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Sustainable
Responsible Investment
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What is RI? How to Operate it?
The development of RI
UN-Principle for Responsible Investment Equator Principles
Sustainability Reporting for corporations
Outline
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An investment approach for investors to recognize social and
sustainable value as crucial parts in investing decisions.
Choose a corporation with potential to achieve sustainabledevelopment and benefit ALL STAKEHOLDERS
Institutional investors mainly
Mission investing, bottom line investing, ethical investing,
green investing
What is Sustainable responsible
investment? (RI/SRI) ?
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What is Sustainable responsible
investment? (RI/SRI) ?
Investor
Corporation
Financial
Profit
Social
Benefit
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Long-term wealth and value
Encourage corporations to improve their ESG
performance to get funds
Facilitate sustainability management tools
Why Responsible investment?
Financial IndustryHelping Sustainability
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1920s UK retire fundNo investing in tobacco, wine,weapons
1999 Dow Jones Sustainability Index Family
2001 London FTSE4GOOD, focus on human right 2006 UN PRI
2010 AfricaSIT
Today in US fund market 12.2 % , over 260 RI funds
Asia- Over $ 2.5 billion Outperforming non-RI funds
THE DEVELOPMENT OF RI
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HOW DOES RI RUN?
Integrate ESG factors into
quantifiable valuation Long-term social invest premium
Externality
Non-financial/non-material issue
Facilitating
OrganizationUNEP EP WBSCD
Construct ESG rating
principles and Guidelines The UN PRI
EP
Financial Institution ESG into financial analysis ,
company valuation, decision
making
EnterpriseSustainability IndexRI investing product
Platform for
cooperation &
consulting
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HOW DOES RI RUN?
Community InvestingProvides capital for communities that are
underserved by traditional FIs Local service Ex: affordable housing , child care
Micro business
Charity
Low-income individual
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DIRECTING PRINCIPLES
United Nation Principles for Responsible
Investment (PRI)
- Established by Government
Equator Principles (EP)
- Established by Private enterprises
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A voluntary framework for investors to assess portfolios
with ESG consideration
2005, UNEP invited 20 FIs from 12 countries to
participate designing the principles
1010 investment institutions have signed
PRI Initiative
Funds come from subscription fee, government,international organizations and contributors
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Incorporate ESG issues into investment analysis and decision-making processes
Active owners and shareholder engagement
Promote implementation within investment industry
seek appropriate disclosure on ESG issues
Work together to enhance effectiveness
Report the implementation
Benefit Knowledge Reputation Access
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SAMPLE
GUIDELINE
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SAMPLE
GUIDELINE
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A benchmark for determining,assessing and
managing social & environmentalriskinproject
financing
Apply to projects with over $10 million in fund
2003 announced by 9 leading banks
Today 73 EPFIs in 27 countries, accounting for 70%transnational loans in emerging markets
EP steering committee
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protection of human rights and security (use of security
personnel)
cultural property and heritage
Biodiversity use of dangerous substances
labor living standards, health and safety
fire prevention
land acquisition and involuntary resettlement impacts on vulnerable groups
impacts on indigenous
participation of affected parties
pollution prevention
ASSESSMENT
SAMPLE
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IMPLEMENTATION
Categorizing
Apply to suitable benchmarkRisk assessment
To reduce negative impact
Negotiate with affected communitiesAction Plan
Governance
Priority consulting for high-risk projectsCommitment
Committee monitoring independentlyReporting
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SUSTAINABILITY
REPORTING
GRI(Global
Reporting Initiative)
provides all organizations with a
comprehensive sustainability
reporting framework
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WHAT ABOUT TAIWAN?
2009 Fubon Taiwan CSR Mutual Fund
2008 CDP (Carbon Disclosure Project) Taiwan 153
enterprises
Acer sponsoring CDP and promoting RI in Taiwan
2009 Bureau of Labor Insurance
Incorporating RI into investing policy statement
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OTHER TYPES OF RI?
Venture Philanthropy
B Lab
A community and brand for social or eco benefiting
corporations to cooperate and enjoy tax break
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REFLECTION
Industries with HIGH POLLUTION will never try
to adopt?
