Biodiversity for Better Business Sustainable Finance ... 2017/C… · Cerin Maduray Investment...

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Cerin Maduray

Investment Analyst

[email protected]

Sustainable Finance & Responsible Investment

Date: 25 October 2017

Biodiversity for Better Business

Shorter title Secondary information can go here

XX-XX Month, Year

• Additional information can run

• Underneath if necessary

Contents

Introduction to WWF and our Global Goals

Sustainable Finance in WWF

The Living Planet Fund

Impact Investing and Private Equity

Active Ownership in South African Organised Labour

WWF/Alexander Forbes Investment Questionnaire

Responsible Investment Biodiversity for Better Business

WWF IN SHORT

WWF is in over

100 countries

+100

WWF was founded

In 1961

1961

WWF has over

5,000 staff

worldwide

+5000

WWF has over

5 million supporters

+5M


OUR MISSION: To stop the degradation of the planet's natural environment and to build a future in which

humans live in harmony with nature, by:

• conserving the world's biological diversity

• ensuring that the use of renewable natural resources is sustainable

• promoting the reduction of pollution and wasteful consumption

WWF: Global Goals


Wildlife • Goal: The world’s most threatened ecological, economically and culturally important species are

secure in the wild

Oceans • Goal: Productive and resilient ocean ecosystems, sustaining human well being and conserving

biodiversity

Forests • Goal: A world enriched by extensive, resilient forest landscapes benefiting biodiversity, people,

and climate

Freshwater • Goal: Freshwater ecosystems and their services sustain people and nature

Climate and Energy • Goal: By 2030, an equitable and just transition (to a global pathway) that limits warming to 1.5C

degrees and builds a climate resilient future

Food • Goal: Sustainable food systems conserve nature while ensuring food security now and in the

future

Finance in WWF

Cross Cutting Relevance & Impact


6

WWF Finance Practice Theory of Change

Our objective is to encourage a meaningful shift in Finance to achieve WWF’s Global Goals

Using the framework of risks and opportunities, WWF can:

• influence the financial system to improve integration of environmental risks

• encourage the financial system to deliver greater investment for sustainable development

• use the influence of the finance sector to drive sustainable practices through the rest of the economy

The WWF

Supported

Prescient Living

Planet Fund

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Investment Biodiversity for Better Business

The WWF Supported

Prescient Living Planet

Fund

Aims to deliver sustainable long-term capital growth to its investors within a

framework that integrates environmental principles in the investment portfolio.

Performance objective:

• Deliver competitive investment returns by out performing the strategic fixed

benchmark over rolling five-year periods (CPI+4% target).

Environmental objective:

• Actively manage and integrate principles that enhance the sustainability of the

natural environment over the long term


The Living Planet Fund: Objective and Implementation

Approach towards optimal E(SG) integration into the Portfolio:

• Pragmatic and realistic

• Respect for and adherence to mandate (competitive risk adjusted returns for

investors)

• Incrementally enhance the E(SG) credibility in our Funds over the long term


WWF-SA:

Environmental Analysis

Company Environmental data and analytics provided by Trucost

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00

Portfolio

Benchmark

GHG Water Waste L&W Pollutants Air Pollutants NR Usage

6.73%

4.57%

0 5 10 15 20 25 30 35 40 45

Portfolio

Benchmark

CO2e Tonnes/R1mn Revenue

Scope 1 Scope 2

23.60

38.74


Presentation to Company Name

Impact

Investment

Solutions and

Private Equity

Responsible


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Risk & Return

Business Life Cycle

Source: The Presidents Council


Africa Environmental Sustainability Private Equity FoF

What is Private Equity?

Classes of Equity that are not quoted

on Stock Markets / unlisted.

WWF in

partnership with

Fair Tree Capital

Multi-Sector

Environmental

Fund of Funds

Provide competitive long term financial

returns and environmental

sustainability impact.


Africa PE FoF

Impact Sector focus

Renewable Energy

Sustainable Agriculture

Sustainable Forestry

Water and Food

Security

Biodiversity Conservation

Clean Tech & Infrastructure

Description

Sustainable agriculture is the production of food, fibre or other plant and

animal products, using farming techniques that are sustainable and ensure the safeguarding of high quality supply of

agricultural products.

Description

Sustainable forestry specifically targets the long

term viability of the palm oil, timber, pulp and

paper sectors. Sustainable Forest Management is the usage and application of

the standards of the Forestry Stewardship

Council (FSC), globally recognised as the most

credible forest certification system.

Description

Food Security is about maintaining sustainable

food systems while simultaneously working

towards long term environmental

sustainability. Water security is defined as the

capacity of a population to safeguard sustainable

access to adequate quantities of acceptable

quality water for sustaining livelihoods.

Description

Protection, rehabilitation and conservation of

ecosystems, wildlife and other species

and preserving genetic diversity, and ensuring the

sustainable utilization of species

and ecosystems.

Description

Any process, product or service that reduces

negative environmental impacts through

significant energy efficiency improvements,

the sustainable use of resources, or

environmental protection activities. Infrastructure including property, fixed investment, materials.

Description

Energy derived from resources that are

constantly replenished or infinite; Renewable

energy technologies can harness renewable

energy to produce power with almost no pollution or

emissions.


