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newsletter 06/2016

Our topics:

1. Customers

- oekom research and LBBW offer sustainability research for savings-bank and BW bank customers

- oekom research appraises Münchener Hypothekenbank sustainability loan

2. oekom Services

- Outperformance through the use of oekom's Prime standard

3. Global Challenges Index

- Global Challenges Index: Wolf Martin Waldow joins advisory board

4. Responsibility Rating

- Sustainability in the sector Financials / Development Banks

5. Studies/Publications

- Study investigates the impact of ESG factors on corporate earnings

- The rise of environmental crime – a growing threat to natural resources, peace, development and security

6. Initiatives

- French award for climate reporting

7. Books

- Film Tip: Sand Wars – Sand, the new environmental time bomb

8. Events

- 3rd international conference on CSR, sustainability, ethics and governance

- Global ESG investment forum

1. Customers

oekom research and LBBW offer sustainability research for savings-bank and BW bank customers

Landesbank Baden-Württemberg (LBBW) is the first German regional bank to offer comprehensive sustainability research to savings-bank and BW-Bank customers to assist them in their investment decisions. Since June, a good 350 equity and bond issuers have not only been appraised on the basis of their yield, risk and liquidity potential, but also – thanks to oekom research’s analyses – judged on their social and environmental performance.

By supplementing the standard financial analyses with detailed sustainability analyses, the cooperation now also enables savings bank account managers to address the investment needs of sustainability-affine customers. “Customers can now decide on their own whether their funds should be invested with a focus on yield alone, or whether sustainability aspects should also be taken into account,” says LBBW Chief Economist and Director Research, Uwe Burkert. “In doing so, we’ve upgraded our advisory portfolio with an ever-more important factor, as customers are increasingly taking an interest in how their money is being used.”

For the first time, the cooperation with oekom research gives interested savings-bank and BW-Bank customers access to detailed information on a company’s strengths and weaknesses, contraventions of exclusion criteria such as human rights violations, and the central sustainability issues and average rating of the industry sector concerned.

“In the retail customer segment, many banks still fall far short of being able to advise their clients on sustainable investments. By giving support to savings banks, LBBW is sending a strong signal for, and making an active contribution towards, more sustainability in advising retail customers,” says oekom research CEO, Robert Haßler. “The report is equally suitable for appraising stocks, corporate bonds and certificates for listed companies. In doing so, investors can incorporate their ethical values as an important criterion into their investment decisions.”

Contact: Dieter Niewierra, Director Communications, tel. +49 (0)89 5441 84-57, email niewierra@oekom-research.com

oekom research appraises Münchener Hypothekenbank sustainability loan

oekom research has appraised Münchener Hypothekenbank’s Sustainability Loan, thereby certifying the loans which the bank grants for financing sustainable property. It is aimed at customers wishing to finance residential accommodation via the bank, and covers new construction, purchase, modernisation and refurbishment projects. It focuses on accompanying a wide range of environmentally-protective, energy-saving measures and makes eligibility conditional upon two general requirements:

  • The annual primary energy needs of the real-estate projects must not exceed 70 kilowatt hours per square metre usable area; and

  • The energy class must have been confirmed by an energy advisor or architect.

“oekom research’s excellent reputation and many years expertise – particularly in the areas of green bonds – and its underlying concept for assessing our Sustainability Loan clinched our decision to choose the agency as our certification partner,” says Münchener Hypothekenbank Director Corporate Development, Dr. Patrick Wellas. “Appraising sustainability aspects of financial products and their appropriation of funds necessitate comprehensive knowledge of the financial sector and extensive expertise in the industry concerned – oekom research left a marked impression here which only helps accentuate the intrinsic value of our loan.”

Contact: Dr. Patrick Wellas, Corporate Development Münchener Hypothekenbank eG, tel. +49 (0)89 5387-392, email patrick.wellas@muenchenerhyp.de

2. oekom Services

Outperformance through the use of oekom's Prime standard

Outperformance durch Nutzung des oekom Prime-StandardsAs part of its collaboration with its partner Deutsche Performancemessungs-Gesellschaft (DPG), oekom research has once again examined the impact on returns and risks of taking the oekom Prime Status into account in capital investments. Prime Status is awarded to companies which meet the sustainability management requirements defined by oekom research. The analysis is based on oekom’s Prime Portfolio Large Caps (oekom PPLC), which consists of the major companies from the oekom universe that have attained oekom Prime Status.

