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newsletter 10/2016

Our topics:

1. In-house news

- oekom research and South Pole Group Support Pioneering Local Authorities to Divest from Fossil Fuels

2. oekom Services

- oekom research publishes Industry Focus for the Packaging Industry

- Updated Position Paper on working conditions in the supply chain

3. Global Challenges Index

- Hanover Stock Exchange’s Global Challenges Index: first-class performance in QIII 2016

4. Market

- PRI, UNEP FI and The Generation Foundation: UK and US roadmaps to fiduciary duty

5. Studies/Publications

- WWF Living Planet Report 2016: mankind consumes more resources than earth can provide

6. Initiatives

- European Parliament pleads for greater use of green financial products

- UK government to form a taskforce for policies on social investment and responsible corporate governance

7. Books

- Alec Ross: The Industries of the Future

- George A. Akerlof and Robert J. Shiller: Phishing for Fools – The Economics of Manipulation and Deception

8. Events

- Review: the oekom Double Dividends 2016 conference

- Discussion meeting on the presentation of the Eurosif SRI Study 2016

- RI Americas 2016 in New York: Risky business, risky investments



1. In-house news

oekom research and South Pole Group Support Pioneering Local Authorities to Divest from Fossil Fuels

oekom research is supporting the cities of Münster and Stuttgart in their decarbonisation activities and in divesting from projects that contribute to accelerating climate change Both cities are among the first local authorities in Germany wishing to make their investments CO2-neutral and free of fossil fuels such as coal and oil. oekom research is supplying the necessary analyses and reports together with its partner South Pole Group, a leading sustainability solutions provider and global supplier of climate-related impact analyses and carbon footprinting data.

To ensure that investments are no longer directed  into companies and projects with adverse effects on the milimate, the capital of the German state Baden-Wuerttemberg, Stuttgart, has commissioned oekom research to filter out all the issuers within an investment universe that breach specific, definite exclusion criteria. With this screening, the city is ensuring that investments are no longer made in companies involved in the extraction of coal or oil, or natural gas extraction done by fracking. Companies that allow the use of child or forced labour, or that  offer GMO produce are also excluded from the investment pool.

Michael Föll, First Mayor of the state capital Stuttgart, explains: “We see it as our responsibility towards our citizens to consider the goals for limiting climatic change, and to avert imminent financial losses which could arise, should investments in climate-damaging projects lose their value. oekom research´s qualitative analyses are helping us to achieve these goals.”

The Department of Finance and Investments of the city of Münster, which has become the country’s first local authority to commit to decarbonisation, has tasked oekom research with analysing its medium- and longterm investments in potentially climate-damaging or non-sustainable companies and projects. In doing so, the rating agency is performing a fossil fuel screening – i.e. identifying companies involved in the supply chain of  fossil fuels – as well as an analysis of the CO2 risks and carbon exposure of the portfolios held by the city of Münster.

“Thanks to the CO2- and climate-related analyses and data, we can find out where we currently stand in terms of fossil fuels, and consider the measures and concrete next steps for our decarbonisation activities ” says Frank Möller of the Department of Finance and Investments of the city of Münster.

oekom research CEO Robert Haßler comments: “In preparing the extensive analyses, we are working closely with our partner, South Pole Group. Our detailed research on climate risks is perfectly complemented with their carbon footprinting data and offers decision makers  and local authorities an optimal base for implementing their divestment and decarbonisation plans.”

“Münster and Stuttgart are leading the way in acknowledging the crucial role of cities for the transition to a 2 degree society - also in their investment activities. Through our work with both cities and investors around the globe and our partnership with oekom research, we see ourselves as natural allies for other cities following suit,” underlines Maximilian Horster, Partner, Financial Industry, South Pole Group.

Contact: Client Relations, clients@oekom-research.com, +49 (0)89 544 41 84 78


2. oekom Services

oekom research publishes Industry Focus for the Packaging Industry

oekom research has completed its rating update for the Packaging Industry. This encompasses companies which design and manufacture packaging solutions. The oekom Universe analyses a total of 29 such companies of which by way the largest share of 31.1 per cent is located in the USA. At just 3.4 per cent, German companies only account for a small proportion of the industry’s country distribution.

According to the report, the Packaging industry’s main task with respect to its sustainability performance is to reduce the negative consequences of its products. This applies all the more because of the huge volume of packaging consumed each day. As an example, it accounts for the largest share (35 per cent) of Germany’s entire plastic consumption. One of the manufacturers’ key challenges is therefore primarily to increase resource efficiency by improving their designs and production processes. A strategy for responsible sourcing of raw materials such as wood also helps mitigate environmental risks.

The top-3 rated companies in the Packaging Industry are Ball Corp (US) and BillerudKorsnas AB (SE), each with the rating B-, and Amcor Ltd. (AU) with the rating C+.

The oekom Industry Focus Packaging can be requested at no charge from communications@oekom-research.com.


