Evolutions in Sustainable Investing Strategies, Funds and Thought Leadership
, by Krosinsky, Cary; Robins, Nick; Viederman, Stephen
- ISBN: 9780470888490 | 0470888490
- Cover: Hardcover
- Copyright: 12/27/2011
Real-world guidance for investment professionals on delivering attractive risk-adjusted and opportunity-directed returns across asset classes and regions Filled with interviews with leading practitioners, this book weaves a narrated web around best sustainable investment practices, guiding readers specifically on investing their assets and with specific sustainability trends in mind, such as increasing constraints on global resources. Offers a clear road map to success by some of the most respected names in the field Includes interviews with leading practitioners Clearly explains how to get sustainable investing done Sustainable Investment is a practitioner's book specifically laying out how this investment philosophy is being practiced. It explicitly considers future social and environmental trends in financial decision making, to provide the best risk-adjusted and opportunity-directed returns for investors.
Cary Krosinsky is coeditor of a previous book on this subject—Sustainable Investing: the Art of Long-Term Performance, also with Nick Robins. Cary is a Senior Vice President and member of the management team for Trucost, which has become the recognized global leader in corporate environmental data and analysis, including advising the respected Newsweek Green Rankings. He also teaches sustainability and investing at Columbia University's Earth Institute and an MBA course on the same subject at the University of Maryland's Robert H. Smith School of Business, and is also a frequent speaker on the intersection of sustainability and ownership. He was a member of the expert group that helped create the United Nations Principles for Responsible Investment.
Acknowledgments xix
About the Editor xxi
About the Contributors xxiii
Introduction xxxv
CHAPTER 1 The Sustainability Imperative 1
David A. Lubin and Daniel C. Esty
Sustainability: A Business Megatrend 1
Getting the Vision Right 3
Getting the Execution Right 4
Building a Sustainability Performance System 6
Summary 8
Note 9
CHAPTER 2 Jupiter Ecology 11
Mark L. Trevitt
Roots of the Fund 11
Jupiter Ecology’s Investment Process 12
Good Governance 16
Building a Following 17
Building on Firm Foundations 18
Assessing Companies for the Long Term 19
Voting and Engagement: Participating in the Process of Change 20
Finding Great Green Companies 21
Fund Performance 24
Notes 25
CHAPTER 3 A Predictor of Performance 27
Paul Hawken
Investment in Natural Capitalism 27
Discovering Opportunities 28
Identifying the Companies of the Future 30
Summary 32
CHAPTER 4 Highwater Global 35
Alexis van Gelder, Dean Martucci, and Erika Kimball
Hawken Takes on Domini 36
Fund Drivers Based on Global Sustainable Themes 38
Finding Investment Opportunities 38
Sustainable Investing Is Responsible Investing 44
Summary 45
Notes 46
CHAPTER 5 Further Context 47
Cary Krosinsky
Starting Point for Measuring Sustainability 48
Sustainability 2.0’s Five Factors 49
Summary 51
Notes 51
CHAPTER 6 Sustainable Asset Management 53
Thomas O. Murtha and Ashley Hamilton
SAM’s Origins and Evolution 54
Building a Sustainable Investing Practice: Basic Business Segments 56
Measuring Intangibles: Sustainability Research Methodology 57
Sustainability Lens: Active Portfolio Management 62
SAM and Performance 63
SAM’s Extended Family: Dow Jones Sustainability Indexes 66
Sustainability Advocacy and Company Engagement 74
Summary 76
Notes 77
CHAPTER 7 Domini and BP 81
Colm Fay
Domini Social Investments 83
Safety, Environmental, and Ethical Concerns 84
Domini Investment Philosophy 84
Business Model Analysis: Key Performance Indicator Alignment Model 85
Integrating Business Model Alignment and Stakeholder Relationship Strength 87
Notes 90
CHAPTER 8 The Story of Calvert 91
