Sustainable Finance & Responsible Investment

Transcription

1 Michel Roggo / WWF-Canon Sustainable Finance & Responsible Investment Date: 25 October 2017 Cerin Maduray Investment Analyst cmaduray@wwf.org.za

2 Contents Shorter title Introduction to WWF and our Global Goals Sustainable Secondary Finance information WWF can go here The Living XX-XX Planet Month, Fund Year Impact Investing Additional and Private information Equity can run Active Ownership in South African Organised Labour WWF/Alexander Underneath Forbes Investment if necessary Questionnaire

3 WWF IN SHORT +100 WWF is in over 100 countries 1961 WWF was founded In WWF has over 5,000 staff worldwide +5M WWF has over 5 million supporters OUR MISSION: To stop the degradation of the planet's natural environment and to build a future in which humans live in harmony with nature, by: conserving the world's biological diversity ensuring that the use of renewable natural resources is sustainable promoting the reduction of pollution and wasteful consumption

4 WWF: Global Goals Wildlife Goal: The world s most threatened ecological, economically and culturally important species are secure in the wild Oceans Goal: Productive and resilient ocean ecosystems, sustaining human well being and conserving biodiversity Forests Goal: A world enriched by extensive, resilient forest landscapes benefiting biodiversity, people, and climate Freshwater Goal: Freshwater ecosystems and their services sustain people and nature Climate and Energy Goal: By 2030, an equitable and just transition (to a global pathway) that limits warming to 1.5C degrees and builds a climate resilient future Food Goal: Sustainable food systems conserve nature while ensuring food security now and in the future

5 Finance in WWF Cross Cutting Relevance & Impact

6 WWF Finance Practice Theory of Change Our objective is to encourage a meaningful shift in Finance to achieve WWF s Global Goals Using the framework of risks and opportunities, WWF can: influence the financial system to improve integration of environmental risks encourage the financial system to deliver greater investment for sustainable development use the influence of the finance sector to drive sustainable practices through the rest of the economy 6

7 Murat Selam / WWF Nepal Responsible Investment The WWF Supported Prescient Living Planet Fund

8 The WWF Supported Prescient Living Planet Fund Aims to deliver sustainable long-term capital growth to its investors within a framework that integrates environmental principles in the investment portfolio. Performance objective: Deliver competitive investment returns by out performing the strategic fixed benchmark over rolling five-year periods (CPI+4% target). Environmental objective: Actively manage and integrate principles that enhance the sustainability of the natural environment over the long term

9 The Living Planet Fund: Objective and Implementation Approach towards optimal E(SG) integration into the Portfolio: Pragmatic and realistic Respect for and adherence to mandate (competitive risk adjusted returns for investors) Incrementally enhance the E(SG) credibility in our Funds over the long term

10 WWF-SA: Environmental Analysis Company Environmental data and analytics provided by Trucost Benchmark 6.73% Portfolio 4.57% GHG Water Waste L&W Pollutants Air Pollutants NR Usage Benchmark Portfolio CO2e Tonnes/R1mn Revenue Scope 1 Scope 2

11 Kate Holt / WWF-UK Responsible Investment Impact Investment Solutions and Private Equity Presentation to Company Name

12 Risk & Return Business Life Cycle Source: The Presidents Council

13 Africa Environmental Sustainability Private Equity FoF What is Private Equity? Classes of Equity that are not quoted on Stock Markets / unlisted. WWF in partnership with Fair Tree Capital Multi-Sector Environmental Fund of Funds Provide competitive long term financial returns and environmental sustainability impact.

14 Africa PE FoF Impact Sector focus Renewable Energy Sustainable Agriculture Sustainable Forestry Water and Food Security Biodiversity Conservation Clean Tech & Infrastructure Description Energy derived from resources that are constantly replenished or infinite; Renewable energy technologies can harness renewable energy to produce power with almost no pollution or emissions. Description Sustainable agriculture is the production of food, fibre or other plant and animal products, using farming techniques that are sustainable and ensure the safeguarding of high quality supply of agricultural products. Description Sustainable forestry specifically targets the long term viability of the palm oil, timber, pulp and paper sectors. Sustainable Forest Management is the usage and application of the standards of the Forestry Stewardship Council (FSC), globally recognised as the most credible forest certification system. Description Food Security is about maintaining sustainable food systems while simultaneously working towards long term environmental sustainability. Water security is defined as the capacity of a population to safeguard sustainable access to adequate quantities of acceptable quality water for sustaining livelihoods. Description Protection, rehabilitation and conservation of ecosystems, wildlife and other species and preserving genetic diversity, and ensuring the sustainable utilization of species and ecosystems. Description Any process, product or service that reduces negative environmental impacts through significant energy efficiency improvements, the sustainable use of resources, or environmental protection activities. Infrastructure including property, fixed investment, materials.

