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Fossil fuel-free funds beat conventional counterparts

The recent drop in global oil prices is causing major jitters in investment markets, but new research suggests the rot set in long ago. Analysing data from the past five years, the stock market index company MSCI finds that investors who divested from fossil fuel companies earned an average return of 13.0% per year since 2010, compared with 11.8% for those with holdings in coal, oil and gas companies.

Notably, MSCI’s All Companies ex Fossil Fuels Index outperformed the wider market throughout 2012 and 2013: i.e. before the fall in oil prices, which began in June last year. The findings come despite a restriction in the number of companies for non-fossil-fuel funds to invest in. The total investible universe is 7% smaller, at $34.9tn rather than $37.5tn. Around $7.5tn in funds globally are benchmarked against MSCI world indices.

MSCI’s All Companies ex Fossil Fuels Index

Socio-economic factors behind female board representation

Cultural attributes such as gender egalitarianism, “humane orientation” and assertiveness significantly impact the likelihood of women being promoted to company boardrooms, a study by Cambridge University finds. Even more important are female economic power (defined by the years spent in school and the gender balance of the workforce) and the inclusion of gender diversity requirements in corporate governance codes. Norway, Sweden and Finland are the only countries to have boards with an average female membership of more than 30%. The UK’s FTSE 100 is not far off, at 24% (comprising 263 female board members in total). Globally, the trend is picking up, with women comprising 16% of corporate boards in 2013, compared with only 9% in 2004. The study, which was commissioned by finance firms BNY Mellon and Newton Investment Management, is based on a sample of 1,002 companies from 41 countries and 51 industries.

The Rise of Women in Society: Enablers and Inhibitors – a Global Study, Womenomics

Supply chain practices deliver benefits

An analysis of supply chain practices among 25 large corporations finds that sustainability measures can help generate a 9%-16% reduction in procurement costs and can help in increasing revenue by 5% to 20%. The study, which was conducted by the World Economic Forum and Accenture, looked at 31 practices, from sourcing from micro-businesses to establishing labour audits. As well as economic benefits, the pursuit of best practices was shown to shrink the carbon footprints of the participating firms by between 13% and 22%. Their brand values also rose by between 15% and 30%. The cohort of participating corporations included UPS, Nestle and SAB Miller.

Beyond Supply Chains – Empowering Value Chains

UK low-carbon sector worth £70.8bn

The UK’s low-carbon sector now comprises 11,550 businesses, which employ 270,000 people directly and 190,000 indirectly. As a whole, the sector counted turnover of £70.8bn in 2013, according to a new study released by the Department for Business, Innovation and Skills. The primary industries within the sector are: low carbon electricity (29%), low carbon heat (9%), energy efficiency products (17%), low carbon services (7%), waste processing, energy from waste and biomass (37%) and low emission vehicles (1%). The most profitable sector is waste processing, generating 45% of total revenues. Turnover in the sector increased by 24.7% between 2010 and 2013. Regionally, England counts the lion’s share of jobs in the sector (85%).

The Size and Performance of the UK Low Carbon Economy, BIS

Energy experts optimistic about renewables

A survey by global energy consultancy DNV GL suggests that 70% of the global electricity system could be powered by renewables by 2050. Eight out of 10 of the 1,600 energy sector experts surveyed agreed that the 70% figure was viable. Two-thirds of respondents identified energy storage as among the three most important levers for delivering a high renewables future. The smart grid and the “internet of energy” were also selected.

Beyond Integration, DNV GL

Circular economy in Sweden

The circular economy could generate a colossal 70% reduction in Swedish carbon emissions over the next decade and a half, the Club of Rome think-tank estimates. Were a major shift away from a linear “take, make and dispose” model to be adopted, the reuse and recycling market could generate more than 100,000 jobs (2%-3% of the workforce) and improve the trade balance of the Scandinavian country by 3% of GDP (equivalent to at least €10bn per year). The calculations assume a preference in major sector supply chains in favour of renewables and secondary materials, as well as a significantly higher overall level of resource efficiency in the Swedish economy. The report follows the European Commission’s recent withdrawal of an ambitious circular economy support package.

The Circular Economy and Benefits for Society: Swedish Case Study Shows Jobs and Climate as Clear Winners, The Club of Rome

Institutional Insights

Natural disasters cost poor farmers dear

Natural disasters and hazards affected more than 1.9 billion people in developing countries and caused damage worth $494bn between 2003 and 2013, according to a study by the United Nations-backed Food and Agriculture Organization. More than one fifth of these costs impacted the agriculture sector. The figure jumps to 84% when looking at drought specifically. Crops (42%) and livestock (36%) bear the brunt of the agriculture-related impacts of disasters. At a regional level, Asia and Africa are almost level pegging in terms of the worst affected, with estimated losses of $28bn and $26bn, respectively.

