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newsletter 04/2017

Our topics:

1. oekom Services

- Publication of the Corporate Responsibility Review 2017

- Updated Position Paper GMO / Agro-Genetic Engineering

- Outperformance through use of the oekom Prime standard

2. Global Challenges Index

- Matthias Kopp appointed new Advisory Board member

- Brisk start to the year with good performance

3. Studies/Publications

- AXA study: 35 percent of insurance companies wish to intensify their observance of ESG criteria

- Study: Global Trends in Renewable Energy Investment 2017

4. Books

- Jean Ziegler: The Narrow Beam of Hope

5. Events

- RI Europe 2017 “Investing in the future”

- Environmental Finance: Green Bonds Europe 2017-04-12

1. oekom Services

Publication of the Corporate Responsibility Review 2017

For the first time, independent sustainability rating agency oekom research has identified a more than just slightly upwards trend in its latest annual report – the Corporate Responsibility Review 2017 – on sustainable business governance around the globe. One of the possible reasons for this trend, which is most noticeable in the midfield of rated businesses, is the pressure to change and pushes for increased sustainability which are impacting companies from many angles. These include international initiatives such as the UN Sustainable Development Goals (SDG), national regulations, increasing demands of sustainable capital markets, and a general rise in sustainability awareness. Businesses also need to respond increasingly to transformation processes in the economy, e.g. decarbonisation in the Energy sector, and e-mobility in the Automobiles industry. The study shows clearly that not all industries are equally well prepared to face these opportunities and challenges. Consequently, there is still considerable room for improvement, with industry having a long way to go before it can speak of holistic sustainability.

The oekom Corporate Responsibility Review 2017 can be downloaded from the following link: http://oekom-research.com/homepage/english/oekom_cr_review_E_2017.pdf

Updated Position Paper GMO / Agro-Genetic Engineering

Position Paper GMO

The use of green genetic engineering has been the subject of controversial debate for many years, especially in Europe. While the debate has centred on the use of genetically modified (GM) varieties in farming and food production, their use for e.g. renewable raw materials has attracted comparatively little attention thus far.

The “roles” in the debate can be easily broken down: on the one hand are the agro-genetic engineering companies which promote what they see as the opportunities of genetic engineering; and on the other hand, the environmental and consumer associations which stress the risks to the environment and consumers’ health.

In a revised and supplemented edition of its Position Paper, oekom research presents the current status of the discussion and developments in this field, and provides a summary of the arguments put forward by both sides.

The publication can be requested at no charge from communications@oekom-research.com.


Outperformance through use of the oekom Prime standard

Together with its cooperation partner, Deutsche Performancemessungs-Gesellschaft (DPG), oekom research has again investigated the implications of considering the oekom Prime status for investment yields and risk. Prime status is awarded to companies which fulfil oekom research’s defined sustainability-management requirements. The analysis is based on the large businesses in the oekom Universe which have been awarded oekom Prime status – the oekom Prime Portfolio Large Caps (oekom PPLC). DPG calculates that during the period from 1 January 2005 to 31 December 2016, i.e. over a period of twelve years, the oekom PPLC, weighted by market capitalisation, achieved a cumulative return on investment of 168.74 per cent. The MSCI World Total Return Index® achieved a cumulative yield 163.49 percent over the same period. Accordingly, the 8.59 percent cumulative annual yield which the oekom PPLC attained outperformed the conventional benchmark index’s 8.41 percent over the review period. With equal weightings of the securities in the oekom PPLC, the yield is even higher, at 10.94 percent p.a.

The analysis findings have been summarised in a new edition of the publication series “oekom Facts & Figures” and can be requested at no charge from communications@oekom-research.com.

2. Global Challenges Index

Matthias Kopp appointed new Advisory Board member

Matthias Kopp, Head of Sustainable Finance at WWF, has been appointed new member of the Global Challenges Index (GCX) Advisory Board with effect from 01 May 2017. He takes over from Dr. Bernhard Bauske, Head of Strategic Business Cooperations at WWF Germany who will be devoting more of his time to plastic waste in the world’s oceans in future. Besides five other independent Advisory Board members, Matthias Kopp will be responsible for monitoring and observance of the strict selection criteria for stocks in the Global Challenges Index (GCX) and bonds in the Global Challenges Corporates (GCC). The industrial engineer has been in charge of WWF Germany’s work in the area of the finance industry since 2005. He initiated projects for measuring the emissions performance of products and companies, and dealt with questions about how financial service providers are living up to the demands of a < 2°C economy. Since 2015, he has been in charge of WWF Germany’s interdisciplinary division Sustainable Finance in which WWF bundles its work with a focus on the capital and financial markets.

