Investors to take actions on climate risk -NBIM excludes 52 coal companies

Stranded assets and climate change risks have become reality in the financial markets. During last week the world largest pension fund, the Norway Pension Fund, NBIM, said that they have excluded 52 coal companies from their portfolio and the pension fund says that further divestments will follow during this year.

According to the Pension Fund this exclusion does not include for example the green bonds if the company has issued such an instrument to finance environmental projects and is being verified by a third partner.

Also in France, institutional investors are to disclose their climate impact and carbon risk exposure. But also the Bank of China and the Bank of England have been rising the awareness of the climate-related risks to the financial sectors.

For long-term passive investors, climate change poses a financial risk which is not priced in the markets. According to study “Hedging Climate Risk” by Mats Andersson (CEO, AP4), Fredrick Samama (Deputy global head of institutional clients at Amundi Asset Management) and Patrick Bolton (Professor, Columbia University, New York) hedging climate change is a possibility to maximize long-term returns while limiting political and timing risks. The writers argue that investor holding a decarbonized index is hedged against the timing risk of climate mitigation policies because the decarbonized indexes are structured to maintain a low track error to the benchmark index.

What happens then when company is disclosing changes in carbon footprint? According to writers inclusion in a decarbonized index should have a positive effect in the company valuation and vice versa. And companies, that are excluded, could more easily determine their carbon footprint ranking in their industry sector and how much carbon footprint reduction it would take for their stock to be included again in the index.

According to the study, in order to foster the engagement of financial markets with climate change, it is advisable to appeal to investors´rationality and self-interest.

– Any rational investor with a long-term perspective, should be concerned about the absence of a market for carbon and the potential market failures that could result from this incompleteness, they say.

 

.

Business Finance

UK Treasuries favours Integrated Reporting

UK Treasuries has encouraged public sector organizations to adopt Integrated Reporting in their processes. According to IIRC (Integrated Reporting) UK Treasuries has urged public organizations to develop their own format to fit their businesses.

– Integrated Reporting encourages organizations to focus on how they are using all of their resources and relationships and how this is driving their strategy for value creation over the short, medium and long term, UK Treasuries says.

Business Finance

Credit Suisse CEO Thiam urges sustainable investing

One of the leading banking groups in the world, Credit Suisse (CSGN) is turning more to Sustainable Investing and Green Banking. The Groups´s CEO Tidjane Thiam  was the keynote speaker in the “Geneva Summit on Sustainable Finance” -event on Tuesday in Switzerland. He said that the banking group is in the process to focus more on longterm, sustainable and strategic economy than short-term capital gains.

Mr Thiam also emphasized the importance of technology in the digital transformation. The bank has for example announced co-operations with different tech companies in order to make the bank´s internal systems more stable, sound and secure to foster more long-term orientation and risk management.

– We are also looking for different kind of PPP-projects, where public and private companies can join for different kind of partnerships in our business areas, he said.

Credit Suisse announced this week also new restructuring actions, which means that the Group will focus more on its core business areas and increase cost savings from the Global Markets – activities.

IMG_1500[1]

Business Finance

Merger of Equals: LSE and Deutsche Börse

The London Stock Exchange and the Deutsche Börse in Frankfurt have today published information about their merger of the equals. According to the statement this would create one of the top financial places globally and  bringing together European and global businesses.

The merger would establish European Capital Markets Union and thus driving the economic growth and job creation in Europe. It would mean better access to global financing and investors also to the European sme-companies. The new company would operate in over 30 countries with over 70 strategic partners.

Business Finance

The Nasdaq Nordic and Baltic Stock Exchanges to implement ESG reporting

canstockphoto4076117The Nordic and Baltic Nasdaq Stock Exchanges have decided to join the global initiative for Sustainable Stock Exchange Reporting on ESG issues. This means that Stockholm, Helsinki, Copenhagen, Reykjavik, Tallinn, Riga and Vilnius have committed to produce a guidance on environmental, social and governance (ESG) disclosure for listed companies by the end of this year.

Nasdaq Nordic and Baltic exchanges joined the United Nations Sustainable Stock Exchanges (SSE) initiative in November 2015. This effort will also reinforce Nasdaq’s mission to provide fair, transparent, and efficient markets for investors. The forthcoming guidance will be aligned with the recommendations issued in 2015 by both the UN Sustainable Stock Exchanges’ initiative and the World Federation of Exchanges’ Sustainability Working Group.

For example the World Federation of Exchanges´Sustainability Working Group have several key ESG Metrics in their recommendations. Those include for example:

  • Direct/indirect GHG (greenhousegas) emissions
  • Water management
  • Waste management
  • CEO pay ratio
  • Gender pay ratio
  • Human rights policy
  • Board voting
  • Code of Conduct

This decision means that Nasdaq will work for the guidance with their stakeholders during this year and publish the guideline by the end of year. It will have some implications also to the IPO listings although the market reporting requirements differ for example in the First North and the main list.

The aim of this global Stock Exchange Initiative is to encourage responsible investment, enhance corporate transparency and ultimately performance on ESG (environmental, social and corporate governance) issues. The SSE is convened by the UN Conference on Trade and Development (UNCTAD), the UN Global Compact, the UN Environment Program Finance Initiative (UNEP FI), and the Principles for Responsible Investment (PRI).  (www.SSEinitiative.org).

Business Finance Lifestyle

Amundi Real Estate´s AUM increased to 12,9 billion euros 2015

Amundi Real Estate achieved a total volume of 3.6 billion euros in transactions in real estate funds and mandates during last year. This doubles the volume of acquisitions/disposals compared to 2014, representing growth of 111%, the company said in the press release.

Amundi Real Estate carried out acquisitions totalling over 3.4 billion euros through 58 deals totalling more than one million square meters (m2), and sold more than 153 million euros in assets via 21 deals on behalf of the funds it manages. While over 2.4 billion euros was invested in France, almost 30% of acquisitions (in volume) were completed in Europe, notably in Germany, the United Kingdom, the Netherlands and the Czech Republic.

More than 84% of these transactions were in corporate real estate assets (with 79% office property, 18% shops and shopping centres and 3% hotels). Residential property investments totalled 46 million euros. These are solely investments made in France, mainly on behalf of Malraux-type real estate investment trusts or REITs.

Amundi Real Estate’s assets under management increased by 39 % to 12.9 billion euros at the end of December 2015, due to the strong growth in transaction volume, both in France and internationally. IMG_0872

About Amundi Real Estate Amundi Real Estate is Amundi’s management company specialising in developing, structuring and managing property funds for private investors, private banks and their distributors, institutional investors, large companies and real estate professionals.  Amundi Real Estate has € 12.9bn assets under management. Amundi Real Estate is a subsidiary of Amundi Group.

Business Finance