change in the energy mix in a sustainable balance is much more difficult, because they are the main complications of investors especially in reference face of fiduciary duty and the use of benchmarks in passive index investment, low cost.

Call fiduciary duty of asset owners such as pension funds, endowments and foundations, to act prudently and in the best interests of the beneficiaries. Some studies have started to become in new interpretations of fiduciary duty, multi-generational move, such as construction investments CalPERS beliefs. Further work is needed to follow for other capital funds and specific actions in the back of the specific guidelines. It would also be ideal for the development of a systemic sense of loyalty that would come from an understanding that the system crashes, and some interventions are needed investors, policy makers and businesses to improve the energy transition. Amory Lovins and his work in the energy transition is a place to see how the mix can over time with respect to (see link above that oil consumption will not disappear by magic) and transition capital should adapt to change do the same . This transition of capital is hampered by the use of indices or benchmarks.

Markers and their use by investors is a serious obstacle to energy policy, and we will write more about the ERA and its indexes and some as a possible solution to this challenge. The need for investors to reduce costs led to investments in closed course, companies that are members of the existing indices such as the S & P 500 and the MSCI World are investing. As much as a third of all investment is now passive. Movement could encourage passive investment in indexes to go depending over time of the energy transition, which is urgently needed. Such a move makes more sense than a campaign that oil production for sale. Oil has been used for decades, but we can begin to capital now gone, and gradually over time, which should protect investors in low yield, which could come from reduced use of oil, and carbon taxes changes in the cost curve increasing benefit to using solar energy, etc. The Carbon Tracker initiative requires to reduce the consideration and likely to eliminate investments in the use of fossil fuel companies "Wasted capital."

Given the very small percentage of the oil companies from universities (something like 0.1% of my own research), sale of oil has the potential to change the value of the oil companies or capital investment, so why do we ask? He meets many people, how to ask me a GSS spurious and industry, which has long been plagued by exaggerated promises and delivery - it's time to take a realistic, practical approach.

Other questions are also in the thresholds of the sale campaign, such as the consideration of the needs of developing countries. The call for the sale of oil rings hollow in many parts of the world. Not everyone can be Vermont, someone said recently, and it is important to take into account regional perspectives in countries such as Canada. The Canadian dollar is pegged to the oil price and those of us, myself included, are very fond of Canada should be about what is needed in all parts of the world into a global energy revolution, not for the country cause financial ruin to think. We can also answer the call of the transition from air-capital bonds by another initiative of the asset classes.

Students also have to spend little time and energy valuable and therefore there is no time better spent promoting energy transition? McKibben recently clarified that the divestment movement was politically oil spirit. Well, but this is not an application for sale.

Feel carbon removal. The IEA, funded in part by the energy industry, four steps to keep the world in a temperature increase of security, and these are: low carbon, to remove fuel subsidies to energy efficiency to maximize efforts and emissions of methane, natural gas exploration to reduce. All these measures are to be developed appropriately and with maximum effort, such as the efforts to other forms of pollution, how to reduce soot carbon.

That does not make sense is a campaign of "oil power." A bad policy is considered a serious problem. Behind the necessary practical steps to facilitate an energy revolution necessary reviews, you get. A "campaign JumpStart energy revolution" could be effective, because it is exactly what is needed, and there are many points that they can affect influence. The students are excited and that's fine, but you'll probably feel tired, if no result. If they short of what is necessary to get in the long run, they can stay involved. And they should for what we really need to ask. It is time to move our energy and thoughts.

Thursday, September 25, 2014

Climate Week in New York - What should investors know

On Sunday, a record crowd for people Climate March, when the largest weather expected in March in history, as it were, religious and labor organizations based in the hands of about 1000 different environment. Large investors in the event have to be careful, even if the climate summit of the United Nations with 120 world leaders, including President Obama, who just announced commitments and strategies to combat climate change.

However, the United Nations is a voluntary organization with the announced on the air a little more demanding unanimity measures and, above all, you can place the advertising with the potentially ideal practice to implement the Directive and in the country unless the vote of the mandates of the General Assembly, such a measure.

And as usual, increasingly scientists trigger alarm with the accumulation of a UN-sponsored 2009 climate negotiations in Copenhagen not without effect, and in the wake of the recovery from the global financial crisis, the record levels of emissions of greenhouse gases emissions, as with the IPCC together.