Updated Position Paper on working conditions in the supply chain

Many companies nowadays source their goods and raw materials via diffuse supply chains spanning the entire globe. In the 1960s, companies in labour-intensive sectors – such as the textiles industry – started outsourcing their production processes to emerging economies and developing countries which had low labour costs. The outsourcing trend accelerated after the 1980s, favoured by a rise in trade liberalisation, the proliferation of free-trade areas, the emergence of communication media such as the Internet, and falling transportation costs. Low working standards are often characteristic of those countries to which production is still outsourced and in which the majority of the raw materials are extracted today. In the 1990s, NGOs increasingly drew public attention to the poor working conditions in multinationals’ global supply chains. One of the most prominent campaigns targeted sport-article manufacturer Nike which came under massive pressure due to allegations of child labour.

The updated Position Paper “Working Conditions in the Supply Chain” discusses a wide range of current developments – from workers’ legal situation worldwide and corporate delivery-chain management to working standards and the factors affecting the sourcing of raw materials. It explains oekom research’s standpoint and clarifies how these factors impact the sustainability rating.

The Position Paper can be ordered at no cost from communications@oekom-research.com


3. Global Challenges Index

Hanover Stock Exchange’s Global Challenges Index: first-class performance in QIII 2016

The Hanover Stock Exchange’s Global Challenges Index (GCX) enjoyed a successful third quarter 2016, rallying 8.9 per cent over the period, and outperforming Germany’s blue chip index, DAX, which only gained 7.6 per cent in the same time. The GCX also outperformed the EURO STOXX 50, which rose 4.3 per cent during QIII, underscoring its performance supremacy over the two benchmark indices. This trend becomes even clearer when tracked since the start of the year: over this period, the DAX and EURO STOXX 50 both fell, by 3 and 6.9 per cent respectively, while the GCX climbed 2 per cent. Since its launch on 3 September 2007, the GCX has appreciated by around 99 per cent (change in value as at 30 September 2016), the DAX only rising around 39 per cent over the same period.

GCX was developed by the Hanover Stock Exchange in cooperation with oekom research, and launched on 3 September 2007. It covers 50 international stocks of sustainable businesses that make significant or groundbreaking contributions to overcoming the largest global challenges.

Contact: Sabrina Otto, Börse Hannover, email s.otto@boersenag.de


4. Market

PRI, UNEP FI and The Generation Foundation: UK and US roadmaps to fiduciary duty

The Principles for Responsible Investment (PRI), The United Nations Environment Program Finance Initiative (UNEP FI) and The Generation Foundation, announced the launch of US and UK roadmaps, which set out recommendations to fully embed the consideration of Environmental, Social and Governance (ESG) factors in the fiduciary duties of investors in the US and UK capital markets. Underlying the roadmap is the understanding that ESG integration is less a product than it is part of the broader process and technology of investment analysis.

In addition to these roadmaps, the PRI will also publish roadmaps in Australia, Brazil, Canada, Germany, Japan and South Africa.


More information and download links for the US and UK roadmaps can be found here: http://bit.ly/2egUNTM.


5. Studies/Publications

WWF Living Planet Report 2016: mankind consumes more resources than earth can provide

Global populations of vertebrates - mammals, birds, reptiles, amphibians, and fish - have declined by 58 per cent between 1970 and 2012, states a new report from World Wildlife Fund (WWF). Animals living in the world’s lakes, rivers, and freshwater systems have experienced the most dramatic population declines, at 81 per cent. Because of human activity, the report states that without immediate intervention global wildlife populations could drop two-thirds by 2020.

The top threat to wildlife is habitat loss and degradation, driven primarily by increasing demand for food and energy. According to the report, global food production is the leading cause for destruction of habitats and overexploitation of wildlife. Agriculture currently occupies approximately one-third of Earth’s total land area and accounts for 70 per cent of all freshwater use. Wild animals are not the only ones at risk; the report states that increased pressure threatens the natural resources that all life – including humanity – depend on.

Living Planet Report 2016: Risk and resilience in a new era is the eleventh edition of WWF's biennial flagship publication. The report tracks over 14,000 vertebrate populations of over 3,700 species from 1970 to 2012 and includes research from the Global Footprint Network and the Zoological Society of London.

More information at https://www.worldwildlife.org/pages/living-planet-report-2016


6. Initiatives

European Parliament pleads for greater use of green financial products

The European Parliament’s Economic & Monetary Affairs Committee (ECON) has voted on the EU’s focal areas in the financial-services space. The EU Commission’s so-called Green Paper on Retail Financial Services intends to leverage the potential of the EU internal market for financial services to consumers. The result of the ECON vote is the European Parliament’s response to the Green Paper submitted by the Commission in December 2015. It will be followed by legislative and other initiatives of the Commission. The next step in the European Parliament will be the vote in the plenum of the European Parliament, which is planned for November 2016 and likely to endorse the ECON Committee’s position.

Further information on the Green Paper can be found at http://bit.ly/1OT6zyZ. 


