APRIL 2018

ESG and Impact Investing: Q1 2018 News Highlights

Category: Executive Committee, Impact Investing, Managing Partners, Media - Impact Investing

By Bill McCalpin, Managing Partner, Impact Investments 

During the first quarter of the year, some well-established investment management firms announced plans to offer significantly sized impact investing funds, while others continued to build out their ESG and sustainable investing teams and take public positions on important issues such as gun violence. At the same time, diversity and inclusion emerged as greater priorities for certain asset owners, consultants, and proxy voting service providers.


Asset Owners – Institutional

The New York City-based Nathan Cummings Foundation pledged to align its entire $443 million endowment with the institution’s philanthropic priorities, which include fighting climate change and income inequality.

The $24 billion San Francisco Employees’ Retirement System created a new position of director of ESG investing.


Consultants

Wilshire Consulting announced a new diversity initiative where the firm will include a diverse asset management company in every public securities search for its non-discretionary clients.


Investment Managers

Laurence Fink, founder and chief executive of BlackRock, used his annual letter to public company CEOs to make the point that “to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

KKR plans to launch an impact investing fund of up to $1 billion later this year that will deploy capital across investment themes such as sustainable economic development, environmental management, land use, education, and agriculture.

Switzerland-based Partners Group is raising a $1 billion fund to invest in areas aligned with the United Nations Sustainable Development Goals, including education, healthcare, energy access, and clean energy.

Activist investor JANA Partners announced plans to form an Impact Capital Fund to invest in public companies and push for changes that will create positive environmental, social, and/or governance impact.

Troubles continue at the Abraaj Group’s $1 billion Growth Markets Health Fund dedicated to building health care systems in high growth, high need cities in Africa and South Asia, with the Gates Foundation and other limited partners claiming mismanagement of investor funds. Founder Arif Naqvi has exited the firm’s fund management business.

Following the February 14 mass shooting at Marjory Stoneman Douglas High School in Parkland, Florida, Blackstone Group contacted about a dozen hedge fund managers requesting information on their ownership in or lending to companies that manufacture or sell guns.

AXA Investment Managers is shifting away from a centralized team responsible for ESG expertise and hiring additional talent with ESG experience that will be integrated into each of the firm’s investment teams.

PIMCO has added a senior executive as chief of sustainable development to further the firm’s push into ESG investing. He was previously deputy executive director of the United Nations Global Compact and, earlier in his career, one of the founders of the U.N. Principles for Responsible Investment.

UBS Asset Management added several individuals to its sustainable and impact investing team to advance plans for new products, integration of ESG factors into investment decision making, and more extensive corporate engagement activity.


Broker-Dealers

ImpactUS, an online impact investment broker-dealer that had received significant financial backing from the Ford, Kellogg, and MacArthur foundations, suspended operations.


Proxy Voting

The $209 billion New York State Common Retirement Fund has announced that it will oppose the reelection of every director on any corporate board that lacks a single female member. The pension fund owns equity in more than 400 U.S. companies that had no female directors in 2017.

Proxy voting services provider Segal Marco Advisors changed its proxy voting guidelines to provide for a vote against nominating committees of boards of directors of U.S. companies that exclude female directors.

 

 

 

Funds mentioned in this document do not reflect an exhaustive list of ESG, SRI or Impact Fund Managers. Specific funds mentioned in this document were not selected for performance based reasons. Additional impact investment examples are available upon request.