“Dr. Bauske has done a fantastic job on the GCX sustainability index’s Advisory Board for many years. We would like to extend our deepest gratitude to him for this and, with Mr. Kopp, are delighted that the WWF, one of the largest international nature- and environmental-protection organisations, is remaining on board,” says Hendrik Janssen, head of the Hanover Stock Exchange which initiated the GCX along with rating agency oekom research a decade ago.

The following are also members of the GCX Advisory Board: Dr. Bernd Balkenhol (former head of the Social Finance department at the Internationalen Labor Organization ILO); Dr. Wolfgang Gehra (Commercial Director, Deutsche Franziskanerprovinz); Walther Hirche (member of sustainable development council, Rat für Nachhaltige Entwicklung, and President of the German Commission for UNESCO); Wolf-Martin Waldow (member of the High Consistory of the Evangelical Lutheran Church of Hanover); and Berenieke Wiener (head of the foundation-management and corporate-sector department of the federal association of German foundations, Bundesverband Deutscher Stiftungen).

For further information, please visit: http://gcindex.boersenag.de/de/ 

Brisk start to the year with good performance

In the general upward trend on the stock markets, the Hanover Stock Exchange’s Global Challenges sustainability index (GCX) ended the first quarter of 2017 with a strong 5.2 percent rise, thereby lagging only slightly behind the DAX which performed slightly better, ending 7.25 percent firmer over the same period. The EuroStoxx50 is situated between DAX and GCX with a 6.8 percent rise. The Global Challenges Index comprising the shares of 50 international companies with outstanding sustainability records, does, however, continues to defend its overall lead in the performance comparison since its initial offering on 03 September 2007. In around ten years, the GCX has appreciated by a good 120 percent (as at 31 March 2017), compared with the DAX which only rose around 64 percent, and the EuroStoxx50 by a good 10 percent over the same period.

“With the initiation of the GCX ten years ago, we wanted to show that sustainability plays a central role in our future – also in economic terms. Sustainability-orientated companies are becoming increasingly successful, a trend which is nowhere more evident than in the continuous strong performance of our index. The common preconception of sustainability and yield being mutually exclusive is thus clearly obsolete. Many investors have already recognised this,” explains Hendrik Janssen, board member of BÖAG Börsen AG, the holding company of the Hanover Stock Exchange and Hamburg Stock Exchange.

The frontrunner in the performance list for the first quarter of 2017 is the stock of Franco-Italian semiconductor manufacturer STMicroelectronics (WKN 893438 / ISIN NL0000226223), around 34 percent stronger, which announced its intention to invest over USD 1 billion in boosting its production capacities over 2017. The company is also forecasting a massive rise in revenues in the second half of 2017 – according to rumours, in connection with a cooperation with Apple. Second place was taken by First Group PLC (WKN 896516 / ISIN GB0003452173) – one of the UK’s and North America’s leading transportation companies and umbrella organisation of the well-known Greyhound long-distance coach brand – with a rise of around 29 percent. Almost as successful, with a rise of 28 percent, was the stock of US-American freight-transport and logistics company CSX Corporation (WKN 865857 / ISIN US1264081035), closely followed by renewable-energies company, Vestas Wind Systems AS (WKN 913769 / ISIN DK0010268606), up around 25 percent, and, in fifth place, chipmaker Advanced Micro Devices (WKN 863186 / ISIN US0079031078) approximately 19 percent firmer.


Criteria for admission to the GCX sustainability index

The Global Challenges Index only admits companies which make an active contribution towards mastering the seven global challenges: combating the causes and consequences of climate change; securing adequate provision of drinking water; stopping deforestation; preserving biodiversity; dealing with population development; combating poverty; and supporting responsible governance structures. The composition of the index is continually monitored and adjusted, based on the strict selection criteria of the Hanover Stock Exchange and rating agency oekom research. If a company no longer satisfies these criteria, its stock is replaced in the Index by that of a different company which does fulfil the criteria.