Sam Brownell and Sara Herald
Unconventional History 91
Calvert’s People 93
Calvert’s Methodologies: Signature, Solution, and SAGE 96
Calvert’s Performance 102
Summary 105
Notes 106
CHAPTER 9 Winslow 107
Amrita Vijay Kumar
Blazing a Trail 107
Investment Process 108
Performance Considerations 112
Summary 112
Notes 113
CHAPTER 10 Portfolio 21 115
Ashley Hamilton
Portfolio 21: A History 116
Theory of Sustainability and Change 117
In Search of Forward-Looking Companies 119
Results 120
Summary 121
Notes 122
CHAPTER 11 Northwest and Ethical Investments 123
Dana Krechowicz
Humble Beginnings 124
New Direction 124
Evolving Investment Approach 126
Corporate Engagement Program 128
Key Products and Performance over Time 130
Looking Forward: NEI’s Merger with Northwest Funds 131
Note 132
CHAPTER 12 Looking for a Green Century: Passive-Indexed versus Active Portfolio Management 133
Fernando Viana
Background 134
Green Century Funds 134
Green Century Equity Fund 135
Trillium Asset Management and the Balanced Fund 136
Trillium Asset Management Corporation 137
Carbon Footprint of the Balanced Fund 140
Seeking Safer Packaging: The Bisphenol-A Report 140
Shareholder Advocacy 141
Summary 144
Notes 144
CHAPTER 13 Pictet Water 145
Jenna Manheimer and Nancy Degnan
Evolution of Investment Strategy over Time: Original versus Current Mission 147
Founders and Key Decision Makers 148
Methodology 149
Metrics: What Is Important and Why 150
Pictet’s Investments 151
Companies Pictet Has Not Invested in, and Why 153
Performance Review 154
Summary 155
Notes 155
CHAPTER 14 Inflection Point Capital Management and Strategically Aware Investing 159
Matthew J. Kiernan
Strategically Aware Investing 161
Beyond Environmental, Social, and Governance toward a New Model of Corporate Sustainability 162
Portfolio Construction 163
Investment Process 164
Summary 167
Note 167
CHAPTER 15 Environmental Metrics 169
James Salo
Theoretical and Practical Needs for Sustainable Investment 170
Available Data and Metrics 172
Challenges and Opportunities Moving Forward 175
Summary 178
Notes 179
CHAPTER 16 Crawford Chemicals: Carbon Risk Management in an Uncertain Environment 181
Thomas J. Nist, Pavel Yakovlev, and Becky Weisberg
Crawford’s Environmental Dilemma 182
Markets for Carbon Permits and Cap and Trade 185
European Union Emissions Trading Scheme 188
Pros and Cons of the Market for Carbon Permits 190
Predicament of Sustainability in the Chemical Industry 193
Summary 199
Notes 199
CHAPTER 17 Using Statistical Tools 203
Sam Brownell
Understanding the Trend 205
Summary 206
Notes 209
CHAPTER 18 Barriers to Sustainable Investing 211
Stephen Viederman
Missing Planet Problem 212
Overcoming the Barriers 213
Strategy and Tactics 214
Notes 215
CHAPTER 19 The Silent “S” in ESG 217
Dan Viederman
Assessing Social Metrics to Increase Business Performance 218
Risk Management 218
Summary 220
CHAPTER 20 Sustainable Investing: A Ten-Year Perspective 221
Nancy Degnan
The New Normal 222
Climate Change Mitigation, Adaptation, and Sustainability Research 222
Adaptation as Key to Investment and Practice 224
Ecosystem Services 226
Making Use of Data and Findings 227
Summary 230
Notes 230
CHAPTER 21 Bloomberg 235
Curtis Ravenel
Providing Investor Insight and Increasing Transparency 236
Summary 238
Notes 239
CHAPTER 22 Aviva 241
Malte Griess-Nega and Nick Robins
Aviva’s History and Investment Philosophy 242
Aviva’s SRI Investment Process 242
SRI Portfolio Construction 246
Case Study 1: Green Tires 246
Case Study 2: The Responsible Supply Chain 248
Engagement Across All Asset Classes 249
Conclusion 251
Notes 251
CHAPTER 23 Generation Investment Management 253
Malte Griess-Nega and Nick Robins
A New Model for Global Equities 254
Summary 258
Notes 259
CHAPTER 24 Insight Investment: Reflections and Lessons Learned from Integrating Sustainability 261
Rory Sullivan
About Insight 262
Investment Research on ESG Issues 263
