20190614 Advocacy ESG Joint Event with PRI

Transcript

1. - R E S P O N S I B L E I N V E S T M E N T - ESG INTEGRATION IN ASIA PACIFIC: MARKETS, PRACTICES AND DATA CFA-PRI ESG INTEGRATION STUDY 2017-19 Matthew McAdam, Director - Asia Pacific
2. Guidance and case studies for ESG integration 2 Guidance and case studies for ESG integration: equities and fixed income (2018) ESG integration in the Americas (2019) ESG integration in Asia Pacific (2019) ESG integration in EMEA (2019) 1,100 financial professionals surveyed 23 workshops in 17 major markets 30+ case studies written by equity and fixed- income practitioners PRI partnered with the CFA Institute to create a best-practice report and three regional reports on ESG integration in equity, corporate bond and sovereign debt portfolios.
3. Regional Findings: Asia Pacific § There is no “one best way” to do ESG integration and no “silver bullet” § Governance is the ESG factor most investors are integrating into their process. § Environmental and social factors are gaining acceptance, but from a low base. § ESG integration is farther along in the equity world than in fixed income. § Portfolio managers and analysts are more frequently integrating ESG into the investment process, but rarely adjusting their models based on ESG data. § The main drivers of ESG integration are risk management and client demand. § The main barriers to ESG integration are a limited understanding of ESG issues and a lack of comparable ESG data. § Investors acknowledge that ESG data has come a long way, but advances in quality and comparability of data still have a long way to go. § It would be helpful for issuers and investors to agree upon a single ESG reporting standard that could streamline the data collection process and produce more quality data. § Many workshop participants were concerned that ESG mutual funds and ETFs offered to investors may be driven by marketing decisions and may not be true ESG investment products. 3
4. ESG issues will grow in important – Listed Equities The impact of ESG issues on share prices in 2017 and the expected impact in 2022 4
5. ESG issues will grow in importance– corporate bonds The impact of ESG issues on corporate bond yields/spreads in 2017 and the expected impact in 2022 5
6. Global barriers to ESG integration Equities and fixed income 6
7. Barriers to ESG integration in selected global markets Equities 7
8. Barriers to ESG integration across Asia Pacific – equities 8 55% 42% 47% China 47% 44% 36% Singapore 45% 37% 39% Hong Kong SAR 45% 42% 42% India 51% 48% 44% Japan 58% 55% 45% Australia
9. Solutions: limited understanding of ESG issues / integration BARRIER SOLUTION EVIDENCE OF INVESTMENT BENEFIT • Both investors and clients need to be educated about the benefits of ESG integration • Knowledge sharing • Training ESG ISSUES • Definitional issues hinder investors and companies from discussing ESG issues. • Knowledge sharing • Training • Materiality frameworks MATERIALITY • What is the threshold for calling it material? • Is it a price change of 1%, 2%, or more? • Or is it a % difference between the intrinsic value and the market value? • Knowledge sharing • Training • Case studies ESG INTEGRATION PRACTICE • Difficult to understand what practitioners are actually doing to integrate ESG analysis • Knowledge sharing • Training • Case studies • Taxonomy 9
10. Solutions: limited understanding of ESG issues / integration 10 What does it not mean? What does that mean? “The systematic and explicit inclusion of ESG factors into investment analysis and investment decisions”. Definition of ESG integration § Certain sectors, countries and companies are prohibited from investing; § Traditional financial factors are ignored; § Portfolio returns are sacrificed to perform ESG integration techniques. § Analysing financial information and ESG information; § Identifying and assessing the impact of material financial factors and ESG factors; § making an investment decision based on all material factors, including ESG factors.
