Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Managers and funds as PRI Awards finalists
The Principles for Responsible Investment organisation annual awards will be announced at the PRI Digital Conference next week, October 18-21.
The conference and awards will provide a suitable opening act for the COP26 meetings to be held in Glasgow in the first week of November, arguably the most important climate change event in several years.
Finalists in each of the five PRI awards categories were announced last month. The two super funds in the running, in separate categories, are NZ Super for ‘Stewardship Initiative of the Year’, and Unisuper for ‘Real-world Impact Initiative of the Year’.
Big US-based managers dominated the ‘ESG Incorporation Initiative of the Year’ category with finalists J.P. Morgan Asset Management, Rockefeller Asset Management, Acadian Asset Management and GMO all US headquartered. BNP Paribas Asset Management is also in the running as the only non-US manager.
In the ‘ESG Research Innovation of the Year’ category, a collaboration between global manager Ninety One and the World Wildlife Foundation has been shortlisted alongside global manager Insight Investment (a BNY Mellon company), Sustainalytics (a specialist ESG research subsidiary of Morningstar) and MioTech, an artificial intelligence startup backed by Singapore’s GIC.
The Ninety One/WWF shortlisted project is the Climate and Nature Sovereign Risk Index, which was launched last year with the aim to harness the potential of the US$50 trillion sovereign debt market to support countries in their sustainable transition.
The benchmark encourages governments to seek green investment packages in order to make foreign investment and sovereign lending more attractive over the long term.
Australia, India, Portugal, Greece and the Gulf Cooperation Council are countries identified by the index as having the most to benefit from a green recovery.
Ninety One and the WWF have collaborated before in the interests of improving sustainability in the fixed income market. They produced a joint report in 2019, ‘Satellites and Sustainability’ which highlighted the critical role of sovereign debt investors in sustainability.
The KEHATI Foundation of Indonesia, which promotes biodiversity, is the only organisation to have been shortlisted in two categories, for the ‘Real-world Impact Initiative of the Year’ and the ‘Emerging Markets Initiative of the Year’, both for the same project.
The nominated project, SRI KEHATI, is also an index, launched in 2009 with the Indonesian Stock Exchange. The foundation’s aim is to “create mutualism between the world of conservation and the business sector”.
The finalists in each category for 2021 are:
ESG incorporation initiative of the year
| Shortlisted projects | Submitted by |
| ESG Improvers – an alpha enhancing factor | Rockefeller Asset Management |
| ESG Integration, Investment-Led, Expert-Drive | J.P. Morgan Asset Management |
| Green-leader or gree-washer? Using AI to prioritize company engagements | Acadian Asset Management |
| Inclusive Growth | BNP Paribas Asset Management |
| Integrating macro ESG metrics into emerging market sovereign debt investing | Grantham, Mayo, Van Otterloo & Co. LLC |
ESG research innovation of the year
| Shortlisted projects | Submitted by |
| Climate & Nature Sovereign Index: WWF & Ninety One | Ninety One, WWF |
| Incorporating Remote Sensing Data to ESG and Alternative Risk Monitoring | MioTech |
| Prime Climate Risk Ratings | Insight Investment |
| Sustainalytics – 10 for 2021 – Investing in the Circular Food Economy | Sustainalytics |
Stewardship initiative of the year
| Shortlisted projects | Submitted by |
| Coalition for Climate Resilient Investment (CCRI) | Willis Towers Watson |
| Collaborative engagement against the construction of Vung Ang 2 coal-fired power plant | Nordea Asset Management |
| Collaborative engagement with the social media companies | NZ Super Fund |
| Reconciliation and Responsible Investment Initiative | Shareholder Association for Research and Education (SHARE), National Aboriginal Trust Officers Association (NATOA) – both Canadian |
| Satellite-based engagement towards no-deforestation | ACTIAM |
Real-world impact initiative of the year
| Shortlisted projects | Submitted by |
| Norsad Finance | Norsad Finance |
| Novaxia R | Novaxia Investissement |
| “Preserve, Strengthen, Rebuild” Covid-19 Response | CDC Group |
| SRI KEHATI | KEHATI Foundation |
| UniSupers Sustainable Path to 2050 | UniSuper |
Emerging markets initiative of the year
| Shortlisted projects | Submitted by |
| Democratising ESG Investing: All-in-one Digital Platform | Crea8 Capital, Cammillion |
| Fixed income incorporation of Southern Asset Management | China Southern Asset Management |
| Harvest ESG Scoring System and its application advancing sustainable investment | Harvest Fund Management Co., Ltd |
| Norsad Finance | Norsad Finance |
| SRI KEHATI | KEHATI Foundation |
Registrations for the PRI Annual Conference and other information on: https://digitalconference.unpri.org/pri/