When maximizing shareholders profitcontradicts public benefits?
How to govern the TRUTH of implementation
as members increase?
What can Taiwan do ?
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Sustainability Investing
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Introduction
Rethinking about Taiwan
Sustainable analysis
Knowledge from practice
Outline
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IntroductionMission and Vision
Sustainable investment
Sustainable network
Walk the talk
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MissionOur mission is to drive sustainability thinking.
to be a leader in translating sustainability foresightinto outstanding investment results.
Vision
Our vision is to set the standard in Sustainability Investing.
SAMs mission and vision
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Along the way to sustainable investment
1995 world's first asset
management company
focusing exclusively
on sustainability investment
2001 SAM
Sustainable Water Strategy
2003 SAM Smart
Energy Strategy
2006
SAM Smart Materials Strategy
Sustainability Services
member of Robeco
2007
SAM Sustainable Healthy Living
Strategy
SAM Sustainable Climate Strategy
2009 ROBECO
Clean Tech Private Equity
2011 SAM SustainableAgribusiness Equities
The Dow Jones Sustainability
Indexes (DJSI)
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Sustainability Investing is
What is Sustainability Investment?
increasingly establishing itself as an effective approach to
generating long- term returns.
Integration sustainability factors into
asset management decisions
Sustainability Themes
Sustainability Core
Sustainability Indexes
Product offers:
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Walk the talk
.
10 Years CO2 neutral
The lighting concept of our new building is designed to save electricity
We reduce the environmental impact to reduce paper usage
We make a best effort to ensure that our suppliers comply
with eco-efficiency standards.
We make an effort to reduce its waste
We encourage use of public transport
Support of sustainable projects
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SAMs competitive advantage
Sustainable analysis
Sustainable criteria
Sustainable scoreSustainability to financial performance
Dow Jones Sustainability Index
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SAMs competitive advantage
value after integrating alphaSAMs competitive advantage
Value created bysustainability
value of traditionalfinancial analysis
company valuew/o sustainability
Alpha
General asset manager
company valuew/o sustainability
SAM
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Companiesthatcaneffectivelymanagerisksandseizeopportunitiesrelatedtosustainabilitytrendsexhibitasuperiorcapacitytoprosperoverthelongrun
Investment philosophy
SAM seeks to identify
companies that both:
1. demonstrate a core ability tomanage sustainability issues2. represent an attractiveinvestment opportunity
SustainabilitycriteriaAnalysis method:
Sustainabilityscore
evaluated in relation to
their industry peers
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Sustainable criteria
identify the sustainability trends that are likely to
have an impact on a companys ability to createshareholder value in the future
In conjunction with its professional network
of industry experts and NGOs, SAM then develops a
number of criteria designed to assess a company's
ability to manage challenges associated with these
trends.
industry-specific assessment
questionnaire, with information submitted directly by
the companies, allowing SAM to identify the leading
and lagging companies within each sector
The assessment is complemented by a media and
stakeholder analysis, which enables analysts to
consider additional information from NGOs and the
media
The CSA is reviewed on an annual basis by an
independent third-party auditing firm.
1
2
3
4
5
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SMssustainabilityscoreslaythefoundationforidentifyingcompanieswithsuperioralphapotential
Alpha from Sustainability
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Results reveal a positive relationship between
sustainability and financial performance
Sustainability to financial performance
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.
Dow Jones Sustainability Index
First global sustainability benchmarks
tracks the stock performance of the world's leading companies in terms of
economic, environmental and social criteria
provide an effective engagement platform for companies who want to
adopt sustainable best practices
Index Type Index (examples)
Composite Index Dow Jones Sustainability World Index (DJSI World)
Subset Indexes Dow Jones Sustainability World Developed Index (DJSI World Developed)
Dow Jones Sustainability World 80 Index
Dow Jones Sustainability World ex US Index
Dow Jones Sustainability World Index excluding Alcohol (DJSI World ex. Alcohol)
Customized Indexes Dow Jones Sustainability World Index excluding Australia (DJSI World ex Australia)
Dow Jones Sustainability World Index ex Australia and Tobacco (DJSI World ex
Australia ex Tobacco)
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The objectives of the DJSI World are:
Measure the global stock market performance of the top 10% of the leading
sustainability companies in all sectors
Provide a liquid base for a variety of financial products
Dow Jones Sustainability Index
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Source Weight(w/ signature from higherauthority )Weight(w/ o signature from higherauthority )
Questionnaire 70 % 50 %
Company documents 20 % 33.3 %
Verification-
-media and stakeholder-contact with company
10 % 16.6 %
Total 100 % 100 %
Questionnaire ResultSustainability scoreweighted sum according to different questions
Scope Score Criterialow 0 No evidence of operational study, no
background info; only case study available
medium 1
Acceptable quality document, including
general strategic statement, management
system , activities related data.