DPG calculates that during the period from 1 January 2005 to 31 December 2015, i.e. over a period of eleven years, the oekom PPLC, weighted by market capitalisation, achieved a cumulative return on investment of 144.35 per cent. Over the same period, cumulative returns for the MSCI World Total Return Index® came to 136.55 per cent. During the period under consideration, the oekom PPLC’s return of 8.46 per cent per annum was thus higher than that of the conventional benchmark index, which stood at 8.14 per cent per annum. If the securities in the oekom PPLC are weighted equally, the return is actually as high as 10.83 per cent per annum.

The results of the analysis are summarised in the latest edition of the “oekom Facts & Figures”, which can be ordered free of charge from info@oekom-research.com.

3. Global Challenges Index

Global Challenges Index: Wolf Martin Waldow joins advisory board

The Global Challenges Index has announced a change in the sustainability index’s advisory council, which was joined by Wolf Martin Waldow, member of the High Consistory of the Evangelical-Lutheran Church of Hanover, on 1 July 2016. Together with another five independent council members, he will be responsible for monitoring and compliance with the rigorous criteria for selecting the stocks that make up the Global Challenges Index (GCX) and bonds contained in the Global Challenges Corporates (GCC). The banker and trained lawyer has been responsible for supervising the assets of the Evangelical-Lutheran Church of Hanover’s church bodies since 2008 and has, in the framework of investments based on the guide for ethically sustainable investments in the evangelical church, also been entrusted, in particular, with sustainability issues.

Wolf Martin Waldow will replace Dr. Rolf Krämer, Vice President of the Evangelical-Lutheran Church of Hanover who would like to dedicate more of his future time to his duties on the NORD/LB Asset Management AG supervisory board. “We would like to thank Dr. Krämer warmly for the many successful years he has spent working with us; we are also delighted that, in Mr. Waldow, we have again won over a member of the Evangelical-Lutheran Church of Hanover for our advisory council whose experience will make a valuable contribution to choosing the Index’s constituents based on ethical principles,” says Hanover Stock Exchange CEO Hendrik Janssen. The Hanover Stock Exchange created the GCX nine years ago in cooperation with oekom research.

The following persons are also members of the GCX advisory council: Dr. Bernd Balkenhol (former head of the Social Finance department at the International Labour Organisation, ILO), Dr. Bernhard Bauske (Director Strategic Business Cooperations, WWF Germany), Prof. Dr. Wolfgang Gehra (professor of Social Management and Public Relations at the University of Applied Sciences Munich, and Commercial Director at Deutsche Franziskanerprovinz), Walter Hirche (member of the Council For Sustainable Development and executive-board member of the German UNESCO Commission) and Berenieke Wiener (head of the Foundation Management & Corporate Sector unit of the Bundesverband Deutscher Stiftungen).

Contact: Sabrina Otto, Hanover Stock Exchange, email s.otto@boersenag.de

4. Responsibility Rating

Sustainability in the sector Financials / Development Banks

Nachhaltigkeit in der Branche Financials / Development BanksThe approach of development banks differs decisively from that of other banks in that they aim to improve economic, social and environmental conditions in all parts of the world. To this end, they provide loans, subsidies and guarantees for investments in the public sector and for funding the private sector. In doing so, the banks cover a broad spectrum of tasks, ranging from business-orientated fields to social, socio-political and environmental funding areas – such as social protection schemes, peace, governance and democracy, the environment and climate. Due to this fundamental orientation and the greater accountability of public institutions, development banks have distinguished themselves as pioneers and norm-setters in the financial industry when it comes to developing and integrating social and environmental sustainability standards into the loan granting procedures.

In its latest analysis, oekom research investigated 27 companies in the Financials / Development Banks sector based on social and environmental criteria. Particularly notable about this sector is its high 55.56 percent Prime quota. The best overall rating on a scale from A+ (best rating) to D- was C+, awarded to the European Bank for Reconstruction and Development, the Asian Development Bank and the European Investment Bank.

Further details about the individual results of the analysed companies are available via access to our benchmarking database, ORBIT. We can also prepare benchmark analyses of individually selected companies upon request. We would be happy to send you further information about these services. An overview of the industry assessment’s findings is offered through the oekom Industry Focus, which can be ordered from us at no cost.

Contact: oekom research Clients Team, tel. +49 (0)89 5441-8778, email clients@oekom-research.com

5. Studies/Publications

Study investigates the impact of ESG factors on corporate earnings

A study conducted by NN Investment Partners in cooperation with the European Centre for Corporate Engagement (ECCE) at the University of Maastricht, the Netherlands, established that the exclusion of organisations with controversial business practices can potentially improve investment results. The study looked into the connection between ESG factors and earnings, and discovered that companies which strove to improve their ESG ratings tended to generate even better earnings than those which had already attained the highest rating.