11. 11 Solutions: limited understanding of ESG issues / integration ESG integration Framework
12. ESG Integration Framework – Japan 12 § RESEARCH § Internal ESG Research § Materiality Framework § Centralised Research Dashboard § Voting § Individual/Collaborative/ Policy Engagement § SECURITY VALUATION § FI: Internal Credit Assessment § LE: Valuation Model Variables § LE: Forecasted Financials § PORTFOLIO CONSTRUCTION § Portfolio Weightings
13. Global, standardised and comparable ESG reporting by companies § Investor groups - CERES, CFA Institute, GIIN, GSIA, ICGN, UNEP-FI, PRI, FCLT - convene to speak with ‘a more unified voice’ on corporate ESG reporting § Work with a standard-setting group known as the Corporate Reporting Dialogue – CDP, CDSB, FASB, GRI, ISO, IFRS, IIRC, SASB - to incorporate material ESG-issues in accounting standards (starting with climate) § Ultimately, working towards a global, standardised and comparable reporting standard that includes ESG and ‘real-world impact’ ESG reporting by asset owners and investment managers 13 Solutions: lack of ESG data / limited ESG research
14. Questions 14
15. Guidance and case studies for ESG integration Summary of findings from PRI-CFA Institute regional reports (2018-19) AMERICAS ASIA PACIFIC EUROPE, MIDDLE EAST AND AFRICA ESG Drivers § Risk management § Client demand § Fiduciary duty § Risk management § Client demand § Regulation § Fiduciary duty § Risk management § Client demand § Alpha generation ESG Barriers § Lack of insight (on ESG issues) § Data quality § Performance fears § Lack of ESG culture § Lack of insight § Data quality § Performance fears § Low client demand § Limited ESG research § Lack of insight § Data quality § Performance fears § Too much non- material information Preferred ESG Approach § Screening § Risk management § Alpha generation § Screening § Risk management § Screening § Risk management § Alpha generation § Impact and SDGs Level of ESG integration § Product-level § Some firm-level § Product-level § Product-level § Firm-level Who owns the responsibility for implementing ESG integration § 44% PMs/analysts § 22% ESG specialist § 31% PMs/analysts § 44% ESG specialist § 45% PMs/analysts § 45% ESG specialist 15
16. ESG DISCLOSURES IN ASIA PACIFIC Piotr Zembrowski, CFA 14 June 2019
17. ESG DISCLOSURES Asset managers Issuers Stock exchanges Investors Government and regulators
18. ESG DISCLOSURES 3 • Australia • China • Hong Kong SAR • India • Japan • Singapore • Thailand • United Kingdom
19. MAIN FINDINGS • Volume of ESG disclosures increases, but quality lags • Solid ESG disclosure practices usually take time to develop, but fast progress is possible • Disclosure regimes differ widely, in level of obligation, specificity and coverage • Reporting obligations follow “race to the top” pattern of tightening, from voluntary, to “comply-or-explain”, to mandatory. 4
20. MAIN FINDINGS • Reporting obligations for large companies tend to be stricter and broader than those of smaller ones • Governance issues used to dominate, now environmental issues are coming to the forefront • Global frameworks are used by some regulators, but the number of different ones adds confusion 5
