ESG roundup: Bridges Ventures, CalPERS, responsAbility on coffee
GLOBAL – Hands-on investment and entrepreneurial talent are "powerful tools" for driving sustainable growth, according to a report by specialist fund manager Bridges Ventures.
The 'Bridges Ventures 10-Year Report: A decade of investing for impact and sustainable growth' shows how impact investing has evolved from being a small niche within the sustainable investment universe to finding its place within conventional investment portfolios and across asset classes.
According to the report, the 10 most important lessons learnt are:
1. Where there are pressing societal challenges, there can also be rapid growth opportunities
2. Impact can be an engine of value across asset classes
3. The value in value for money
4. Clarifying investment selection – the lock-step and impact first
5. The importance of alignment in property investing
6. How the structure of social enterprises can create a competitive advantage
7. Policy as a catalyst for change
8. It's not just about what we do, it's about how we do it
9. Finding a place in conventional investment portfolios
10. A variety of skills, a shared vision
Bridges was created in 2002 to focus exclusively on opportunities where investments can generate attractive investor returns while meeting social or environmental challenges – be it backing business that generate jobs in underserved areas, building environmentally friendly care homes for the elderly or providing flexible financing for community transport models.
In other news, the California Public Employees' Retirement System (CalPERS) has launched the Sustainable Investment Research Initiative (SIRI).
The launch also marked the start of a Call for Working Papers from scholars and investment practitioners globally in the fields of finance, economics, accounting, law and business.
The papers will contribute to a debate on the impact of environmental, social, and governance (ESG) issues on long-term value creation and capital market stability.
Anne Simpson, CalPERS senior portfolio manager and director of global governance, said: "CalPERS has made it a priority to use sustainability factors in making investment decisions across our fund.
"This initiative will aid us in our application and help us draw conclusions that can inform our investment strategy and beliefs."
In 2011, the CalPERS board approved integrating ESG issues as a strategic priority across its investment portfolio.
It is grounded in the three forms of economic capital – financial, human and physical – that are needed for long-term value creation, according to the pension fund's 2012 report 'Towards Sustainable Investment'.
SIRI will provide independent evaluation and insight for CalPERS sustainability strategy, as well as contribute to the larger debate.
Meanwhile, asset manager responsAbility has published a study of coffee growing in Costa Rica.
In the study, the responsAbility economists identify key criteria for success in development – outline conditions favourable to development, with a broadly based policy for each sector, transparent regulation and research focused on productivity and quality, strong producer organisations that facilitate returns to scale, combined with better management and lower transaction costs to increase turnover and prices and access to finance as an essential precondition for producer organisations to trade profitably and grow.
Marco Fischer, senior research analyst at responsAbility, said: "On a global scale, there are roughly 40m farmers who are part of producer organisations but suffer from a lack of access to financing.
"Their financing need is estimated at around $80bn (€59bn) in total. Thus the fair trade sector has significant potential and offers commensurate opportunities for investors.
"The goal of investments in the fair trade sector is to use finance to tap the vast potential of small farms."
Investments in fair trade are not only financially attractive but, according to this study, also help small farmers in developing economies to earn a better living.