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FORIMMEDIATERELEASE November16,2015 Contact:TobyHeaps,CEOCorporateKnights,+14162741432,[email protected] Fossilfuelinvestmentscostmajorfundsbillions NewtoolanalyzingGatesFoundation,WellcomeTrust,ABP,CPPIBandothersshowshighcostsofnot divestingfromfossilfuels. TORONTO,CANADA--CorporateKnights,togetherwith350.organdSouthPoleGroup,haslaunched theCleanCapitalistDecarbonizer,aninteractivetoolthatallowsuserstodeterminethefinancialimpact ofdivestingfromcarbonheavycompanies.Usingthisfirst-of-itskindtool,CorporateKnightsanalysed theinvestmentsof14fundstotaling$1trillioninassets,includingtheGatesFoundationandABP,and determinedthatthescaleoflossesoverthepastthreeyearsexceededUS$22billion. Theanalysiscoveredrecentdisclosedholdingsof14prominentfunds1toestimatethepotential financialimpacthadtheyshiftedtheirinvestmentsfromthemostcarbonheavycoalandoilcompanies2 andcoal-intensiveutilities3tocompaniesthatderiveatleast20%oftheirrevenuesfromenvironmental marketsornewenergy4.Fromthere,thetotalreturnsoverathreeyearperiodstartingonOctober1, 2012werecalculated.Thiscoincideswiththefirstfullquarterfollowing350.orgfounderBillMcKibben’s articleinRollingStone,whichlaunchedthefossilfueldivestmentmovement. “Theanalysisof14majorfunds,basedonavailabledata,foundthatcarbon-intensiveinvestmentscost investors$22billioninreducedreturns.Whileincompletedisclosurelimitstheprecisionofanalysis,the conclusionisunequivocal:decarbonizingportfolioholdingsproducedabetterfinancialoutcomeinevery casebutone,"saidCorporateKnightschiefexecutive,TobyHeaps.“Ithelpsexplainwhyagrowing groupofinvestors5arevotingwiththeirdollarsforlesspollutionandmoreenvironmentalsolutions.” Somefundswerefoundtohavesubstantiallyhigherexposuretocarbonheavycompanies,whileothers havequietlyreduced,orinsomecasescompletelyeliminated,theirmajorholdingsexposuretothe mostcarbon-intensivecompaniesandasaresultavoidedsignificantfinanciallosses.Thiscomesonthe heelsoftworeports:onefromOxfordUniversitywhichidentifiedthefossilfueldivestmentmovement asthefastestgrowingdivestmentmovementinhistoryandwrotethat“inalmosteverydivestment campaign(...)fromadultservicestoDarfur,tobaccotoApartheid,divestmentcampaignswereeffective inlobbyingforrestrictinglegislationaffectingstigmatizedfirms”.AndanotherbyArabellaAdvisors, whichfoundthatthemovementtodivestfromfossilfuelsandinvestinrenewableenergyandclimate solutionsgrew50-foldinonlyoneyear,topping$2.6trillioninassetsundermanagementbyinstitutions andindividualscommittedtodivestment. “Majorfundshaveconsistentlyoutperformedmajorindicesinthelastthreeyears,through decarbonizingtheirportfolios.Ourwidecoveragewithover40,000consideredcompaniesandour methodologywithover800approximationmodelsguaranteestheaccuracyandpertinenceoftheClean CapitalistDecarbonizer.Weareexcitedtobepartofthisinitiative,”saysMaximilianHorster,Director FinancialServicesatSouthPoleGroup. Theperiodofanalysiscoincideswithatoughmarketforoilandcommodityprices,anditispossiblethat overthenextfewyears,someoilstocksandevencoalutilitiescouldpartiallyrecover;however,when consideringthelong-term,itisclearthatthereisatenuousbusinesscaseforremainingheavilyinvested incarbonintensiveindustries,asoutlinedbytheGovernoroftheBankofEnglandMarkCarney.In failingtodivest,institutionsriskunder-exposureto$3trillionofpublicequitiespositionedtobenefit fromamoreresourceefficientandexpandinglowcarboneconomy. “Theimpactofclimatechangewillbeamajorinvestmentthemeinthenextdecadeandinvestorswho areattheforefrontofaddressingrisks,suchasstrandedassetsintheirportfolioconstructionand securityselectionprocess,shouldbethebeneficiariesofstrongerlong-termriskadjustedperformance,” saidChristopherIto,ChiefExecutiveOfficerofFossilFreeIndexes.