21. RECOMMENDATIONS For governments, regulators, and stock exchanges • Ensure meaningful, accurate, timely, and comprehensive disclosures • Work toward harmonisation of global frameworks • Articulate benefits of ESG disclosures to issuers • Offer guidance and training to issuers 6
22. RECOMMENDATIONS For issuers • Educate the board and senior executives on relationship of ESG to strategy and risk management and on the importance of ESG reporting • Ensure disclosures of relevant and material ESG information For asset owners and investment managers • Demand high quality ESG information from issuers • Articulate the effect of material ESG information on company valuation 7
23. JAPAN How does Japan stand out on ESG disclosures in the region? • Earliest voluntary ESG disclosure guidance (2003) • Environmental disclosures driven by government, not exchanges • Environmental disclosures an early priority • Recent focus on corporate governance (2015) • Integrated Reporting <IR> framework has been adopted by 57% of Nikkei 225 companies.* * Source: KPMG 8
24. CHINA Pushing ahead on environmental disclosures 2016 – People’s Bank of China published Guidelines for Establishing a Green Financial System - Timeline of implementation of mandatory environmental disclosures by 2020 - Proposed KPI disclosures are currently under industry consultation 9
25. HONG KONG SAR Strengthening disclosure requirements May 2019: Stock Exchange of Hong Kong published a consultation paper on ESG disclosures, proposing: • Mandatory disclosures of ESG policies • Disclosures of significant climate-related issues • Require KPI targets for environmental disclosures • Tighten Social KPI requirement to “comply or explain” from voluntary • Shorten deadline for publication of ESG reports 10
26. GOLD STAR IN SUSTAINABILITY REPORTING Stock exchange Disclosure Growth Timeliness Helsinki Stock Exchange 1 18 32 Euronext Paris 2 28 16 BME Spanish Stock Exchanges 3 33 10 Deutsche Börse 4 5 12 Euronext Amsterdam 5 15 7 Borsa Italiana 6 8 17 Johannesburg Stock Exchange 8 22 3 Oslo Børs 9 26 4 SIX Swiss Exchange 10 29 9 Ranking of the world’s top 10 exchanges based on ESG disclosures Source: 2018 Report on Progress, Sustainable Stock Exchanges Initiative, Corporate Knights Stock Exchange of Thailand 7 23 13
27. STOCK EXCHANGE OF THAILAND Ranking on sustainability disclosures by Corporate Knights 2013 – 2018 (out of 45 global exchanges) 12 40 27 17 13 10 7 2013 2014 2015 2016 2017 2018 Source: Corporate Knights
28. THAILAND: REGULATORY INITIATIVES • 2010 – Stock Exchange of Thailand (SET) publishes Guidelines for Sustainability Reporting, based on GRI framework • 2014 – Securities and Exchange Commission (SEC) requires corporate social responsibility (CSR) disclosures • 2017 – SEC issues new Corporate Governance Code requiring sustainability reporting 13
29. STOCK EXCHANGE OF THAILAND • Disclosure of key performance indicators (KPIs) remains voluntary • SET provides on-going strategic training on sustainability reporting, environmental risks, and materiality • SET views good ESG disclosures as: - Diversifying factor - Competitive advantage - Attracting foreign investors 14
