Issue 23

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Issue 23 (Jul/Aug 2009)

Today’s social and environmental issues are tomorrow’s key investment drivers. News, research and events from The London Accord and other organisations examine issues where finance and investment interact with ESG policies. The London Accord increases the social value of the existing investment research process, adding value for authors and their firms by enhancing policy recommendations.

News

Index-linked carbon bonds catching on

Uncertainties surrounding government commitments to de-carbonising the economy create three key risks – missed carbon emission targets, low fossil fuel prices and low carbon prices. Such risks reduce the profitability of clean energy or cause losses that developers of low carbon projects and their investors are not willing to bear. How can these risks be hedged?

Newsflash: London Accord website has major revamp

The London Accord website (www.london-accord.co.uk) is undergoing a major upgrade, courtesy of the City of London Corporation. New functions give users the ability to search reports by author, research organisation, date and subject, making accessing content much easier.

New research: the influence of investment and economic research on policy development

Anna Gusel is leading a new piece of research for The London Accord on how policy development is influenced by investment and economic research. She seeks to understand the nature and effects of public-private information sharing practices in the realm of climate change policy. As this year marks a crucial point in the climate change arena, a time when the frameworks and legislation enacted at both national and multilateral levels will set the stage for action to come, sensible policy formulation is crucial. To ensure that policies incentivise and support the right adjustments and innovation for market and consumer behaviour, it is vital that policy-makers have access to broad and nuanced sources of information from all sectors.

New investment tools for a low carbon economy

FTSE Group, the global index provider has launched new capital investment tools to assist investors to identify and gain exposure to the rapidly growing environmental technology sector. This pioneering move comes at a time when climate change and environmental concerns are key items on political agendas across the globe and when clean technology opportunities are of growing interest to investors worldwide.

Passive funds lack ESG risk management

A significant proportion of equity holdings managed within passive funds are not subject to high levels of ESG risk management, according to an audit commissioned by The Local Authority Pension Fund Forum (LAPFF).

Managing emissions across the value chain

Greenhouse gas emissions from companies’ value chains represent a material source of risk and opportunity for companies, according to a new report Managing Greenhouse Gas Emissions Across the Value Chain: the New Agenda, from Insight Investment in conjunction with international consultants Acona.

Greater ESG disclosure demanded by emerging market investors

Seven out of ten major asset managers and institutional investors, representing a total of US$130 billion of emerging market investment, cited lack of ESG disclosure as the key challenge to investing in emerging markets, according to a new report from the Emerging Markets Disclosure (EMD) Project.

Simplifying emissions reporting

Recently the Confederation of British Industry (CBI) published a report on greenhouse gas emissions reporting, setting out “a simple and common method for businesses to report their emissions publicly.”

Migrant workers in the supply chain – the business responsibility

Migrant workers in the UK are vulnerable to very low wage rates, excessively long working hours, poor health & safety conditions, workplace discrimination and other injustices, according to a new report from the Ecumenical Council for Corporate Responsibility (ECCR). This can impact on the reputational risk of companies and their investors.

Research

Power sector remains key

ETS emissions data for 2008 confirms the key role of generators to prices. ETS data shows generators are very short but all the other sectors combined long. Having revised down their 2009 emissions forecast by a further 50Mt to reflect the continuing weak macroeconomic outlook Deutsche Bank considers EUAs will only really start to reflect fundamentals when generators’ Phase-3 compliance buying begins in earnest: forecast for mid-to-late 2010.