The Impact of Natural Hazards And Disasters on Agriculture and Food and Nutrition Security: A Call for Action to Build Resilient Livelihoods, Food and Agriculture Organisation

Renewable investment up 17% in 2014

Renewable energy investments are rebounding after two years of decline, according to a report from the UN Environment Programme. In total, renewable projects attracted $270bn (£182bn) globally in 2014, up 17% on the previous year. Among the most significant investments were major solar installations in China and Japan, and record offshore wind projects in Europe. At 36%, growth in developing market investments (worth $131.3bn) was greatest. The global figure marks the first annual increase in investments in three years, and comes close to the all-time record of $279bn set in 2011. Falling technology costs explain why investment slipped in 2012 and 2013, according to the report. Recent statistics from Bloomberg New Energy Finance, however, suggest 2015 has got off to a slow start, with year-on-year investment in clean energy dropping by 15% in the first quarter of this year (to $50.5bn).

Global Trends in Renewable Energy Investment 2015, UNEP

Most UK shoppers ethically inclined

More than one in three UK shoppers say they “strongly agree” that it is important for consumer brands to take action to maintain a sustainable environment for the future, while half say they “tend to agree”. Of the 1,005 UK residents surveyed by SmartestEnergy, a renewable energy firm, seven out of 10 say they would prefer to shop with consumer brands that have adopted positive sustainability and energy practices. Only 6% say they would exclusively buy such brands, however. This is only one-third the proportion who say they care only about the best deal they can get.

Corporate Snapshots

H&M buying more sustainable cotton

Swedish retailer H&M sourced 13.7% of its cotton from organic or recycled sources in 2014, up from 7.6% in 2012. A further 7.5% came from Better Cotton Initiative, which guarantees basic social and environmental conditions in the cotton industry. The high street retailer also launched a new denim collection called Conscious Denim collection, which uses 56% less water and 58% less energy than comparable denim – on top of being made with materials such as organic or recycled cotton. During 2014, the company’s recycling programme encouraged 13,000 tonnes of textiles to be collected – equivalent to 65m T-shirts.

H&M Conscious Actions – Sustainability Report 2014

Heineken reduces water intensity

Dutch brewer Heineken has reduced its water consumption to 3.9 hectolitres (hl) per hectolitre of beer, well below the industry average of around 4.3 hl. It has subsequently committed to reduce this to 3.5hl by 2020. Carbon emissions in its 160 breweries and other operational activities have fallen by nearly one third since 2008. One fifth of the company’s energy use comes from renewable sources. These water and energy efficiency uses have resulted in cost saving of €75m over the past six years.

Heineken‘s 2014 Sustainability Report

FedEx slashes fuel use

FedEx saved more than 100m gallons of jet fuel in 2014 through logistical efficiencies coupled with aircraft modernisation efforts, the US delivery firm reports. The company also counts more than 1,000 alternative fuel road vehicles in its owned and contracted fleet.

Moving Possibilities, FedEx’s Global Citizenship Report 2014

Accenture cuts employees’ carbon footprint

The carbon footprint of global consultancy firm Accenture’s 323,000 employees is 43% lower today than in 2007, resulting in carbon emissions savings of around 2m tonnes. Four-fifths of the company employee-related emissions derive from flying and their electricity use at work. Video conferencing and other virtual communications technologies have helped reduce travel emissions by 13% over the past seven years, with employees collectively clocking up an average of 8m videoconferencing minutes per month. Office-based energy efficiency measures, meanwhile, have reduced emissions by 26% since 2007.

Making a Measurable Difference, Accenture’s 2014 Corporate Citizenship report

ABN Amro’s large sustainable portfolio

ABN Amro now has €5.4bn in sustainable assets under management. Of these, €949m correspond to its own discretionary investments, where the Dutch bank has the most influence to push through social, environmental and governance priorities. The bank’s sustainability team advised on 444 deals in 2014, 23 of which were rejected or withdrawn by its clients. Nearly 100 were approved on a qualified basis. Human rights issues were the focus of 167 of these sustainability assessments.

ABN Amro Sustainability Report 2014

BP shareholders approve climate change resolution

Shareholders of UK oil and gas major BP overwhelmingly approved a resolution on climate change at the company’s recent annual meeting. The “Strategic Resilience for 2035 and Beyond” resolution, submitted by an activist shareholder alliance and two non-profit groups, won 98% support after being recommended by BP’s board. The resolution will commit BP to increased disclosure on its climate change strategy, including asset portfolio resilience against 2035 scenarios and research into low carbon energies.



circular economy  CR Cheat Sheet  CSR Cheat Sheet  divestment  DNV GL  gender equality  low-carbon  Natural disasters  renewable energy 

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