UK government to form a taskforce for policies on social investment and responsible corporate governance

British trade journal Responsible Investor has reported on UK government plans to form a so-called “Inclusive Economy Unit” which is to work towards developing and formulating policies on social investment and responsible corporate governance. The disclosure comes just shortly after Prime Minister Theresa May’s announcement at the Conservative Party’s Annual Conference to align capitalism even closer with workers’ interests. According to this,  the concept of enhanced corporate governance in the UK is to be implemented in company committees and supervisory boards and provide for greater transparency – notably in the area of remuneration and salary payment. Representatives of employee and consumer associations are to participate in this process.

For more informa
tion, please visit: http://bit.ly/2fvWyNK.


7. Books

Alec Ross: The Industries of the Future

The Responsible Investor Handbook

The most recent publication of Hillary Clinton’s former innovation advisor, Alec Ross, made it straight away to the German Business Book Award shortlist at this year’s Frankfurt Book Fair. In “The Industries of the Future”, the author takes a look at how much the world changed over the past 20 years from 1994 to 2015, and how change is expected to further accelerate over the next twenty years. Alec Ross has visited over 40 countries thus far. In this book, he collates his observations on the forces changing the world. He examines the best opportunities for progress and shows why countries fail or succeed in exploiting them to their advantage. He pays special attention to the areas which will have the greatest impact  on our economic future over the next ten years: robotics, artificial intelligence (AI), genetics and cybercrime. In a combination of storytelling and economic analysis, he answers the question of how we will have to adapt to the new circumstances and provides an outlook on the coming years’ trends.

For more information, please visit: http://bit.ly/2fP8cnU.



George A. Akerlof and Robert J. Shiller: Phishing for Fools – The Economics of Manipulation and Deception

The Responsible Investor Handbook

In “Phishing for Fools” nobel prize laureates in Economics, George Akerlof und Robert Shiller discuss the central theories of economics, according to which free markets and free competition are the best prerequisites for general prosperity. The authors argue to the contrary, however: that markets are not inherently benign and that it is not always the best products which win through. In this book, the authors address the central role of manipulation and deceit in the economy for the first time. They use numerous case examples to show how consumers are enticed into spending more money than they have; how advertising has a greater influence on people than one thinks; why one often overpays; and the massive influence business has on politics.

For more information, please visit: 
http://press.princeton.edu/titles/10534.html. 



8. Events

Review: the oekom Double Dividends 2016 conference

The Responsible Investor Handbook

During our meanwhile 13th “Double Dividends – Sustainable Investment Trends” conference which was held on 25 October 2016 in Frankfurt am Main, over 100 attendees discussed the sector’s trends and developments. The keynotes of Hessian Minister of Economics, Energy, Traffic and State Development, Tarek Al-Wazir, on the topic of “Green finance – Opportunities for Financial Centre Frankfurt”, and of Director United Nations Sustainable Goals Fund, Paloma Durán, on the topic of “The role of Private Sector as an actor in the implementation of the SDGs” addressed the importance of sustainability from various perspectives. According to these, particularly the UN SDGs offer the framework which industry needs for orientation and guidance for even more sustainable corporate governance. Various representatives of financial institutions, church investors, insurance companies and the municipal sector discussed these and other topical issues in panel discussions and more-in-depth workshops. The event was aimed particularly at representatives of institutional investors such as pension schemes, insurers, foundations and ecclesiastical institutions.

For further information and the conference transcript please visit: http://oekom-research.com/index.php?content=doppelte-dividende-2016.



Discussion meeting on the presentation of the Eurosif SRI Study 2016

To mark the presentation of the new SRI Study on the European sustainable investment market, the European umbrella association, Eurosif, will be holding a one-day event to discuss the market status quo and future trends in Brussels on 10 November 2016. The topics will include the importance of ESG factors in investment decisions, the definition of green-bond standards, necessary pan-European guidelines for investors, possible obstacles to these, and prospects for the future. Eurosif Executive Director Flavia Micilotta will present the “SRI Study 2016” during the event.

For further information, please visit 
http://www.eurosif.org/2016-sri-study-launch/.


RI Americas 2016 in New York: Risky business, risky investments

The 8th annual conference on responsible investments in the US and North America takes place from December 6th to 7th in New York. It will look with various sessions, panels and workshops at current topics and developments in the SRI market. Main focus points will be how the US election result is going to change responsible investment in America, upcoming action points from COP21 to COP22 and what this means for future investment strategies, the FSB Taskforce on Climate-Related Financial Disclosure and many more. More than 50 industry leading speakers from many high profile asset owners & asset managers are expected to discuss the most critical ESG issues.

Ariane de Vienne, Director Business Development North America and Head of the New York office of oekom research, will attend the event as a panel speaker, addressing current ESG and investment related topics. 

More information can be found at 
https://www.eiseverywhere.com/ehome/riamericas2016/Summary/.


top news

Result of the presidential election in the US - impact on the country rating

2016/11/09

oekom research and Solactive support Federal State of Berlin in driving the city´s divestment activities with the development of a sustainable equity index

2016/11/08

oekom research and South Pole Group Support Pioneering Local Authorities to Divest from Fossil Fuels

2016/10/30

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