For further information, please visit: http://gcindex.boersenag.de/de/

3. Studies/Publications

AXA study: 35 percent of insurance companies wish to intensify their observance of ESG criteria

35 percent of insurance companies incorporate RI or ESG criteria into their investment decisions for structuring their portfolios. This is the finding of a survey of 122 insurance CIOs and other industry decision makers in Germany, France and the UK conducted by AXA Investment Managers. The long-term development indicates that the trend towards responsible investments is being increasingly considered in the insurance industry’s business models. Nevertheless, 53 percent of the respondents said that, after the intensified consideration of RI and ESG, ultimately the most important driver was simply the industry’s increasingly rigorous regulatory environment. The next most important factor emerged as the connection between RI and performance – and was stated by 40 percent of the respondents.

For further information on the study, please visit: http://bit.ly/2oQ627M 

Study: Global Trends in Renewable Energy Investment 2017

According to the latest “Global Trends in Renewable Energy Investment” report, a record capacity of 138.5 gigawatts of electricity generation was financed worldwide in wind, solar, biomass and waste-to-energy, geothermal, small-scale hydroelectric and maritime-energy projects in 2016. This record, which was up nine percent on the previous year, was possible at a lower investment cost, primarily due to falling technology prices for renewable energies.

At 55 percent, the volume of renewable energies (excluding large hydroelectric plants) as a share of total new energy capacity reached a new record. As a result, the volume of renewable energies as a share of actual electricity generation rose from 10.3 percent in 2015 to 11.3 percent in 2016, saving around 1.7 gigatonnes of carbon dioxide emissions. At the same time, the USD 241.6 billion investment volume was 23 percent lower than a year earlier. Despite this general decline, the investment volume in renewable energies was around twice as high as investments in the generation of electricity from coal and gas.

The report was initiated and issued by the UN Environment Programme, Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance (Centre) und Bloomberg New Energy Finance (BNEF).

For further information, please download: http://bit.ly/2ntIJnq



4. Books

Jean Ziegler: The Narrow Beam of Hope

For many years, Jean Ziegler has been working for humankind on behalf of the United Nations, initially in the capacity of UN Special Rapporteur on the Right to Food, then as Vice President of the Consultative Committee of the Human Rights Council. In his latest book, Jean Ziegler reports on these activities and struggles, some of which culminated in success, others which ended in failure. He highlights the machinations behind the democratic stage and analyses the strategies of globalised financial capital. In doing so, one of the central, fundamental questions was always: what can we do to turn Roosevelt’s and Churchill’s inspired vision of a world organisation into political practice and position the United Nations to enable it to ensure peace, human rights and secure a minimum subsistence level for the peoples of this planet?

For further information, please visit: http://bit.ly/2pDu61w 

5. Events

RI Europe 2017 “Investing in the future”

The tenth RI Europe Conference will be held in London on 06 to 07 June under the caption “Good Business – Sustainable Capital”. With over 500 representatives expected from the world of sustainable or ESG-aligned institutional investments, it is one of Europe’s most important events of this sector. Attendees can look forward to a wide range of topical subjects, with talks, discussions and workshops looking at subjects as diverse as religiously motivated and responsible investment, impact investing, social and green bonds, standards for managing sustainability data, climate change, the UN Sustainable Development Goals (UN SDGs) and current trends in the automotive sector and their impact on responsible investment.

oekom research will be represented at a stand at the conference and, on 06 June, be contributing in a breakout panel with oekom research Senior Analyst Silke Jolowicz speaking on the topic “Health, Food and Sustainable Production”.
For further information, please visit: https://www.eiseverywhere.com/ehome/222706/agendapage/ 

Environmental Finance: Green Bonds Europe 2017-04-12

Environmental Finance will be hosting the Seventh Green Bonds Europe Conference in London on 19 June. In light of the astronomical international growth of the green bond market over the past years, the talks, presentations and discussion rounds will illustrate the opportunities as well as potential pitfalls which the market poses for issuers and investors.

oekom research Director International Business Development, Dr. Julia Haake, will be talking about the developments and challenges of the green bond market during the panel session “Impact and standards – where are we now and what's left to do?”

For further information, please visit:

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