Published 3 years ago.
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A new toolkit provides a roadmap for addressing risks to the ‘S’ part of ESG investing; while a new case study validates the Rockefeller Brothers Foundation’s bet on a fossil-fuel-free portfolio.
Image credit: Investor Alliance for Human Rights
The Investor Alliance for Human Rights today unveiled a new Investor
Toolkit on Human
asset owners and managers to address risks to people posed by their investments.
This comes in the midst of the COVID-19 crisis, where
systemic economic and social inequalities across society have been exposed and
exacerbated — starkly revealing the precarious foundation that financial markets
In this context of the pandemic and going forward, institutional investors of
all sizes have a responsibility, as well as
an opportunity, to
support recovery and positively contribute to new systems grounded in respect
more and more mainstream investors are integrating environmental, social, and
governance (ESG) criteria into their investment
many are not. Even when ESG factors are considered, addressing risks to the ‘S’
part of the equation remains widely neglected.
“In this global crisis, we see why investment-as-usual must change. An essential
step in this process is recognizing that institutional investors, even minority
shareholders, have a responsibility to address the risks to people present in
their investment value chains,” said Paloma Muñoz Quick, Director of the
Investor Alliance for Human Rights. “To do this, investors should know the human
rights risks connected to their investment portfolios and show how they are
taking action to manage those risks in line with globally agreed upon
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The expectation that investors, like all business actors, respect human rights
is outlined by the UN Guiding Principles on Business in Human
unanimously endorsed by governments in the UN Human Rights Council in 2011.
This expectation is also increasingly embedded into legal requirements impacting
financial markets across the world — for example, the European Union now
European investors to disclose the steps they have taken to address the adverse
impact of their investment decisions on people and the planet.
“For European investors, the Investor Toolkit provides timely and much-needed
practical guidance for helping investors apply the UN Guiding Principles and
meet emerging EU requirements calling on investors to disclose due diligence
efforts to manage risks to people throughout the investment
lifecycle,” said Carola van Lamoen, Head of Active Ownership and Executive
Director at Robeco.
It’s been heartening to see more and more companies pivoting their product or
service to put people
during the pandemic. But, altruism aside, a growing body of research shows the
correlation between corporate attention to ESG and corporate financial
Read more about the Toolkit here ...
Image credit: Milada Vigerova/Unsplash
Meanwhile, the Rockefeller Brothers Foundation (RBF) has just released a
case study detailing how its investment returns beat market benchmarks since it
divested from fossil
— on which their great-great-grandfather, John D. Rockefeller, built his
vast fortune — five years ago.
Financial data included in the study shows the RBF posted an average annual net
return of 7.76 percent over the five-year period that ended December 31, 2019.
Over the same period, an index portfolio made up of 70 percent stocks and 30
percent bonds — including coal, oil, and gas holdings — returned 6.71 percent
When the RBF announced its decision to divest in September 2014, it set out to
prove the business case behind the move — projecting that fossil fuel holdings
would decrease in value as the world shifted away from carbon-intensive
to mitigate the impacts of climate change.
The divestment movement accounted for just $50 billion in global assets under
management when the Rockefeller Brothers Fund signed on in 2014. That number has
now ballooned to around $12 trillion today — the RBF and its grantees continue to press
other foundations, universities, governments, companies and banks to divest, as well.
“The rationale for continued investment in gas and oil is fading fast,”
said Stephen Heintz, president and CEO of the RBF. “We spent the last five
years proving oil was bad not only for the environment but for the bottom line —
COVID-19 did it in two months.”
The RBF report points to recent moves by financial giants such as
as further evidence that fossil fuel stocks are increasingly getting the boot
from investors, but the coronavirus pandemic has helped prove the case, as just
eight weeks of reduced global consumption — a drop in the bucket of what will be
required to curb global climate change — have seen crude futures drop to record
lows. The RBF report includes 2020 first-quarter data that suggests its earlier
departure from fossil fuels extended its financial outperformance and shielded
the Fund from some of the market volatility caused by the pandemic.
“When we joined the divestment movement, we were convinced that a more
profitable and less risky investment portfolio could be constructed without
exposure to fossil fuels,” said Valerie Rockefeller,
great-great-granddaughter of John D. Rockefeller and chair of the RBF board of
trustees. “Now, we have five years of financial data to back it up. Oil is obviously a definitional part of my family’s past, but it has no place in our future.”
Read more about the Rockefellers Brothers Fund and the case for going fossil
Published May 19, 2020 2pm EDT / 11am PDT / 7pm BST / 8pm CEST