However, investors are increasingly concerned about these issues find that sometime give something, and it will affect the value of their portfolios. Will ruin the economy or climate change, or some sort of agreement on climate profitability of the production of fossil fuels affect.

Therefore, perhaps the most important for this upcoming Climate Week in New York event is the call for a global price for carbon dioxide emissions.

In fact, a call that has just been released is the Global Investor Coalition on Climate Change, established over $ 20T of global investment demand, the carbon price.

Evidence of the need for a carbon price is the simultaneous publication of case studies of low-carbon investments by the same group. Add the value of this investment meets to something like $ 30B, or just over 0.1% of the value of all assets of this group of pension funds and other owners of large assets.

$ 30B is a lot called additional $ 36T Clean Report trillion earlier this year by CERES in 2050 the math on this, takes Q1 dollars per year for the next 36 years and 2014 is no t an average of $ 1 per year, on average, now and needed in the future.

Moreover, as recently in our articles, such as American investors make reports on climate change, the IEA says not enough investment in clean energy will prevent to climate change, there are not more investors. In fact, more than what the consumer is doing enough demand for electric cars is not enough to transform the transport, for example.

What these investors are in fact in its call for a price on carbon only say that the profit motive behind fossil fuels, along with the continuing growth of the population of the middle class in the world to be able to want the same level of consumption as we enjoyed developing here in fact block a way to dangerous climate change.

We can not help if we do a clean energy and the most profitable forms of consumption and cheaper options easy.

Can help innovation and efficiency. But a carbon price actually help to eliminate that greed blocked many shareholders as the owners of the oil companies. China seems to go in this direction, and a real world price for coal has many obstacles to overcome, but that is where investors should focus their attention, because it could have an impact on the business valuation, income and strategies investment.

Climate Week in New York itself has many opportunities for participants and interested observers, more to participate in this system. All eyes will even come to the United Nations as a leader in order to clarify its intentions. It's caused a bilateral effort between the United States and China?

The World Bank reported today that climate change is not detrimental to the economy. One could argue that without action on climate change catastrophe in the coming decades and that the Department of Defense is the most radical approach to take concrete steps to move the needle on the emissions of greenhouse gases move now concerned.

If this is true, then investors better start attention if they do not already.

Tuesday, September 23, 2014

You want to diversify your portfolio? Buy these 3 ...

Stocks, bonds or money market: Investment funds are usually placed in one of three categories. Many investors to diversify their portfolio by using a mixture of the three.

Equity Fund

Equity funds are also known as equity funds, the volatile of the three, with its increasing value and sometimes a sharp drop for a short period. But historically better long term shares performed than other types of investments. This is because shares are traded on the assumption that the market share, higher income and greater benefits in the future results of the company include advanced traded. This increase shareholder value.

Populations generally vary on investor confidence in the economic conditions and their potential impact on corporate profits. Socially responsible investors also consider other risks to benefits such as exposure to fines or prosecution of the economics of pollution or discrimination against certain employees.

Not all stock funds are the same. Some mutual funds are:

  • Growth Fund, the high esteem offer potential capital, but can not pay an ordinary dividend.
  • Pension funds to invest in stocks that pay regular dividends.
  • Index funds that replicate the performance of a particular market index, such as composite Stock Price Index S & P 500 try ..
  • Sector funds are specialize in general in an industry such as finance, health or engineering

Pension fund

Pension fund, also known as fixed income securities to provide the investment in corporate bonds and State revenue through dividend payments. Pension funds are often included in a portfolio in order to enhance the overall performance of the investor through a regular income when equity funds lose value.

As capital funds may be allocated to sectors and pension fund can be organized to be classified. They can vary in low-risk, such as obligations of government bonds, risky form of high-yield bonds or undesirable, are lower than corporate bonds with investment-grade rating.

Although usually safer than equity funds, bond funds provide their own risks, including:

  • The possibility that the issuer of the bonds, such as companies or municipalities can not pay their debts.
  • The fact that interest rates rise, bond prices fall which
  • The possibility that the bonus will be paid soon. When this happens in pension funds is the possibility that the manager not to reinvest the proceeds in something that pays higher returns in a position.

