Monthly Archives: March 2019

Pope Francis Issues Call for Action on Sustainable Development at Rome Conference of Experts & Activists

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by Hank Boerner – Chair and Chief Strategist, G&A Institute

Global faith leaders can directly and indirectly affect significant changes in our global society. 

One leader with high visibility and strong opinions on important societal issues is the Holy Father in Rome, Pope Francis.  The Roman Catholic Church as a collective institution is one of the largest owners and holders of assets in the world, including pension systems of various orders, Catholic charities, healthcare systems, and more.

The Roman Catholic Church’s policy is guided by important encyclicals issued by the Pope in the Vatican City. 

For example, the contents of the historic 1891 encyclical issued by Pope Leo XIII on capital and labor and the rights of both (and concerns about the Industrial Age working class) continues to reverberate even today in discussions about corporate-labor and public sector-labor issues (this was “Rerum Novarum”).

Amidst the rising discussion worldwide about climate change and the need for action, Pope Francis issued “Laudato Si” (Our Home) in May 2015.  This is a powerful work addressing environmental and ecology issues, especially including the need for action on climate change. This work called on the world society – and especially the institutions of the R.C. church – to address the urgent threats posed by climate change.  (The subtitle was “On care for our common home”.)

As part of the public dialogue, Pope Francis addressed the joint houses of the U.S. Congress in May 2015 and received 37 standing ovations as he addressed climate change, common needs, risk to our common home (the Earth), the responsibility of richer nations, and other societal challenges.

The discussion continues:  the Roman Catholic Church convened a three-day conference earlier this month in Rome to bring together experts and activists in human development, the environment and healthcare.

To – as Pope Francis explained – explore new paths of constructive development … development having been “…almost entirely limited to economic growth… [which] is leading the world down a dangerous path where progress is assessed only in terms of economic growth.”

The title of the conference:  “Religions and the Sustainable Development Goals:  Listening to the Cry of the Earth and of the Poor”. The theme:  “Without a change of attitude that focuses on the well-being of the planet and its inhabitants, efforts to achieve the SDGs will not be sufficient for a fair and reasonable world order.”

Said the Holy Father, leader of the world’s 1.2 billion Roman Catholics:  “No branch of science or form of wisdom should be overlooked, and this includes religions and the languages particular to them.” 

Our Top Story is the news report of the Catholic News Service out of Rome with background on the conference and related information.

Background on the historic significance of Laudato Si (Our Home), Pope Francis’s encyclical is in the “Trends Converging! – A Look Ahead of the Curve” book of essays by G&A Chair Hank Boerner, available (chapter 44) online. 

There is also a management brief on this on G&A Institute’s “To the Point!” management briefing platform:
https://ga-institute.com/to-the-point/


This Week’s Top Story

Pope: World in need of ‘ecological conversion’ to advance sustainability   
 (Tuesday – March 12, 2019) Source: Cux Now – ROME – Sustainable development cannot be achieved without the voices of those affected by the exploitation of the earth’s resources, especially the poor, migrants, indigenous people and young men and women, Pope Francis told… 

Focus on Green Finance – The European Union Action Plan – Mandates Being Put In Place for Fiduciaries

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by Hank Boerner – Chair and Chief Strategist, G&A Institute

The European Union adopted a Sustainable Finance Action Plan in May 2018; the package of measures included a proposal for a regulation to establish a framework to facilitate sustainable investment.  The aim is to create a unified classification system or taxonomy on what could be considered to be “an environmentally-sustainable economic opportunity”.

Also in the plan:  a proposal for regulation on disclosures related to sustainable investment and sustainable risks to require financial sector players to integrate ESG in their risk processes and decision-making as part of their fiduciary duties.

The action plan also calls for a regulation to amend the benchmark regulation by creating a new category of benchmarks for low-carbon and positive-carbon impacts (this would provide investors with better information on the carbon footprint of their investments).

The latest move in the action plan is the mandating of disclosure by money managers, insurance companies, pension funds and investment advisors in how these financial sector players are integrating ESG factor in their portfolios and disclosing the details to their beneficiaries, savers, investors, and advisors.

The financial sector fiduciary organizations will have to disclose how certain investments of theirs might cause damage to the planet, such as polluting water (think: mining companies, oil & gas companies, chemical companies, and others) and how an investment might damage biodiversity.

Implementation of the European Commission plan requires amending the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive, and other directives or by adopting new “delegating acts” under the directives.

Also to be expected:  establishing an EU label for “green” financial products, those that comply with green or low-carbon criteria.

