The four-year review report prepared by onValues was presented at a meeting of sell-side and independent research providers and EAI members in Paris. It provides a detailed analysis of the progress made in terms of the volume and quality of extra-financial research since the EAI's inception in 2004. The report concludes that EAI has been very successful in helping extra-financial research establish itself and that in a next phase this type of research should aim at expanding its reach and becoming a part of the mainstream offer.
To support this aim, EAI is joining forces with a larger and more international initiative: the Principles for Responsible Investment (PRI). The PRI has announced that it will launch the first global, non-commercial database, dedicated to showcasing investment research that includes material environmental, social and governance (ESG) issues. onValues is supporting PRI in designing and testing the database.
«EAI – Four years of the Enhanced Analytics Initiative»
Ivo Knoepfel and Gordon Hagart are among the co-authors of a new book entitled, ‹Sustainable Investing: The Art of Long Term Performance›. Bringing together leading practitioners from around the world, the book examines the state-of-the-art in ESG-inclusive investments, and their prospects for the years ahead.
The book (ISBN: 1844075486) is available through the usual retail channels, including Amazon
At a meeting in Maastricht on 18 September 2008, the UN Principles for Responsible Investment in collaboration with the European Centre for Corporate Engagement (ECCE) launched the first global academic network dedicated to research on ESG issues in investment. Leading research institutions including Boston College, ECCE, Saint Mary’s College, Umea University, Gothenburg University and University of St. Andrews took part in the launch event. onValues and Mistra presented lessons learned from the academic programme on sustainable investments that was launched by Mistra already in 2005, and highlighted practitioners’ requirements for this type of academic research.
For further information: www.corporate-engagement.com
On 12 June 2008 onValues ran a workshop on environmental and social issues in real estate investments on behalf of Mistra, The Foundation for Strategic Environmental Research.
Workshop participants believe that E&S issues will increase in importance in the future due to, among other factors, rising resource prices, regulatory incentives aimed at combating climate change, and the renewed market focus on fundamentals after the real estate boom years. Participants noted that the financial costs and benefits of resource efficiency investments are not evenly distributed among different actors (owners, tenants, developers, other agents) and that this represents an important (but not insurmountable) barrier to investments in this area.
Participants also highlighted the fact that resource efficiency is not the only value driver. Better locations, increased occupant comfort, brand and reputation leading to higher building values, occupancy rates and rental yields can all make significant contributions to increasing the return and reducing the volatility of real estate investments (and should be explained better by developers).
The workshop report below includes an introductory chapter on the relevance of environmental and social issues from the point of view of real estate investors, as well as a summary of the most interesting findings from the presentations and discussions.
«The value of environmental and social issues to real estate investors»
The US$ 14 trillion Principles for Responsible Investment (PRI) Initiative recently published its second assessment that captures in significant detail how signatory investors are integrating environmental, social and governance (ESG) issues within investment decision making and ownership practices. Selected key results include:
- 32% of respondents said they would now revisit relationships with service providers in light of ESG issue-related capabilities. A 68% increase on the number of signatories willing to do this last year.
- 70% of signatories ask companies to produce standardized reporting on their ESG policies, practices or performance
- Principle 1 of the PRI, which focuses on incorporating ESG issues into investment analysis and decision making was ranked the most difficult to implement.
«PRI Report on Progress 2008»
The market for sustainable investments in Switzerland continued its strong growth in 2007 according to research by onValues. In spite of financial market turbulence, the total market volume increased by 67% in the period between end of 2006 and end of 2007 reaching a volume of CHF 30 billion (CHF 34 billion if also assets managed in Switzerland on behalf of foreign clients and subsidiaries are included). Assets managed in sustainable funds and other collective vehicles grew 92% in the same period, while the total Swiss fund market saw its volume decrease by 1%.
In a separate survey, the Swiss market for sustainable theme investments was assessed in detail for the first time. Assets under management for the three most important themes (climate change, renewable energy / energy efficiency and sustainable water) amounted to CHF 21.7 billion per end of 2007, of which CHF 9.7 billion included an analysis of the environmental, social and governance performance of holdings in addition to selecting companies on the basis of their theme exposure. The strong growth of investments in the still relatively young climate change theme is particularly notable.
«Sustainable investments in Switzerland 2007»
In the May 2008 edition of Environmental Finance magazine Ivo Knoepfel and Gordon Hagart explain why the rash of data showing the growth of socially responsible and sustainable investments should be treated with caution.
«Behind the numbers»
onValues has recently assessed investment opportunities in sustainable timberland on behalf of its clients. Some of our thoughts and conclusions are summarised in an article in the April 2008 edition of Global Pensions magazine. Ivo Knoepfel of onValues points out that investment managers and investors will have to look more closely at environmental and social issues related to timber production in the future, given that investments are increasingly taking place in emerging and developing countries. Environmental and social certification schemes support investment decisions, but their growing number and quality poses a challenge.
«Blossoming interest in timber»
The investment case for energy-efficient and sustainable real estate is the topic of a January 2008 article by Ivo Knoepfel and Gordon Hagart in the Global Pensions Magazine. The authors argue that higher energy prices and environmental constraints will be a powerful source of new opportunities and risks in real estate. They describe how the ability of new building technologies to achieve higher occupant comfort, healthier indoor environments and improved resource efficiency has direct positive impacts on the investment case for sustainable buildings, and how a small number of leading institutional investors are already using these trends to their financial advantage.
Global Pensions Magazine article