Case Study: Climate Change 266
Case Study: European Electricity Utilities 267
Case Study: Biofuels 268
Reflections/Takeaways from the Case Studies 269
Summary 274
Notes 274
CHAPTER 25 The Unexpected Role Model: Chinese Environmental and Energy Policy 277
J. Jason Mitchell
China’s Resource Scarcity and Its Empirical Need for Efficiency 280
Shaping Chinese Energy-Efficiency Norms 288
Chinese Policy Setting 290
Translating China’s Environmental Policies into Industrial Opportunities 292
Summary 296
Notes 297
CHAPTER 26 Ethical Asia 301
Simon Powell
Reporting Is on the Rise 302
CSR Works when Companies and Society Are Aligned 305
Focuses in Asia: Labor and Environment 306
Summary 310
CHAPTER 27 Mitigating ESG Risk in Asian Portfolios 313
Lucy Carmody and Laura Dodge
The Challenge: Lack of Disclosure 314
ESG Integration in Asian Portfolios 315
Funding ESG Research 317
Building Institutional Capacity 318
Use of Indexes, Benchmarking, and Screening 319
Summary 320
Notes 320
CHAPTER 28 Sustainable Investing and Canada 323
Dana Krechowicz and Alex Wood
The Basics 324
Growth of Canada’s Sustainable Investment Industry 325
Context and Trends 325
Summary 327
Notes 327
CHAPTER 29 High-Risk Areas, Resources, and Sustainability 329
N.A.J. Taylor
Blacklisted 330
Background 331
Enter Rio Tinto 336
Ordinary Business Activities 339
Summary 342
Notes 342
CHAPTER 30 Sustainable Investing in Africa’s Frontier Markets 345
Graham Sinclair and Roselyne Yao
Stronger Economics: The Case for Investing in Africa 346
Sustainability Issues in Africa 348
Role of Indexes 350
International Exposure 350
Future Trends: ESG, Media Coverage, and Networks 352
Summary 353
Notes 354
CHAPTER 31 Evolution of ESG in India 359
Sumantra Sen
Sustainability Issues in India 359
Opportunities in India’s Sustainable Investing Market 361
Considering the Integration of ESG Factors 362
Summary 363
References 364
CHAPTER 32 Indexes 365
Graham Sinclair
The “What” and “Why” of Indexes 366
Index Architecture 369
Research Quality and Independence 372
Lessons from the Leading Sustainability Indexes 373
Company Reactions to Indexes and Their Impacts 378
Summary 380
Notes 381
CHAPTER 33 How Asset Owners Can Achieve a Sustainable Investing Framework 383
Roger Urwin
Importance of Values and Beliefs 384
Integrated Allocations and Targeted Allocations 385
Risk Factors and ESG Beta 386
Quantitative Methods of Risk and Return 388
Monitoring Framework 389
Summary 391
Notes 392
CHAPTER 34 On Performance 393
Bud Sturmak and Cary Krosinsky
SRI Techniques 394
ESG Affects Investment Performance 395
Trends from Performance Reports 396
Summary 398
Notes 398
CHAPTER 35 Private Equity 401
Graham Sinclair
Private Equity as a Niche of General Asset Management 402
PE’s Fit within Sustainable Investing 404
Development Finance Institutions Leverage of Emerging Markets Private Equity 405
PE-Specific ESG Methods 406
PE Best Practices and ESG Case Studies 408
Contrasting PE and Listed Equity Investors 409
New SI Activity in the PE Asset Class 410
PE Allocations Increase 410
Increased PE Funds Focused on Emerging Markets 411
Future Sustainability Themes in PE 412
Summary 413
Notes 414
CHAPTER 36 Blue Wolf: Implications for Private Equity 417
Adam Blumenthal and Michael Musuraca
Challenges and Opportunities 419
Generating Results 420
Labor Relations Coda 421
Summary 422
CHAPTER 37 New Business Models, Measurement, and Methodologies 423
Howard Brown
Resources and Products versus Wealth 425
Trend of Doing More with Less 426
Improving Overall Performance 426
Summary 427
CHAPTER 38 Terminology and Intention 429
Lloyd Kurtz
Values 430
Financial Performance 432
Fiduciary Duty: Universal Ownership 433
Impact 435
Mapping Techniques to Motivation 436
Summary 437
Notes 438
CONCLUSION
Cary Krosinsky 441
Notes 446
APPENDIX A Sample Curriculum 447
Syllabus 447
APPENDIX B Investors 453
Index 455
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