“WearepleasedthattheCarbon Underground200TMhasbecomeastandardtoolforinvestorsastheyevaluatetheirexposuretoreserve owningcompanies.HistoricalresultssuchasthoseindicatedbytheCleanCapitalistDecarbonizerbegin tohelpshapethenarrative,butgoingforward,theimpactofclimatechangeandfuturecarbonpricing willlikelyhaveamorepronouncedimpactespeciallyonthosereserveowningcompanieswhosebusiness modelsandstrategiesarenotconsistentwiththemovetowardalowcarboneconomy.” Whilethisanalysisfocusedonthepastthreeyears,datingtothelaunchofthefossilfueldivestment movement,otheranalysesoveratenyearperiodbyMSCIandFossilFreeIndexesalsofoundfossilfree portfoliosoutperformed. “TheDecarbonizerwillprovideadeeperleveloftransparencyinthediscoursearoundtheinvestmentsof someoftheworld’smostprominentinstitutions,”saidBrettFleishman,SeniorAnalystat350.org.“The successofthedivestmentcampaignisevidencethatthetideisbeginningtoturnagainstfossilfuels. WhenthetooldisclosedthattheUniversityofTorontocouldhavegeneratedanexcessreturn--big enoughtohavepaidfulltuitionfortheentirestudentbodyforallfouryears--iftheyhaddivestedfrom fossilfuelswhenthecampaignstarted,theconversationbecamegroundedinthestoryoftheinstitution itself.Divestmentisthemoral,prudent,andsmartthingtodo.” ### NotesforEditors: 1 14Fundsanalyzed EstimatedCostofnot decarbonizing3years ago6 Fund SizeoffundinUSD AlgemeenBurgerlijkPensioenfonds(ABP):"DutchCivil ServantsPensionFund") $382,344,000,000 $9,366,211,873 7 AustralianNationalUniversityEndowment $686,980,602 $53,850,841 CanadaPensionPlanInvestmentBoard $199,825,920,000 $7,025,528,323 FutureFund(Australia) $83,152,631,000 $1,546,602,354 Bill&MelindaGatesFoundationTrustEndowment $40,564,000,000 $1,897,962,806 HarvardUniversityEndowment(HarvardManagement Company) $37,600,000,000 -$206,290,9768 LondonSchoolofEconomicsEndowment $147,939,674 $3,062,919 7 McGillUniversityEndowment(McGillInvestmentPool) $990,520,320 $32,330,177 7 NewYorkCityEmployeeRetirementSystem(NYCERS) $54,451,000,000 $1,618,154,962 OntarioMunicipalEmployeesRetirementSystem (OMERS)7 $54,374,400,000 $756,153,815 OntarioTeachers'PensionPlan(OTPP) $115,081,907,200 0 UniversityofTorontoAssetManagementCorporation $5,588,480,000 $419,418,629 VermontPensionInvestmentCommittee $4,020,000,000 $79,387,949 WellcomeTrust $27,448,424,600 $352,680,885 Total $1,006,276,203,396 $22,945,054,557 AboutCorporateKnights:CorporateKnightspublishestheaward-winningbusinessandsociety magazineCorporateKnights,andproducescorporaterankings,researchreportsandfinancialproduct ratingsbasedoncorporatesustainabilityperformance.Itsbest-knownrankingsincludetheBest50 CorporateCitizensinCanada,andtheGlobal100MostSustainableCorporations.CorporateKnights researchalsopowerstheNewsweekGreenRankings. AbouttheCleanCapitalistDecarbonizer:CreatedbyCorporateKnightsandpoweredbycarbondata fromSouthPoleGroup,theCleanCapitalistDecarbonizerisafreeinteractivetoolthatshowsthe financialimplicationsofdivestinghighcarboncompaniesinfavourofthosethatderiveatleast20%of theirrevenuesfromenvironmentalmarketsornewenergy.TheCleanCapitalistdatabasecovers7,000 securities(comprisingmorethan85%ofglobalmarketcapitalization),includingallprimarypublicequity