Investments for a low carbon economy: New WWF report about Sovereign wealth funds (focus on the Norwegian Oil Fund)

Today we released a new report: “Fund Management in the 21st Century: The role of sovereign wealth funds in contributing to a low carbon future”. The report can be downloaded here.

This is the start on a more focused attempt to engage with SWF’s around the world, and with special focus to start with on the Norwegian Government Pension Fund Global - the world’s second largest sovereign wealth fund in a proactive and transformative agenda that can deliver concrete results.

The fact that the financial system under significant pressure now will obviously be used as an excuse by some for lack of action, but it should be seen as an opportunity. We need to rethink the criteria for investments and the need for a low carbon economy could help, especially as the climate crisis is even more urgent than the the current crisis in the financial system.

If you are interested in transformative change in companies in order to make money on low carbon solutions (beyond negative screening, reporting, PR and Green washing, the current focus for many companies) please have a look at the model (attached) on page 59.

Below is the press release (and here is a short article in FT):

Sustainable investing can pay off for sovereign wealth funds
Sovereign wealth funds could and should focus more attention on the investment risks as well as opportunities of the carbon-constrained economies of the future, an Innovest report commissioned by WWF-Norway has found.

Fund management in the 21st century was submitted to the Norwegian government as recommendations for future governance of the world’s second largest sovereign wealth fund, the $US 381 billion Norway Global Pension Fund.

“Sovereign wealth funds can incorporate climate risk considerations directly and systematically into their actual stock selection and portfolio construction processes,” the study said.

“It is at this level that investors can send the strongest message to companies, produce significantly changed company behavior, and, most importantly, improve their long-term, risk-adjusted returns.”

The analysis found that funds using socially responsible investment through positive screening strategies and using their influence as large investors to encourage improved company behavior contributes to investor returns, risk management and reputation.

Report lead-author Karina Wong, senior consultant at Innovest, said “Socially responsible investment can no longer be seen as a purely ethical exercise that reduces profit while doing good.

“Rather, in an increasingly resource restricted world sustainable business models are a crucial indicator for long-term profitability and risk reduction.”

In particular, Innovest’s analysis showed that better company management of carbon issues translates into better investment performance globally (more than 3 per cent greater return annually).

This relationship was even more pronounced for Scandinavian companies, which are seen as leaders in dealing with carbon issues, where the difference in investment performance between leading and lagging companies was more than 11 per cent annually.

The report found that sovereign wealth funds including Norway’s Global Pension Fund lagged behind public pension funds such as ABP in the Netherlands and CalPERS in the United States, primarily because they do not apply best practices for positive screening and pursue targeted environmental investments.

“Loaded with petroleum cash, Norway has a special responsibility to invest in low carbon development and help mitigate impacts from global warming on hundreds of millions of the world’s poor,” said Rasmus Hansson, CEO of WWF-Norway

“The Norwegian Government is currently revising the ethical guidelines for the fund and now has a unique opportunity to introduce more progressive instruments for sustainable investment, such as positive screening and a climate technology investment fund.”

Dennis Pamlin, global policy advisor in WWF, said “Institutional asset managers today control more than 80% of investments in the world and must play a proactive role in supporting companies that can become winners in a low-carbon economy, not just disinvesting from those that are unsustainable.”

But he said there were promising signs, for instance with China’s sovereign wealth fund CIC’s recently announcment that it will invest in environment-friendly technologies.

“WWF will now explore the possibilities for the world’s largest sovereign wealth fund’s, Norway, UAE, Saudi Arabia, Singapore, Kuwait and China, to take a lead in implementing and developing further the investment practices and tools needed for low carbon development in the 21st Century.”

Contact persons below:
• Karina Wong, lead-author and senior consultant Innovest,
kwong@innovestgroup.com
• Dag Tore Seierstad, deputy secretary general WWF-Norway,
dtseierstad@wwf.no
• Dennis Pamlin, co-author and global policy advisor WWF-Sweden
dennis.pamlin@wwf.se

Investments for a low carbon economy: New WWF report about Sovereign wealth funds (focus on the Norwegian Oil Fund)

Today we released a new report: “Fund Management in the 21st Century: The role of sovereign wealth funds in contributing to a low carbon future”. The report can be downloaded here.

This is the start on a more focused attempt to engage with SWF’s around the world, and with special focus to start with on the Norwegian Government Pension Fund Global - the world’s second largest sovereign wealth fund in a proactive and transformative agenda that can deliver concrete results.

The fact that the financial system under significant pressure now will obviously be used as an excuse by some for lack of action, but it should be seen as an opportunity. We need to rethink the criteria for investments and the need for a low carbon economy could help, especially as the climate crisis is even more urgent than the the current crisis in the financial system.

If you are interested in transformative change in companies in order to make money on low carbon solutions (beyond negative screening, reporting, PR and Green washing, the current focus for many companies) please have a look at the model (attached) on page 59.











Below is the press release (and here is a short article in FT):

Sustainable investing can pay off for sovereign wealth funds
Sovereign wealth funds could and should focus more attention on the investment risks as well as opportunities of the carbon-constrained economies of the future, an Innovest report commissioned by WWF-Norway has found.