Money market

Money market funds have in comparison to other investment funds and most other investments relatively low risks. By law, they will only invest in high quality equipment limited specific, short-term securities. Of the Government of the United States, American businesses and state and local governments

Money market funds try to keep their "net value" (NAV) - a constant $ 1 per share - representing the value of an interest in a fund. But the NAV may fall below $ 1 when the fund's investments perform poorly.

Historically, yields on money market funds was lower than for two or pension fund shares, leaving them vulnerable to inflation. In other words, if a money market fund at a guaranteed 3 percent, but during the investment period inflation rate of pay rose by 4 percent, the value of money, the investor would have eroded by 1 percent.

Sunday, September 21, 2014

What You Should Know Investment by faith

As the stock market has intensified the decline in 2008, customers of Mark Minella escape the negative impact of the stronger sectors declined - financial services. This is not because Minella, President of Integrity investors in Saint Louis, MO, saw the crash. Minella invested according to Christian principles. As a result, he has never bought shares in these companies because of their support for alternative designs, such as the inclusion of same-sex couples in the employee benefit life.

Similarly, the investors were in the Amana funds also from the dangers to own the bank or insurance company shares protected. In his case, as Amana invest according to Islamic principles, which means avoid interest.

Probably clients and investors to own shares in Amana funds, as investors usually Minella took some pieces in a difficult environment. But the lack of financial securities is a part of your portfolio, you may well feel investment in a fast growing segment of the socially responsible investing as a faith-known through their participation.

As SRI means that you can hurt a competitive return on dollars without its social and environmental principles, the investment is based on the belief applied consistent with the principles of religion. This usually means focusing on the screens of "anti-family" services such as abortion, pornography, alcohol, gambling and alternative lifestyles. But it can also mean avoiding companies whose business practices violate beliefs, such as interest income.

As the number of socially responsible mutual funds investments in the last ten years as well as funds that invest according to the faith-based screens increases. Total assets under management rose from approximately denominational funds under $ 500 million 11 years ago to more than $ 31 million TODAY, according to Morningstar.

"This group of funds is undoubtedly an increasingly from the world and ISR are subset," says Michael Herbst, an analyst at investment funds covering confessional funds. Morningstar "What we see is a growing awareness of individual investors that are based faith offers that may coincide with their own spiritual beliefs closer than options had to be in the past."

Morningstar has approximately 100 funds on faith, managed fund ten families. Including small, medium and large cap, fixed income, value, growth and sector funds. You invest by early Christians and Muslims, and if they are a part of social investment family, the securities of companies that can not in a more general SRI portfolio.

Catholic confession funds include options such as mutual funds and fund LKCM Aquino Ave Maria. Ave Maria managers use a "selection process legal owner" to that of the Catholic Advisory Board of this board includes how the former football coach Lou Holtz Notre Dame developed personalities known select inventory. And economic adviser Lawrence Kudlow CNBC talk show and founder Thomas Monaghan of Domino Pizza. Fund uses Aquino LKCM Conference of Catholic Bishops of the United States socially responsible when choosing business investment.

Among the Protestants Fund Thrivent Financial for Lutherans is the largest with more than 40 options, including sector funds. Fund Steinf├╝hrer, which began as the pension plan for employees of the Southern Baptist Convention has 23 funds, five of which more than $ 1 billion in assets. MMA practice funds for the Mennonite Church USA connected (MMA means Mennonite Mutual Aid) and designed brothers and religious groups for the name of the Church with the Mennonite Anabaptist roots, Amish.

Among the Islamic fund Amana Amana growth and income, both five-star rating from Morningstar have. Income Fund seeks current income without having to invest in bonds due to its policy of interest. Instead, he invests in stocks that pay dividends.

"Muslims in the United States have had and knew it to follow certain restrictions or guidelines desire actions," said Nicholas Kaiser, portfolio manager. "By a company managing investment funds, a fund setting to obey the restrictions knew that their religious needs to satisfy and create your goal of buying shares."

Denominational funds tend to have higher expense ratios compared to traditional investment funds which experts attribute to the smaller funds, on average, and the cost associated with recruitment companies. However, a growing segment of the investment community is willing to bear the cost of raising funds in accordance with their beliefs.

"There can be a huge revival happening in the Christian community to invest more with their money in any way, do" Minella said. "People recognize that they have a choice."