Two years ago the EU adopted ESG disclosure policies for public companies (the EU Directive for Non-Financial Disclosures and an Accounting Directive that was adopted by all 28 states); this corporate reporting directive could be strengthened as part of the action plan to assure that companies are providing the right information to investors.

All of this is to further ensure that the financial sector players invest more responsibly, said Valdis Dombrovskis, the EU vice president responsible for financial stability, financial services and the Capital Markets Union (CMU) in talking with Editor Paulina Pielichata of Pensions & Investments.  \

The CMU is a plan of the European Commission to mobilize capital in Europe and channel it to companies and infrastructure projects to expand and create jobs, part of the vision of creating a single market for capital in the union.

She had written back in June 2018 after the announcement of the action plan that disclosure of sustainability and low-carbon attributes of investment strategies will soon be standardized as the European Commission worked on creating better transparency for those strategies for moving toward a lower-carbon economy.

There’s more information for you at the EU Sustainable Finance web site: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance_en

This Week’s Top Story has the current Pension & Investments report by Paulina Pielichata on the latest moves by the EU on the action plan:


This Week’s Top Story

EU agrees to sustainable investment disclosure framework   
(Friday – March 08, 2019) Source: Pension& Investments – The European Parliament and European Union countries agreed Thursday on sustainable investment disclosure rules for institutional investors. Under the agreed rules, money managers, insurance companies, pension funds and…

Looking at Green Finance in the United States of America
Citi announced issuance of its first green bond in January, as part of the Citi Group commitment to environmental and climate finance.  The bond will fund renewable energy, sustainable transportation, water quality and conservation, energy efficiency, and green building projects (all part of the organization’s US$100 billion Environmental Finance Goals (announced in 2015). 

In January, Citi issue EU1 billion, 3-year fixed rate notes. Citi is a co-founder of the Green Bonds Principles (2014). Citi VP Michael Eckhart is the key player (he is head of environmental finance and was a principal player in creation of the Principles). 

On April 11th in New York City the Fixed Income Analyst Society (FIASI) will hold an event at the University Club in midtown — “ESG Integration in Fixed income:  How Credit Analysis of Risks and Opportunities is Evolving”. 

The event will explore the drivers and current status of ESG integration in fixed income; focus on developments at the largest credit rating agencies regarding ESG integration in creditworthiness, and how investment management firms are considering ESG risks & opportunities in fixed-income investing.

Global sustainable investment assets reached US$23 billion in January 2016, FIASI points out, and one of the fastest-growing segments is ESG integration.  There’s a broad spectrum of methods involved, and for fixed-income instruments, there are higher levels of complexity in evaluating “green” issues than for equity, FIASI explains.

Speakers from Moody’s, Fitch, S&P, TD Asset Management, Loomis-Sayles, JP Morgan Asset Management, APG Asset Management, and others will be speakers, moderators and panelists.  For information: https://www.fiasi.org/esg-conference

Information about FIASI is at: https://www.fiasi.org/

Five/in/Five – IBM Predicts Five Innovations To Change Our Lives in the Next Five Years at 2019 Think Conference

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At the recent IBM Think 2019 Conference, fascinating artificial intelligence (“AI”) innovations were showcased; these are approaches in development to help meet the needs of global stressed food and water ecosystems.

Forbes’ contributor Lee Bell outlined the work of scientists and developers at IBM’s research unit, telling the story from the conference with a “crop-to-trash” theme.  These innovations are:

The Digital Twin – AI helping to accurately forecast crop yields (helping farmers to establish critical data points for arranging farm credit).

Blockchain – this is about using AI to help keep more food out of the waste system, and address numerous “unknowns” in the food supply chain; this is a Blockchain approach to help the value chain players (from planting to ordering to shipping) reduce food loss (food loss is a major factor in the herculean effort of addressing pressing hunger issues around the world).

Microbe Mapping – the use of millions of microbes to protect food with DNA and RNA sequencing using Big Data resources.

Food Detection AI Sensors – this is in the works now using advanced technology to help farmers, food processors, grocers, home cooks, to detect dangerous contaminants in food.  Simple:  using a cell phone or countertop AI sensor to spot e.Coli or Salmonella.

“VolCat – a welcoming note here as the IBM researchers look to eliminate existing plastics (such as those used in grocery bags) and develop new products that can be used again and again.  VolCat is a catalytic chemical process designed to turn polyesters into a new substance to make new products.