Fund management in the 21st century was submitted to the Norwegian government as recommendations for future governance of the world’s second largest sovereign wealth fund, the $US 381 billion Norway Global Pension Fund.

“Sovereign wealth funds can incorporate climate risk considerations directly and systematically into their actual stock selection and portfolio construction processes,” the study said.

“It is at this level that investors can send the strongest message to companies, produce significantly changed company behavior, and, most importantly, improve their long-term, risk-adjusted returns.”

The analysis found that funds using socially responsible investment through positive screening strategies and using their influence as large investors to encourage improved company behavior contributes to investor returns, risk management and reputation.

Report lead-author Karina Wong, senior consultant at Innovest, said “Socially responsible investment can no longer be seen as a purely ethical exercise that reduces profit while doing good.

“Rather, in an increasingly resource restricted world sustainable business models are a crucial indicator for long-term profitability and risk reduction.”

In particular, Innovest’s analysis showed that better company management of carbon issues translates into better investment performance globally (more than 3 per cent greater return annually).

This relationship was even more pronounced for Scandinavian companies, which are seen as leaders in dealing with carbon issues, where the difference in investment performance between leading and lagging companies was more than 11 per cent annually.

The report found that sovereign wealth funds including Norway’s Global Pension Fund lagged behind public pension funds such as ABP in the Netherlands and CalPERS in the United States, primarily because they do not apply best practices for positive screening and pursue targeted environmental investments.

“Loaded with petroleum cash, Norway has a special responsibility to invest in low carbon development and help mitigate impacts from global warming on hundreds of millions of the world’s poor,” said Rasmus Hansson, CEO of WWF-Norway

“The Norwegian Government is currently revising the ethical guidelines for the fund and now has a unique opportunity to introduce more progressive instruments for sustainable investment, such as positive screening and a climate technology investment fund.”

Dennis Pamlin, global policy advisor in WWF, said “Institutional asset managers today control more than 80% of investments in the world and must play a proactive role in supporting companies that can become winners in a low-carbon economy, not just disinvesting from those that are unsustainable.”

But he said there were promising signs, for instance with China’s sovereign wealth fund CIC’s recently announcment that it will invest in environment-friendly technologies.

“WWF will now explore the possibilities for the world’s largest sovereign wealth fund’s, Norway, UAE, Saudi Arabia, Singapore, Kuwait and China, to take a lead in implementing and developing further the investment practices and tools needed for low carbon development in the 21st Century.”

Contact persons below:
• Karina Wong, lead-author and senior consultant Innovest,
kwong@innovestgroup.com
• Dag Tore Seierstad, deputy secretary general WWF-Norway,
dtseierstad@wwf.no
• Dennis Pamlin, co-author and global policy advisor WWF-Sweden
dennis.pamlin@wwf.se

SEED and the world we live in

Had a very inspiring meeting/lunch at SEED: Science is culture with Adam Bly, Laura McNeil and Don Hoyt Gorman in their office in New York. They have some really interesting projects in the pipeline so keep an eye on their webpage (and subscribe to their magazine). The magazine is one of the best around and keeps reminding me of some of the big questions in a way that inspire.

During my trips to China and India I felt that it would be interesting if I magazine like SEED could look into China and India and ask the same fundamental questions that they usually do. After the meeting in New York I got a few more ideas, here they are:

1. The 21st century from the labs/universities in China
What new solutions and approaches do we see in China and India, how will the 21st century look like if they will shape the development of our societies?

2. Tomorrow’s world today
Voices from scientists in China and India. Could be simple interviews with a selected number of thinkers.

3. Answers to the challenges in the 21st Century
What are the main challenges that humanity must face and what solutions are emerging in China and India?

4. Global Research Index for tomorrow’s solutions
The centre of gravity in a number of areas are moving “east”. Still much of the world leading research happens in the “old institutions”. But what are the directions that the new centers of excellence are moving? Instead of just the current state this index would capture speed and direction. Could be a very interesting graphic.
5. The science of cities
With 2008 as the year when we for the first time in history have more people in urban than rural areas we need to understand the “anatomy of cities”. The understanding of cities is really low and I keep getting surprised regarding the lack of basic knowledge even when it comes to fundamental facts. How much cities import and export that contribute to climate change is one area that should be a top priority, but also what kind of cities that encourage people to connect with the world around and that base their decisions on facts, not fiction.

6. The moving axis of assumptions for research
The creation and development of “science” is based on worldviews that are changing and basic assumptions that also change. What are the problems and opportunities that guide scientists around the world? What new challenges (climate change, WMD, aging populations, lack of privacy, etc) and what new opportunities (nanotech, biotech, robotics, internet, access to information, respect for basic human rights, etc) are the most important today.

Six is a good number in China, almost as good as eight, so I’ll stop here and keep two slots for new ideas when I go to China in October.

SEED and the world we live in

Had a very inspiring meeting/lunch at SEED: Science is culture with Adam Bly, Laura McNeil and Don Hoyt Gorman in their office in New York. They have some really interesting projects in the pipeline so keep an eye on their webpage (and subscribe to their magazine). The magazine is one of the best around and keeps reminding me of some of the big questions in a way that inspire.

