Responsible investment and carbon footprint: the future is now!LinkedIn
NB Bulletin Vol. 19 N. 3, February 2016
Over the past few years, responsible investment has become very important to investors. According to a survey of European institutions (pension funds, foundations, investment managers, etc.) conducted by Ernst & Young in 2015, close to 80% of investors now take into account the non-financial performance, including their impacts on the planet, of businesses they are investing in. This percentage has risen from 65% in 2014. Throughout the world, a number of initiatives have been introduced to make investors and businesses aware of the effect of environmental, social and governance factors (ESG factors) on investments. In late 2015, the Paris Agreement sent a clear message calling for change in relation to environmental issues and our dependence on fossil energy.
Paris Agreement: Is change finally on the horizon?
The Paris Agreement was signed by 196 countries during the 2015 Climate Change Conference. Under this agreement, the countries involved are committed to limiting the global temperature increase to a maximum of 2˚C above pre-industrial levels and making every effort to hold the temperature increase to 1.5˚C above pre-industrial levels. They are also expected to reach the net zero greenhouse gas emissions target by 2050. To achieve these goals, the countries must develop plans to be implemented in 2020. The media attention given to the Paris Agreement raised the collective awareness around climate change. The event did a great deal to highlight one of the key elements of responsible investment, i.e., activating or reactivating the drive to take action in the face of these environmental issues that challenge all of us in one way or another.
Investors are not waiting until 2020
Many investors are not waiting until 2020 to take action, and initiatives are already underway. These initiatives include:
Some market regulators are already at work
Several market regulators are working to assess or implement significant changes concerning the carbon footprint. For example:
Closer to home, Ontario has taken an important step by requiring registered pension plans to indicate in their statement of investment policy and procedures, as of January 1, 2016, whether or not they consider ESG factors, and, if so, how they are addressed in the plan’s investment strategy.
Normandin Beaudry believes in it and is taking action
With the Paris Agreement and the various initiatives of many key players in the investment market, major changes can be expected in the coming years. Pension fund trustees and other institutional investors will be more and more inclined to review their investment structure and their practices with respect to ESG factors.
Normandin Beaudry is committed to ensuring responsible investment, advancing investment practices in this regard and creating a greener world for future generations. To honour these commitments and achieve these goals, Normandin Beaudry is proud to have become a signatory to the Principles for Responsible Investment (PRI) on January 1, 2016. Among other things, Normandin Beaudry will be systematically including ESG factors in the reflection process when analyzing and monitoring investment managers.
Enhanced reflection process for our 20thRevue annuelle des gestionnaires de placement
All of these changes are bound to have an impact on the portfolios of institutional investors, in particular for companies from the Energy, Materials and Utilities sectors.
To continue this important reflection for investors, we invite you to take part in our 20th Revue annuelle des gestionnaires de placement (February 18, 2016). At this event, we will discuss, among various current topics, the impacts and challenges of the greenhouse gas reduction targets for institutional investors.