Years back we attended an IBM briefing with a research head who explained that many products in the lab would be at market in five years or less if they worked out as planned.  Today IBM continues on that path with its explanations of what the company’s research team members are looking at what could be possible five years from now…when the eight billionth person joins humanity and enters a world more connected and inter-dependent than ever (said Arvind Krishna, SVP of IBM Cloud & Cognitive Software).

Historians tell us that wandering tribes and clans of hunter-gatherers settled down  somewhere in the Fertile Crescent to “farm” and raise food animals some 10,000-to-12,000 years ago and the practices they established changed ever-so-slowly over the millennia.  Rapid change came in the modern times of agriculture” (some 200-to-500 years ago) with advances in mechanization, seed development, irrigation, crop rotation, selective breeding, preservation, plant nutrients, fertilizers, and recently, digitization of many tasks.

It will be fascinating to see what just the next five or ten years may bring in terms of technological developments for agriculture, ranching, food manufacturing and distribution, and related activities.  Stay tuned to the IBM AI research efforts!

The IBM February gathering with the theme of “five in five” (5 innovations within 5 years) had a number of fascinating tech discussions, including “Human-Robot Interaction”, “How AI and Blockchain Will Change the Game”, “Trust and Ethics in Tech”, and IBM Chairwoman/CEO Ginni Rometty’s address – “Building Cognitive Enterprises”.

Click here to learn more about the IBM Think 2019 Conference.


This Week’s Top Story

Sustainability Tech: The Top 5 Innovations Set To Transform Our Lives Over The Next Five Years   
(Tuesday – February 26, 2019) Source: Forbes – Researchers unveiled a raft of innovations earlier this month that they claim will “change our lives the most over the next five years”, and they’re all related to the very things keeping us alive: food and water. 

Morgan Stanley Research Important Takeaway: Sustainable Investing Approaches Now Clearly Mainstream For Institutional and Retail Asset Owners

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A 2018 survey by Morgan Stanley took the pulse of U.S. asset managers (with in-depth telephone interviews) to determine the level of adoption of sustainable investing approaches by asset managers in the United States.

Results:  in the report “Sustainable Signals: Growth and Opportunity in Asset Management” a majority of managers said they now see sustainable investing strategies as a strategic imperative, explains Matthew Slovik, head of Global Sustainable Finance at Morgan Stanley.

Morgan Stanley Institute for Sustainable Investing and Bloomberg had 300 asset management firms with at least US$50 million in Assets Under Management polled and the results built on a prior Morgan Stanley and Bloomberg survey in 2016 (“Sustainable Signals: The Asset Manager Perspective”). In that year’s pulse-taking, 65% of survey respondents said their firms adopted sustainable investing; the 2018 response was that 75% of asset management firms surveyed had done so.

Reasons cited:  increased investment stability; high client satisfaction; product popularity; possible high finance returns.

Explains Bloomberg Global Head of Sustainable Business & Finance, Curtis Ravenel:  “As investors increasingly consider sustainability factors across asset classes and investment products, we expect to see a shift toward better data tracking and reporting mechanisms…this will increase credibility and improve measurements of impact across portfolios.”

Survey Highlights:  Three-in-four U.S. asset managers now offer sustainable investing strategies. Nine-in-ten say sustainable investing is not a fad, it’s here to stay. Eight-in-ten say strong ESG practices can lead to higher profitability and companies [with ESG practices] may be better long-term investments. Two-out-of-three asset managers believe that it is possible to maximize financial return while investing sustainability.

Consider that according to the most recent survey of U.S. asset owners and managers by the U.S. Forum for Sustainable & Responsible Investing (US SIF), $13 trillion (or one-in-four dollars) of professionally-managed assets now consider sustainability principles, a clear signal that ESG factors are now widely incorporated into investment processes.

The new Morgan Stanley / Bloomberg survey results make the financial case for sustainable investing with both institutional and retail investors demanding an increasingly sophisticated range of investment approaches and impact outcomes.

The Initiative for Responsible Investment at the Hauser Institute for Civil Society at the Harvard Kennedy School and Edelman Intelligence contributed to the work.

The Top Story this week has highlights of the survey; click here to access the 16-page report.

The US SIF’s comprehensive “Report on U.S. Sustainable, Responsible and Impact Investing Trends 2018” is also available.

This Week’s Top Story

Sustainable Investing Goes Mainstream: Morgan Stanley and Bloomberg Survey Finds Sustainable Investing a Business Imperative Among U.S. Asset Managers
(Friday – February 22, 2019) Source: BusinessWire – A majority of U.S. asset managers are now practicing sustainable investing, viewing it as a strategic business imperative. In a new survey entitled Sustainable Signals: Growth and Opportunity in Asset Management, from..