Defining Impact Investing

What is Impact Investing?

Investments made into companies,

organizations, and funds with the

intention to generate social and

environmental impact alongside a

financial return (GIIN)

Research has shown that a

access to affordable funding is

1 of the top factors inhibiting

growth for Small Business

For investors very often the risk

return profile makes investment

into small businesses

unsuitable


The Green Outcomes Fund impact investment initiative


The World Bank’s Climate Technology Program (CTP), together with University of

Cape Town GSB’s Bertha Centre for Social Innovation and Entrepreneurship, WWF-

South Africa and GreenCape is pioneering an innovative, outcome-based funding

mechanism, the Green Outcomes Fund (GOF)

The aim is to mobilize investments into promising green small and growing business

(SGBs) that contribute to environmental and social outcomes across the Southern

African region.


•The Green Outcomes Fund (GOF) is an innovative green mechanism that has an

objective to mobilize investment into Small & Growing Green Businesses (SGBs) that

deliver on pre-agreed identified environmental outcomes.

•Environmental outcomes include impact areas such as climate mitigation, water

management, waste management and green job creation; specific outcome metrics will be

pre-agreed and verified.

•GOF offers funders (grant and investors) a unique and quality solution, through which the

growth and development of green SBG’s can be supported to enhance Sustainable

Development Goals (SGB’s).

•The GOF provides outcomes-based funding to the impact investment industry for

investment in green SGB’s in the Southern African region.

•Impact Investors and allocators invests at lower risk and greater efficiency which leads to the

development of a robust green impact investment industry in the Southern African region.

The Green Outcomes Fund

impact investment initiative

The Green Outcomes Fund :

Example outcomes


Green outcomes can be the payment triggers for the recipient funds

These outcomes should be measurable and verifiable

Energy

Energy Generation

(kWh)

Energy Efficiency (kWh)

Persons reached by Clean Energy (

number of people)

Waste

Waste to Landfill Avoided (tonnes)

Waste recycled/reused

(tonnes)

Avoided Waste Incinerated (tonnes)

Chemical Recovery (tonnes)

Water

Water Use Reduction

(m3/yr)

Water Productivity (ltrs/unit of product)

Water Sourced from an Alternative Resource (m3)

Other

Carbon Sequestered (CO2-

eq)

Green Sector Direct Jobs

Green Sector Indirect Jobs

+ Scope for additional

Active Ownership

through

Organised

Labour in South

Africa

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Responsible Investment Through Active

Ownership in South African Organised

Labour

Responsible


• GEPF is one of the largest

pension funds in the country

• Collectively members have

significant shareholdings in

listed South African companies

• By exercising their voting

rights/shareholder rights they

can influence management

policy at the highest level

• Labour Union Trustees on

behalf of their members can

get specific ESG issues onto

the agenda

Responsible Investment Through Active

Ownership in South African Organised

Labour

Responsible


Water Management

Executive

Remuneration

Black Ownership

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• Underneath if necessary

The WWF & Alexander Forbes Inv.

Partnership


AFI & WWF Partnership

• Since the start of 2015, Alexander Forbes Investments and the WWF-SA have been

working in collaboration to drive an environmental sustainability agenda within the

investment industry.

• The partnership provides a unique opportunity to assist asset managers in their

consideration of environmental issues.

• Our partnership led to the launch of an Environmental Sustainability Questionnaire

in 2016.

• The framework was designed to highlight critical areas of focus from an

environmental perspective and through this enhance the quality and content of

environmental discussions between mainstream asset owners and the companies

they invest in.

• A framework to assist mainstream asset owners in the investment decision making

process


WWF/AFI Env. Questionnaire:

Snapshot and Background

• An industry level environmental framework for investment professionals

• Tool to understand and engage with companies on “E” risks

• Set of 25 Questions covering 7 critical areas:

Environmental critical areas covered

1. Env. Governance

2. Water consumption & management

3. Supply chain management & consumption

4. Waste Management & pollution

5. Fossil fuel, energy and emissions

6. Renewable Energy

7. Industry specific: Mining & Energy.


AFI/WWF Partnership

Companies reached and covered

0

1

2

3

4

5

6

7

8

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Number of Questionnaires per Covered Company

• 32 of SA’s largest listed companies

• Over R8trn in value

• Over 75% of the value of the ALSI


2016 AFI/WWF Partnership:

Response Analysis

• 14 Co’s with low/medium levels of Environmental Governance

• 2 Co’s without Environmental Reporting/Disclosure

• 13 Co’s did not disclose or measure Water Consumption

• 3 Co’s did not disclose their CO2eq Consumption

• 3 Co’s did not have Supply Chain Tracking and Tracing Procedures

• 2 Co’s with potential risks of Acid Mine Drainage

• Many inconsistent and blank responses to key questions


2016 AFI/WWF Partnership

The Follow Up

• AFI & WWF responded to AM’s in January 2017 based on our analysis and

findings

• AM’s responded to our letters

• AM’s engaged with company management ito. big E Risks

• Clarified their responses

• Filled in missing critical info

• Responses show high level of engagement

• Companies show a willingness to improve their Env. Management


Thank you

www.panda.org

© 2010, WWF. All photographs used in this presentation are copyright protected and courtesy of the WWF-Canon Global Photo Network and the respective photographers.


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