15 Defining Impact Investing What is Impact Investing? Investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return (GIIN) Research has shown that a access to affordable funding is 1 of the top factors inhibiting growth for Small Business For investors very often the risk return profile makes investment into small businesses unsuitable

16 Defining Impact Investing What is Impact Investing? Investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return (GIIN) Research has shown that a access to affordable funding is 1 of the top factors inhibiting growth for Small Business For investors very often the risk return profile makes investment into small businesses unsuitable

17 The Green Outcomes Fund impact investment initiative The World Bank s Climate Technology Program (CTP), together with University of Cape Town GSB s Bertha Centre for Social Innovation and Entrepreneurship, WWF- South Africa and GreenCape is pioneering an innovative, outcome-based funding mechanism, the Green Outcomes Fund (GOF) The aim is to mobilize investments into promising green small and growing business (SGBs) that contribute to environmental and social outcomes across the Southern African region.

18 The Green Outcomes Fund impact investment initiative The Green Outcomes Fund (GOF) is an innovative green mechanism that has an objective to mobilize investment into Small & Growing Green Businesses (SGBs) that deliver on pre-agreed identified environmental outcomes. Environmental outcomes include impact areas such as climate mitigation, water management, waste management and green job creation; specific outcome metrics will be pre-agreed and verified. GOF offers funders (grant and investors) a unique and quality solution, through which the growth and development of green SBG s can be supported to enhance Sustainable Development Goals (SGB s). The GOF provides outcomes-based funding to the impact investment industry for investment in green SGB s in the Southern African region. Impact Investors and allocators invests at lower risk and greater efficiency which leads to the development of a robust green impact investment industry in the Southern African region.

19 The Green Outcomes Fund : Example outcomes Green outcomes can be the payment triggers for the recipient funds These outcomes should be measurable and verifiable Energy Waste Water Other Energy Generation (kwh) Energy Efficiency (kwh) Persons reached by Clean Energy ( number of people) Waste to Landfill Avoided (tonnes) Waste recycled/reused (tonnes) Avoided Waste Incinerated (tonnes) Chemical Recovery (tonnes) Water Use Reduction (m3/yr) Water Productivity (ltrs/unit of product) Water Sourced from an Alternative Resource (m3) Carbon Sequestered (CO2- eq) Green Sector Direct Jobs Green Sector Indirect Jobs + Scope for additional

20 Murat Selam / WWF Nepal Responsible Investment Active Ownership through Organised Labour in South Africa

21 Through Active Ownership in South African Organised Labour Responsible Investment GEPF is one of the largest pension funds in the country Collectively members have significant shareholdings in listed South African companies By exercising their voting rights/shareholder rights they can influence management policy at the highest level Labour Union Trustees on behalf of their members can get specific ESG issues onto the agenda

22 Through Active Ownership in South African Organised Labour Responsible Investment Water Management Executive Remuneration Black Ownership

23 The WWF & Alexander Forbes Inv. Partnership Shorter title Secondary information can go here XX-XX Month, Year Additional information can run Underneath if necessary

24 AFI & WWF Partnership Since the start of 2015, Alexander Forbes Investments and the WWF-SA have been working in collaboration to drive an environmental sustainability agenda within the investment industry. The partnership provides a unique opportunity to assist asset managers in their consideration of environmental issues. Our partnership led to the launch of an Environmental Sustainability Questionnaire in The framework was designed to highlight critical areas of focus from an environmental perspective and through this enhance the quality and content of environmental discussions between mainstream asset owners and the companies they invest in. A framework to assist mainstream asset owners in the investment decision making process

25 WWF/AFI Env. Questionnaire: Snapshot and Background An industry level environmental framework for investment professionals Tool to understand and engage with companies on E risks Set of 25 Questions covering 7 critical areas: Environmental critical areas covered 1. Env. Governance 2. Water consumption & management 3. Supply chain management & consumption 4. Waste Management & pollution 5. Fossil fuel, energy and emissions 6. Renewable Energy 7. Industry specific: Mining & Energy.

26 AFI/WWF Partnership Companies reached and covered Number of Questionnaires per Covered Company 32 of SA s largest listed companies Over R8trn in value Over 75% of the value of the ALSI

27 2016 AFI/WWF Partnership: Response Analysis 14 Co s with low/medium levels of Environmental Governance 2 Co s without Environmental Reporting/Disclosure 13 Co s did not disclose or measure Water Consumption 3 Co s did not disclose their CO2eq Consumption 3 Co s did not have Supply Chain Tracking and Tracing Procedures 2 Co s with potential risks of Acid Mine Drainage Many inconsistent and blank responses to key questions

28 2016 AFI/WWF Partnership The Follow Up AFI & WWF responded to AM s in January 2017 based on our analysis and findings AM s responded to our letters AM s engaged with company management ito. big E Risks Clarified their responses Filled in missing critical info Responses show high level of engagement Companies show a willingness to improve their Env. Management

29 Our objective is to encourage a meaningful shift in Finance to achieve WWF s Global Goals 2010, WWF. All photographs used in this presentation are copyright protected and courtesy of the WWF-Canon Global Photo Network and the respective photographers.

30 Our objective is to encourage a meaningful shift in Finance to achieve WWF s Global Goals Thank you , WWF. All photographs used in this presentation are copyright protected and courtesy of the WWF-Canon Global Photo Network and the respective photographers.