California Debt and Investment Advisory Commission

Webinar Description

Socially Responsible Investing: Integration in the Local Agency Portfolio
December 10, 2019
10:00 AM to 12:00 PM

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Note: The complete program including, replays, transcripts, and slides are available in the CDIAC Education Portal.
Registration required but materials are free.

The board members and constituents of local agencies are increasingly asking that the investment of public funds take into account socially responsible investing (SRI) objectives. SRI and environmental, social, and governance (ESG) considerations may affect a local agency’s investment policy, credit analysis and investment portfolio decision process. This webinar aims to equip local investment officers with tools to help them carefully navigate the exploration and potential adoption of SRI strategies and ESG criteria. Participants will gain a better understanding of fundamental SRI and ESG concepts from CDIAC’s publication, Socially Responsible Investing – What Does It Mean and What’s the Risk?, hear how other California local agencies are integrating SRI objectives and ESG criteria, and learn about available resources that can help with SRI analysis.

Webinar Resources

Organizations Promoting Socially Responsible Investment and Environmental, Social and Governance Factors

  • United Nations Global Compact. The Ten Principles of the UN Global Compact involve human rights, labor, environment, anti-corruption. By incorporating the ten principles companies are not only upholding their basic responsibilities to people and planet, but setting the stage for long-term success.
  • Principles for Responsible Investment. The Six Principles of Responsible Investment to acknowledge the ESG factors can have a material impact on returns and can affect the investment performance of bonds, both negatively and positively, at the issuer, sector, geographic and system levels.
  • CFA Institute. The CFA Institute’s mission is to lead the investment profession globally by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society. The incorporation of ESG data into the investment process is encouraged so that investors can be more informed about the decisions they are making.
  • Government Investment Officers Association. The mission of the GIOA is the education and training of Government Investment Officers to assist them in their responsibilities: to ensure safety of principal through suitable investments; maintain sufficient portfolio liquidity; optimize and measure investment performance; and communicate portfolio policy and plan to the governing board and public.
  • Green Initiative Task Force. The Green Initiative Task Force was established to identify, analyze and propose investment opportunities and risk-control strategies addressing climate change. Since then, the focus has pushed beyond carbon emissions to consider risks and opportunities related to issues such as land use, water sourcing, mineral extraction and waste disposal.
  • US SIF: The Forum for Sustainable and Responsible Investment. The mission of US SIF Forum for Sustainable and Responsible Investment is to rapidly shift investment practices toward sustainability, focusing on long-term investment and the generation of positive social and environmental impacts.
  • Sustainability Accounting Standards Board. The Sustainability Accounting Standards Board is an independent, non-profit standard-setting organization established in 2011 to set, interpret, and maintain industry-specific sustainability standards.
  • Ceres. Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Ceres tackles the world’s biggest sustainability challenges, including climate change, water scarcity and pollution, and inequitable workplaces in its mission to transform the economy to build a sustainable future for people and the planet.
  • SustainAbility is a think tank and advisory firm founded in 1987 that works to inspire and enable business to lead the way to a sustainable economy.

ESG Information by Credit Rating Agencies

  • Moody's - Moody’s is developing analytical tools to help improve the market’s understanding of how ESG factors affect credit risk, to be more transparent about how ESG risks are identified and assessed, and to ensure that Moody’s analysts consider ESG factors in a consistent manner across sectors and geographies, with the aim of identifying which sectors and issuers are most exposed to these risks. Moody’s will also continue to publish sector-specific reports that provide more transparency into how ESG risks are incorporated into its ratings.
  • S&P Global Ratings - S&P Global Ratings ESG Evaluation is a cross-sector, relative analysis of an entity’s capacity to operate successfully in the future and is grounded in how ESG factors could affect stakeholders and potentially lead to a material direct or indirect financial impact on the entity.
  • Fitch - Fitch Ratings has launched a new integrated scoring system which shows how environmental, social and governance (ESG) factors impact individual credit rating decisions. We are the only CRA who currently offers this level of granularity or transparency about the impact of ESG on fundamental credit.
  • Kroll - Assess the relevance of ESG risks to key credit metrics as well as the possible effect of ESG factors on the credit risk of an issuer, which may vary based on the time horizon of the debt issuance being evaluated.
  • Japan Credit Rating Agency, Ltd. JCR focuses its efforts on providing evaluations to green, social and sustainable finance (including both bonds or loans and other debt instruments) to contribute to the market players.

Free Searchable ESG Data

  • CSRHub - Provides access to its corporate social responsibility and sustainability ratings created by aggregating over 500 sources of data and information on 17,268+ companies from 134 industries in 141 countries. Ratings are aggregated using ESG datasets from Institutional Shareholder Services (ISS), MSCI (ESG Intangible Value Assessment, ESG Impact Monitor, and ESG Carbon Metrics), Trucost and Vigeo EIRIS as well as other data inputs.
  • Yahoo! Finance - Provides access to ESG data from Sustainalytics for companies and some governmental entities (i.e. Fannie Mae) including ESG ratings and comparisons of ESG performance for each ESG category to other peer companies’ ESG scores as well as a daily list of the top 30 most sustainable and ethically responsible companies. Specific entities can be found through the website’s search feature.
  • RobecoSam - Provides rankings for 2,686 companies evaluated in 2018 as part of their annual Corporate Sustainability Assessment. Rankings include over 600 U.S. companies.