30. DOW JONES SUSTAINABILITY EMERGING MARKETS INDEX Stocks listed on Stock Exchange of Thailand punch above their weight in global emerging market indices. 15 Taiwan 20 Thailand 20 India 10 Brazil 10 South Africa 10 Colombia 8 Chile 5 Mexico 3 Turkey 2 Malaysia 2 China 1 Russia 1 Philippines 1 UAE 1 Source: S&P Dow Jones Indices, Robeco SAM, as of 24 September 2018
31. CFA INSTITUTE OUTCOME-FOCUSED APPROACH TO ESG CFA Institute mission Strategic partnerships Creating awareness and impact Engagement and outreach Thought leadership
32. JOIN THE COMMUNITY www.arx.cfa SHARE LEARN ENGAGE
33. Fixed Income Case Studies: Corporate Bonds 日本の社債投資関係者へのインプリケーション 2019年6月14日 日本CFA協会理事 三木隆二郎（CFA) Advocacy ESG Joint Event
34. ESGインテグレーションとは • ESGインテグレーションの定義 • 「投資分析や投資意思決定にESG要因を明示的かつ体系的に含めること」 • ESG要因と伝統的な財務要因からなるマテリアルな要因を見つけ出し評価して投資意思決 定を形作るような、投資分析の全体観的手法である。 • 「ESG インテグレーション・フレームワーク」とは • 実務家が同業他社のESGインテグレーション・テクニックを分析し自社に適したテク ニックを見つけ出すために参照するもの • WHAT ESG INTEGRATION IS NOT? • あるセクター、国、企業への投資の禁止 • ポートフォリオ・リターンがESGインテグレーション・テクニックで犠牲になる • マテリアルでないESG要因が投資意思決定に影響を与える • 投資プロセスに大幅な変更が必要となる
35. 債券におけるESGインテグレーション • 債券投資の実務家は株式投資に比し、ESGインテグレーションをそれほど使っていない 株式 債券 ガバナンス 56% 42% 環境 37% 27% 社会 35% 27% • 債券市場が株より大きく、金利や流動性リスクを評価する際、ESG課題を信用リスク評 価にインテグレーションするのをむつかしくしている。 • 社債保有者は議決権行使出来ないので経営層に効果的にエンゲージメントすることを 難しくしている。ソヴリン債券はなおさらだ。 • 信用市場の流動性の低さのため、ESG訴訟のニュースにより債券を売買することを難し くしている • 伝統的財務要因（金利・インフレ等）の影響のほうが大きい
36. なぜ社債投資でESG分析が重要か • 社債投資でガバナンス劣悪企業に投資していると価格急落も… • 「ESGの中でガバナンスはどんな発行体でも重要」（Insight Investment) • ESGリスクの程度によっては発行体の今後の信用に波及する可能性 もあり、クレジットについての意見を変えることにつながることも… • 株はアップサイドの成長の潜在性に焦点を当てる傾向があるが、債 券投資家はよりダウンサイドを気にするのでESG分析が有用 • ESG分析の出発点として信用力調査の観点から最もマテリアルな ESG課題を抽出するプロセスが、投資先企業への理解を深める
37. 社債投資ESGインテグレーションのプロセス 7社のケースから導き出されるインプリケーション • ファンダメンタルズ分析に影響を与えるマテリアルなESGリスク要因を分析 • 定量分析…各社固有の独自ノウハウを入れ込んだ定量モデルによるスコア • 定性分析…エンゲージメントから得る情報が重要 • ESGインテグレーションを行うためには自社固有のモデル化が必要 • マテリアルなESGかどうかを決める助けになるのはSASBが開発した基準 • マテリアルなリスクは産業セクターにより異なる • マテリアリティの判別 • その情報を省略することが株主や投資家の決断に影響を与えるかどうか • 有益なエンゲージメントを素早く行うことはリスク管理に役立つだけでなく 潜在的な投資機会を生み出すことにすら役立つ。 • アナリストはかなりの時間を発行体経営幹部との面談に使う • エンゲージメントからの情報が発行体ESGスコアに影響を持つ
38. （１） Breckinridge Capital Advisors • p104
39. （2） Hermes Investment Management • p107
40. （3） Insight Investment • p111
41. （3） Insight Investment • p112
42. （4）MAN GLG • ガバナンスはどんな発行体でも重要 • P115
43. (5)PIMCO …ESGスコア構成要素 • P118-119 環境(15％) ・サステイナブル貸付 ・環境と持続性計画の評価 ・グリーンボンド発行 社会(25％) ・システミックな重要性と規制環境 ・引受と商品の安全性におけるESGの統合 ・顧客のプライバシーとデータ保護 ガバナンス(60％) ・社風とビジネス行為 ・リスク管理とリスク・アピタイト ・会計の質 ・取締役会の質 ・人的資本
44. (5)PIMCO • p118
45. (5)PIMCO • p119
46. (6)ROBECO • p123
47. (7)UBS Asset Management • p127
48. 債券投資戦略にESGを組み込む上での課題 • 中核的なビジネスドライバーにマテリアルな影響を与えるESG課題を如何に 抽出するか • ESGデータの一貫性のなさをどう克服するか • ESG専担チームを作るか、各アナリストがESG含め分析するか • ESG格付を作り内部格付を作るか、ESGを勘案したファンダメンタルズ格付か • 「プロバイダーによるESG関連データがないエマージング市場とハイイイー ルド市場の債券へのESG格付をどのように付与するか」(Insight) • 「ソヴリン債券と社債のESG格付付与方法をどう統合するか(UBS AM) • ESG格付はあらゆるトピックを網羅するのですぐ投資に応用するには幅が広 すぎる。さらにESG格付は債券と株の違いを重要性の点で同一視してしまう 傾向がある。」（UBS AM)
49. 補足 • 用語の整理 • 投資家によっては「責任投資」と「ESG」を同義として使っている。しかしInsight 社では責任投資はESG課題にのみ焦点を当てるものよりもずっと幅広いア プローチだと考えている（ Insight Investment） • 学術論文 • 「マテリアルなESG課題についてのパフォーマンスが力強い企業は同業他社 をアウトパフォームする」（” Corporate Sustainability: First Evidence on Materiality” by Harvard Business School researchers Mozaffar Khan, George Serafeim, and Aaron Yoon 2015) 以上
50. M E M O