During my trips to China and India I felt that it would be interesting if I magazine like SEED could look into China and India and ask the same fundamental questions that they usually do. After the meeting in New York I got a few more ideas, here they are:

1. The 21st century from the labs/universities in China
What new solutions and approaches do we see in China and India, how will the 21st century look like if they will shape the development of our societies?

2. Tomorrow’s world today
Voices from scientists in China and India. Could be simple interviews with a selected number of thinkers.

3. Answers to the challenges in the 21st Century
What are the main challenges that humanity must face and what solutions are emerging in China and India?

4. Global Research Index for tomorrow’s solutions
The centre of gravity in a number of areas are moving “east”. Still much of the world leading research happens in the “old institutions”. But what are the directions that the new centers of excellence are moving? Instead of just the current state this index would capture speed and direction. Could be a very interesting graphic.
5. The science of cities
With 2008 as the year when we for the first time in history have more people in urban than rural areas we need to understand the “anatomy of cities”. The understanding of cities is really low and I keep getting surprised regarding the lack of basic knowledge even when it comes to fundamental facts. How much cities import and export that contribute to climate change is one area that should be a top priority, but also what kind of cities that encourage people to connect with the world around and that base their decisions on facts, not fiction.

6. The moving axis of assumptions for research
The creation and development of “science” is based on worldviews that are changing and basic assumptions that also change. What are the problems and opportunities that guide scientists around the world? What new challenges (climate change, WMD, aging populations, lack of privacy, etc) and what new opportunities (nanotech, biotech, robotics, internet, access to information, respect for basic human rights, etc) are the most important today.

Six is a good number in China, almost as good as eight, so I’ll stop here and keep two slots for new ideas when I go to China in October.

The Ashridge Sustainable Innovation Award in association with the European Academy of Business in Society and supported by HP and WWF

The Ashridge Sustainable Innovation Award that was launched today is something I really look forward to. It is another sign that leading companies and organizations shift towards an opportunity approach when it comes to climate change.

The jury is interesting as I think I’m the only one representing an organization that traditionally have focused on environmental issues, that is exactly what I believe is right. Ensuring that the leaders of tomorrow think about reduced CO2 emissions as a business opportunity is a must if we are serious about reducing CO2 emissions.

Let’s hope that there are MBA students that are willing to pick up the challenge and submit proposals that will change the future.

Later this fall I will visit a few MBA courses in EU, the Middle East and Africa. If all goes well I might put together a short paper based on that tour: “the state of the MBA world and innovative climate solutions”.

Below is the pressrelease:

+++++++++++++++++++++++++++++++++++++++++++++++++
11 September 2008

Ashridge launches Sustainable Innovation Award

Ashridge Business School, in partnership with the European Academy of Business in Society (EABIS) and supported by HP and WWF, has launched the Ashridge Sustainable Innovation Award 2008/2009.

The award is designed to generate the best ideas from MBA and other post-graduate students on how organisations can create value from the shift to a low carbon economy.

The winning entrant will receive a cash prize of €7,000, a six month mentorship with HP and career advice from Spencer Stuart, the executive search firm. The second and third prizes are €5,000 and €3,000 respectively, also including career advice.

The award is open to full or part-time students studying on any MBA programme being taught in Europe, the Middle East or Africa (EMEA) during the 2008/2009 academic year. Additionally, the award is open to full or part-time MBA students at one of EABIS’ non-EMEA member schools and students on MBA or Masters level postgraduate programmes at HP linked universities.

“We are exited to bring our existing work with WWF on climate change to the academic world,” said Gabriele Zedlmayer, vice president Corporate Marketing and Global Citizenship, HP EMEA. “To transition to a climate-smart economy, a shift in management thinking and decision-making is required. By supporting this award, we want to help tomorrow’s talent become successful players in a changing economy.”

The award will be judged by a distinguished panel including:
- Sir Paul Judge, Benefactor of the Judge Institute, Cambridge University
- Eric Cornuel, Director General, EFMD
- Jeanette Purcell, Chief Executive, Association of MBAs
- Gabriele Zedlmayer, Vice President Corporate Marketing and Global Citizenship, HP EMEA
- Dennis Pamlin, Global Policy Advisor, WWF
- Kai Peters, CEO, Ashridge
- Della Bradshaw, Executive Education Editor, Financial Times
- Tom Dodd, CSR Policy Advisor, DG Enterprise and Industry, European Commission
- Anthony J Vardy, Senior Director, Spencer Stuart & Associates
- Rachel Jackson, Head of Social and Environmental Issues, Association of Chartered Certified Accountants
- Viscount Etienne Davignon, Chair, European Academy of Business in Society and Vice-Chair, Suez-Tractebel

The closing date for entries is 2 March 2009. The award will be accompanied by presentations from WWF at select universities over the next few months. For further information, please visit: http://www.ashridge.org.uk/sustainableinnovation

Information on the award can also be found on Facebook at
http://www.facebook.com/pages/Ashridge-Sustainable-Innovation-Award/23715149027