securitieswithamarketcapover$2billionand/orlistedonmajornationalandglobalindices.A professionalversionoftheCleanCapitalisttoolfortheinvestmentcommunitywillbelaunchedatthe upcomingParisClimateConference. AboutSouthPoleGroup:Zurich-basedSouthPoleGroupbeganasaproject-drivencompanyfocusedon developingandsellinghigh-qualitycarboncredits.Today,itistheworld'sleadingproviderofclimate solutions.Nootherfirmintheworldhasdevelopedasmanysuccessfulemissionreductionprojects.No othercompanyoffersasrichasuiteofservicesandsolutions.SouthPoleGrouphelpspublicandprivate sectororganisationsdevelopclimateprovenpoliciesandstrategies.Areasofexpertisecovereverykey sustainability-relatedareaofclimatechange,includingbutnotlimitedto:forests&landuse,water, sustainablecities&buildings,aswellasrenewableenergyandenergyefficiency.Formoreinformation, visitwww.thesouthpolegroup.comorfollowthecompany@southpolegroup. NadiaKähkönen,CommunicationsManager,SouthPoleGroup Ph:+6626788977,email:[email protected] 2 TheCarbonUnderground200,originallypioneeredbyCarbonTracker,wasprovidedbyFossilFree Indexes,andconsistsofthetop100publiccoalcompaniesgloballyandthetop100publicoilandgas companiesglobally,rankedbythepotentialcarbonemissionscontentoftheirreportedreserves. 3 Thelistofutilitieswhichgeneratemorethan30percentofelectricityfromcoalwasprovidedbySouth PoleGroup. 4 Companiesprovidingenvironmentalsolutionsderiveatleast20%oftheirrevenuesfrom environmentalmarketsornewenergyasverifiedbyFTSEEnvironmentalMarketsorBloombergNew EnergyFinance.Thecollectivemarketcapitalizationofthecompaniesprovidingenvironmentalsolutions totalled$3trillionasofSeptember30,2015. 5 Someexamplesofinvestorsleadingtheway:PFZW,the$183billionDutchpensionfundhaspledged tohalveitscarbonfootprintby2020whileincreasingitsinvestmentsinclimatesolutionsfourfold.AXA, theFrenchinsurerwith$1.6trillioninassetsundermanagement,issellingoffitsstakesinmining companiesandelectricutilitiesderivingover50%oftheirturnoverfromcoal,whiletriplingitsgreen investments.ItisalsonotablethattheFrenchgovernmentrecentlyamendedlegislationtorequire institutionalinvestorstoreporttheircarbonfootprintsaswellashowtheyarecontributingtothe internationalgoaloflimitingclimatechange.BobLitterman,aformerheadofriskmanagementat GoldmanSachs,isshortingcarbonforhigherreturns.TheLitterman-inspiredWWFstrandedassetstotal returnswapislongS&P500andshort“stranded”assets.Ithasreturnedmorethan40percentforthe WorldWideFundforNaturesinceJanuary2014.23investorsignatoriestotheMontrealCarbonPledge andPortfolioDecarbonizationCoalitionwithassetstotalling$1.2trillionhavepledgedtoreducetheir portfoliocarbonfootprintsbyasmuchas50%-80%withoutsacrificingfinancialreturns,includingthe SwedishpensionfundAP4andFrenchpensionfundsERAFPandFRR. 6 Basedonthedifferenceofinvestingtheestimatedvalueofafund’spublicequitiesholdings(onSept 30,2012)intwosimulatedportfolios(CleanandUncleaned),rebalancedquarterlyoverathreeyear timeperiodtoSeptember30,2015.Allevaluatedfundswereofferedanopportunitytoreviewthe analysisinadvanceofitsrelease.Viewfullmethodologyhere. 7 Inthefourcaseswherethefunddidnothaveanycompaniesclassifiedasenvironmentalsolution providers,freefloatmarketcapitalizationweightingwasused. 8 Moneydivestedfromcarbonintensivecompanieswasshiftedintocompaniesprovidingenvironmental solutionsalreadyexistingintheinvestor’sportfolio.InHarvard’scasetheyhadjustonesuchcompany,a sustainablefood,feedandfuelingredientsfirmcalledDarlingIngredients,whichperformedpoorlyon thestockmarketoverthepastthreeyears.