Invest on the basis of faith does not have to ignore the fundamental questions of individual investors when making a portfolio, because this is the time for investors in retirement, it is your risk tolerance. But add an additional monitor to companies that do not offend their religious principles make sure your money.

Minella of abortion and pornography are two main objections to the BIS or biblically responsible investors, followed by supporting alternative lifestyles. This includes not only the gay and gay life, but also heterosexual couples from marriage life. He says that this alternative type of screen life is often misunderstood.

"Do not attack someone," he said. "This means that we believe that the Lord wants us. We calculate our own way of life have not, but we do not want to support or encourage others to do this.'s Why I do not want a company that do that would connect to. "

While many religious backgrounds are connected to certain religions or churches, fund managers, they are made open to all investors.

Saturday, September 20, 2014

Sustainalytics sustainable banks

A new report has just been published and called Sector Report: - banks like a phoenix from the ashes bird Sustainalytics visits the bank through a series of ethical perspectives, identifying leaders and laggards (?).

Sustainalytics provider was a frequent winner ESG survey data from Thomson Extel TBLI IRRI and rightly enjoys a good reputation in the market for their positive relationships with customers, prospects and employees their own approach.

Sustainalytics is generally recognized as one of the leading research companies in the world specializing in responsible investment (GSS) social environment and governance and analysis. The company provides global perspectives and solutions based on local experience, focused on traditional values and the installation of ESG information and assessments into their investment decisions both for investors.

In a context of improving investor confidence, tighter regulatory framework and the continuing problems of the past as a result of the financial crisis, report new Sustainalytics on the banking sector, the likely impact on the sustainability and business five (ESG) physical, social and governance Questions for the banks: Business Ethics; Resistance; Responsible for Finance; Governance of financial products and human capital. Leaders and laggards in terms of each of the five ESG and ESG-related performance., The report can be downloaded here

Some of the key findings are:

• The financial system remains fragile and banks need more resistance against negative shocks. Current global regulatory efforts to improve the resilience of the sector addressed in the future. However, the stability of the banks is also cultural and behavioral factors that are not yet sufficiently addressed by the regulatory authorities affected.

• Head of Finance to further ground in the banking sector in the coming years to win. Banks have an incentive to have resources for the improvement of credit standards and the development of new strategies and products which have significant effects on the environment and social functions for its innovative competitiveness to increase.

• Lack of public confidence in banks and erosion of the reputation of the industry are to reduce the talent pool available to the industry's fault. Change management strategies of human capital should consider whether employees of the Bank, to pursue their own interests in the interests of customers, shareholders and stakeholders in general, or continue.

The report concludes with a reflection: While regulatory efforts to ethical behavior and the reluctance of banks are laudable, and risks that continue to improve with portfolio investors associated fall slowly; the real test for the future of the industry is whether the structures that have been implemented are really enough to avoid another "Lehman" and distinguished.

The report of the Bank Sustainalytics comes on the heels of other recent reports on important global issues, including a report entitled July 2014 Asia Description: Air Pollution in China: murky future and a report in June 2014 and focused on drones Human Rights: Emerging Issues for investors.

The report showed how to go July contamination has become one of the most pressing problems in China. Concerns about air quality and increased public health, the Chinese central government now in fact declared the "war against air pollution." Biggest polluters, ie energy, services, materials, automobiles, capital goods, public transport and real estate industry in the country "is to reduce stringent targets to reduce the emissions of pollutants soon.

This report assesses Sustainalytics the potential impact of more stringent regulations on air pollution exposure and viewing management regulatory risk provisioning businesses, companies and industries that are significant risks of the changing regulatory environment, as well as those willing to benefit from the issuance of the strictest air.

The analysis is triggered ee rapid progress and widespread use of drone technology between military and civilians who discussed a debate among producers, investors and civil society in June. Sustainalytics examines how the use of these drones, which are controlled remotely, it is an important military development and raises concerns about potential human rights issues, such as:

  • the use of drones completely autonomous "
  • the use of drones outside areas of conflict and
  • Data protection issues to the civilian use of unmanned aircraft technology.

This report examines the new problems of the proliferation of drones context underlined the risk to investors and how to manage and possibly to counter these risks.

Look for more in this series Sustainalytics.