high 2
Good quality document, detailed objective of
strategic and implementation of performance
indicators
Score differentiated by scope of company document
Source of info
Analysis method of DJSI
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Dimension Criteria Weight
Economic Codes of
Conduct/Compliance/
Corruption & Bribery
5.4
Corporate Governance 3
Risk & Crisis
Management
3.6
Industry Specific
Criteria
Industry Specific
Environmen
t
Environmental
Reporting
1.8
Industry Specific
Criteria
Industry Specific
Social Corporate
Citizenship and
Philanthropy
2.4
Labor Practice
Indicators
3
Social Reporting 1.8
Talent Attraction &
Retention
2.4
Industry Specific
Criteria
Industry Specific
Total score is calculated by SAM Information
Management System.Formula:TS=[CLWCRWQUWASQAW+DAWDAS]QVS
TS= Total score
CLW= Weight of source
CRW=Weight of criteria
QUW=Weight of question
QAW=Weight of questionnaire assessment
DAW=Weight of quality document available
DAS=Score of quality document available
AS=Score of answer
QVS=Score of verified questionnaire
DJSI criteria and weight
DJSI---Sustainability score
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DJSI World---annual review
DJSI Sector
Classification
Corporate
Sustainability
Assessment
Sector Ranking
Eligible
CompaniesComponent
Selection
Eligible Sectors
1 2 3 4
5 6
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DJSI World---Ongoing maintenance
mergers
takeovers spin-offs
initial public offerings (IPOs)
Delisting and bankruptcy
continually reviewed for changes to the index composition necessitated by
extraordinary corporate actions
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Reference
Dow Jones Sustainability World Indexes Guide Book. 2011
SAM white paper: Alpha from Sustainability. 2011
--- SAM. 2011
. . 2010
. www.sustainability-index.com
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Green city -
Freiburg
Future Leader Teamfor Sustainable Entrepreneurship
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agenda
City Background
Actions
Green Communities
Price and Awards
Rethinking about Taiwan
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City background
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location
History: established in 1091
Population200 thousand Geological Condition
West of Schwarzwald
Plenty of natural resources
Eco-Businessover 2000 firms Value of output
over 650 million
Geological information
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Solar Industry & Research Network
square measure of solar panel over 11000 square meter
7300kWp
Capacity of Solar energy: 36.7kWp/person
Green City construction
kWp 1
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Why green city?
1970 Oil Crisis
Awareness on limitation of oil supply
1975 Plan of building a Nuclear power
plant in Wyhl
Anti-Nuclear Activity
1985- Conscious on
green city
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actions
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toward Sustainable economy
Development on Solar Industry
Awaken of peoples conscious throught Campaigns and events
Waste Management
Transportation
Eco-Tourism
Plan of Sustainable City
Commitments of Citizens
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actions
Policy
buildingsCitizens
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Chemobyl Nuclear Disaster in the Soviet Union (1986) Policy of New Energy
Petrochemical/Nuclear Power Renewable energy
Goals CO2 emission in 2010 25 less than 1992 Weight of renewable energy used: over 10%
Subsidyfrom the governmentinstallation on solarpanel 3-4% loan subsidy for 10-20 years
solar power buy-back for 20 years
policy
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House that can earn money Solar house
Electricity Output: 1/2 3/4 more than the average need for each house
Excess power buy-back from electron company
Encourage the use of renewable power Price of solar power
Cost 0.12/kWh if purchased from local electricity company(NT$5)
Citizens can sell 1kWh for 0.457NT$20)
Price of the house
buildings
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Concept of energy conservation
In order to reduce CO2 emission
Sharing of electric applications
Private car public transportation
Ride-sharing
Postman:
Ride bikes to deliver letters
Citizens
Vauban
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Established General Traffic and Transport Plan
Content Environment friendly in transport constructions
Goal Reduce traffic, promote the use of bike & publictransports modern urban light railway system
approx. 420 kmlong network of cycle tracks and lanes
9,000 bicycle parking racks local center concept
gives priority to basic shopping
facilities in the immediate
neighborhood
transportation
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between 1982 and 1999 volume of cycling (out of the total inner-city traffic volume)
15% 27%
local public transport 11%
18%
volume of car journeys38% 32%
Achievements in Transportation
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Handling and Sorting Charge rubbish handling fees
Sort rubbish into 7 colors
returnable container principle
80% of paper used are recycled financial incentives
discounts for collective waste disposal schemes
and for people who compost their green waste.
