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The Circular Q3 2019: keeping you in the sustainability loop

As responsible-investment activity heats up, we sample temperatures across the market to pinpoint flaring activity.

Green is the coolest colour: sustainable software, responsible real estate

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Sustainable investing helps keep the world cool: everyone should be doing it.

What’s it all about?

Climate change is driving corporate innovation in surprising places beyond obvious candidates in the energy-intensive sectors.

What’s new?

Louise Dudley, a Portfolio Manager in the Hermes Global Equities team, reviews a low-carbon star performer in software giant Salesforce, which just hit net-zero greenhouse gas emissions and carbon-neutral cloud targets – and turned a profit. Elsewhere, in the 2019 Responsible Property Investment Report, Chris Taylor, Head of Private Markets at Hermes, reveals how responsible property investment produces sustainable outcomes, including climate-friendly buildings that promote occupier wellbeing and foster civic pride in communities.

What’s the impact on investors?

By identifying companies that take sustainability seriously and embedding responsible investment principles across all asset classes, investors can help build a better world without destroying returns. How cool is that?

Forest grump: slash-and-burn backlash

Hermes goes into battle for the forests, and the trees.

What’s it all about?

The world needs more trees if it is to meet the stated target of neutral carbon emissions by 2050 – yet deforestation proceeds apace as resource-hungry firms destroy the planet’s most effective CO2-absorbers.

What’s new?

A new analysis by Jaime Gornsztejn, Hermes EOS’s Lead Engager for the industrials sector, highlights the urgency of the deforestation issue – and how previous investor successes in reversing the tree tragedy could be repeated. We have also joined with other groups in backing the Investor Statement on Deforestation and Forest Fires in the Amazon.

What’s the impact on investors?

Watching the Amazon burn in 2019 has shown investors beyond doubt that “ignorance of the other side of the [deforestation] transaction is untenable for businesses”, according to Hermes SDG Engagement Equity Fund Lead Engager, Will Pomroy. He writes that investors can engage with resources firms – such as rubber producers – to protect the world’s tree heritage, without slashing returns.

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We’ll always have Paris: Hermes EOS looks back on 15 years in the sun

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Boasting 15 years of operation as evidence, Hermes EOS proves that asset stewardship is essential in sustainable-investment strategies.

What’s it all about?

Hermes EOS recently celebrated its 15th anniversary, cementing the mainstream credentials for the pioneering global asset stewardship group.

What’s new?

Hans-Christoph Hirt, CEO of Hermes EOS, recounts key moments of the stewardship unit’s story in the latest Hermes EOS Public Engagement Report, including its attendance at the ratification of the 2015 Paris Agreement on climate change. The event “served notice that companies could not continue with ‘business as usual’ – this was unsustainable”.

What’s the impact on investors?

Along with other groups, Hermes EOS has helped shift the global investment conversation from pure financial matters to one where real-world impacts hold sway. Talk continues, but investors now want stewardship to deliver outcomes.

Prime target: why the UN framework sets better return goals

Goals are good but investors need better tactics in order to to score sustainable returns.

What’s it all about?

The Sustainable Development Goals (SDGs) lay out a broad programme for change that investors can tune into.

What’s new?

In this episode of Amplified, Aoifinn Devitt, Hermes’ Head of Investment – Ireland, kicks ideas around with Mitch Reznick and Hamish Galpin, Head of Sustainable Fixed Income and Small & Mid Cap Equities respectively, about how to weave SDGs into winning – and sustainable – investing strategies.

What’s the impact on investors?

The SDGs steer investors in a general direction without offering specific investment targets. But, as the Hermes SDG Engagement Fund H1 2019 report illustrates, focused investors can turn SDG aspirations into high-scoring portfolios.

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Mercury rising: how SDGs help investors hit the hot-button issue

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Hermes shows how to target climate change with the SDGs in sight.

What’s it all about?

As the most recent Hermes Public Engagement Report reveals, climate change represented almost 73% of our formal interactions with companies on environmental issues during Q2 2019. This indicates that the hottest global issue of all is just getting hotter.

What’s new?

The SDGs provide an effective way to bring the broad climate-change challenge into sharper focus. Our piece, "Blueprint for a better future", shows how Hermes links the SDGs to corporate accountability on climate change.

What’s the impact for investors?

While the SDGs offer guidelines, Hermes has mapped out clearer connections between the goals and real investment opportunities. Tim Crockford, Head of Impact Investing at Hermes, profiles the path from SDG target to climate-aware portfolio choices in the Q2 Hermes Opportunities Impact Report.

Climate Change Myth Busters

 

FULL CIRCLE

That’s a wrap for issue three of The Circular.

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