Further information about the study can be found at: https://www.nnip.com/corporate/GB/en/Press/News-Commentary/view/Study-confirms-contribution-of-ESG-factors-to-investment-performance-says-NN-IP-1.htm

The rise of environmental crime – a growing threat to natural resources, peace, development and security

The Rise of Environmental Crime – Eine wachsende Bedrohung für die natürlichen Ressourcen, Frieden, Entwicklung und Sicherheit

In “The Rise of Environmental Crime”, UNEP and Interpol have published a report on the growing problems caused by biodiversity offences and economic crimes associated with the environment. They report of a new form of criminal activity which already represents the fourth most prevalent form of crime worldwide and is growing two to three times faster than the global economy. Based on the findings, Interpol and UNEP estimate that natural resources valued at between circa USD 91-258 billion are being plundered each year, thereby depriving the countries concerned of their fundamental means of development and future profits.

The unbridled illegal slaughter of elephants and rhinoceroses in Africa and other wild animals around the world is leading to the extinction of these species over the medium to long term, and also reducing biodiversity in many countries. One of the main motivations for this remains the immense economic gains to be made. Poaching and environmental crime have also been professionalised with alarming success at other levels, too: Total trade in this area has meanwhile expanded to areas such as waste and garbage, chemicals, ozone-depleting substances, illegally caught fish, woods and other forestry products, and conflict minerals such as gold and diamonds.

The report can be downloaded from the following link: http://unep.org/documents/itw/environmental_crimes.pdf

6. Initiatives

French award for climate reporting

The French government has initiated an award to promote and recognise best-practice examples of climate-related reporting by investors as these implement the new, obligatory reporting requirements. The Ministry of the Environment is partner of the French think-tank organisation 20ii which it supports in implementing the competition. Its main goal is to collect examples of climate-change reports and, in doing so, also to assist and inspire other international initiatives for climate-related reporting.

The award’s criteria still have to be defined, but will be based on the reporting requirements introduced in Article 173 of the French Energy Revolution Act. The award ceremony will be held in November by French Minister of the Environment, Ségolène Royal.

Further information is available at the following link: http://www.ipe.com/news/esg/esg-roundup-french-award-axa-exits-tobacco-german-trends/10013437.article

7. Books

Film Tip: Sand Wars – Sand, the new environmental time bomb

Filmtipp: Sand Wars – Sand, die neue Umweltzeitbombe

At the end of the 21st century, beaches will be a thing of the past. This is the shocking prediction of growing numbers of scientists and environmental organisations shown in the film Sand Wars by director Denis Delestrac. The reason for this dramatic change is the ever-more intensive use and plundering of sand deposits. Besides the usage and processing of classical natural resources which serve as the basis of our industry, sand has, almost unnoticed, become a central raw material of the modern age: tooth paste, cleaning products, cosmetics, homes, tyres, roads and electronics could not be produced without sand. But sand is by no way an unlimited resource. After water, it has already become the most sought-after resource worldwide: on beaches, in rivers and on sea beds, the mafia, governments and tourist resorts are contending for 15 billion tonnes of it a year.

Sand Wars shows in blunt images, convincing facts and inspiring alternatives what needs to be done for a sustainable future. The film not only portrays how sand is used, depleted and smuggled, but also environmentalists’ work and the circumstances of those affected.


8. Events

3rd international conference on CSR, sustainability, ethics and governance

Under the motto “Sustainable Management as a New Business Paradigm”, the Global Corporate Governance Institute and Cologne Business School are jointly offering academics and business people an opportunity to discuss new impulses from the latest sustainability research at a two-day conference from 1 to 3 August in Cologne. The conference will be one of the largest international scientific conferences on the topic of sustainable management, and has already been held at previous venues in China and Australia.

For further information about the programme and event, please download: http://www.gcg-csr.org/files/116106353.pdf

Global ESG investment forum

A wide range of sustainable-investment professionals will meet at the Global ESG Investment Forum from 26-27 October in London to discuss the latest challenges and hottest topics given the current global underlying economic situation within the ESG cosmos. The forum’s agenda was drawn up by asset owners with the assistance of an advisory board; its main aims are to show how the market has developed since COP21, to exchange best practices and to discuss the future of ESG investments. Speakers and panellists will include asset managers, as well as representatives of pension funds, sovereign wealth funds, foundations, banks, charities, NGOs and academic institutions.

For further information, please visit http://www.esginvestmentforum.com/

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