Treatment of non-recyclable waste incinerated in tREA, 20 km south of Freiburg
Heat supplies electricity to 25,000 households
energy generated from the fermentation of organicwaste covers 2% of Freiburgs electricity needs.
Waste management
l f l
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throwaway
sustainable consumer
behavior
ASF(waste disposal and urban sanitationcompany )
Organize eoo-system courses andguided tours for elementaryschoolchildren
Goals of waste planning
disposal
recycling
avoidance
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Green Communities
S l i S hli b
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Construction finished in 2000 & 2005
Building concepts:
utilize in energy, protection of ecosystem, architectural design
150 plus energy house within the community
Use local building material
High building cost, but
Income by selling electricity per household5000/year
8
Solar power community-Schlierberg
S i bl i V b
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Developed from old military barracks
Building concepts:
utilize in energy, protection of ecosystem, architectural design
Achievements in eco-buildings
Energy consumption of the community
- 30% below Germany average.
Cogeneration facility
(80%,20%, CO260%)
Electricity used 65% self-generate Promotion of ride-sharing, carless
living environment.
Sustainable community-Vauban
P i d A d
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in 1992, chosen as Germanys Environment Capital
honored with more awards in environmentalprotection and solar engineering : the European Public transport Award
the German Solar Prize
federal prizes for sustainability in urban development
top place in the Sustainable Community competition
Price and Awards
R thi ki b t t i
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Rethinking about taiwan
f
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Green City Freiburg. Retrieved time: 2012/03/02.Retrieved from http://www.freiburg.de/index.html
Freiburg Green City Brochure. . Retrieved time:2012/03/02. Retrieved from
http://www.fwtm.freiburg.de/servlet/PB/show/1199617_l2/GreenCity_E.pdf
2007202007
2007-2012/03/02http://www.materialsnet.com.tw/DocSearch.aspx
references
http://www.freiburg.de/index.htmlhttp://www.freiburg.de/index.htmlhttp://www.fwtm.freiburg.de/servlet/PB/show/1199617_l2/GreenCity_E.pdfhttp://www.fwtm.freiburg.de/servlet/PB/show/1199617_l2/GreenCity_E.pdfhttp://www.fwtm.freiburg.de/servlet/PB/show/1199617_l2/GreenCity_E.pdfhttp://www.materialsnet.com.tw/DocSearch.aspxhttp://www.materialsnet.com.tw/DocSearch.aspxhttp://www.materialsnet.com.tw/DocSearch.aspxhttp://www.materialsnet.com.tw/DocSearch.aspxhttp://www.materialsnet.com.tw/DocSearch.aspxhttp://www.materialsnet.com.tw/DocSearch.aspxhttp://www.fwtm.freiburg.de/servlet/PB/show/1199617_l2/GreenCity_E.pdfhttp://www.fwtm.freiburg.de/servlet/PB/show/1199617_l2/GreenCity_E.pdfhttp://www.fwtm.freiburg.de/servlet/PB/show/1199617_l2/GreenCity_E.pdfhttp://www.freiburg.de/index.htmlhttp://www.freiburg.de/index.htmlhttp://www.freiburg.de/index.html