Sustainable Finance Flashcards
UBS how many will pay more for a sustainable product?
69%
Across the MDBs backed by all G7 countries, how much debt is outstanding.?
USD 400 billion
4 reasons why sustainable data is not high quality
- limited standardisation
- varying amounts of data disclosed
- inconsistent location (it is spread across multiple reports)
- limited assurance (some firms use partial data)
What were some of the main shifts in practice since mid-2010s?
Considerable resources and expertise
Attract larger pool of institutional capital
Objective decision-making encourages efficiency
In 2023, are fees from sustainable issuance
greater than fees from the fossil fuel
industry.
In 2023, for the second year in the row,
fees from sustainable issuance were
greater than fees from the fossil fuel
industry.
How much is invested in private markets today?
ca. USD 300-400bn
How many (%) private market firms integrate ESG into their analysis?
70%
What are challenges of multilateral development bank bond (MDB)?
lack of transparency
Conflicting sustainability priorities
corruption
What are the disadvantages when building a sustainable investing strategy in a smaller firm?
Smaller pool of assets
Limited media footprint
What are the most popular standards?
ISSB
GRI
CSRD
What do charities & foundation investors care a lot about in sustainable investing?
Reputation protection, manager integrity, mission alignment
How much in % of thematic fund assets are actively managed?
Roughly 75 %
How much (%) does the USA embrace sustainability?
45%
What key building blocks did the traditional portfolios lack?
single currency investment-grade funds
corporate emerging market bond funds
gold
What is the challenges for sustainability-linked bond?
Greenwashing risk + financial impact
How many (in%) investors are not in favor for a single standard?
34%
How many (%) private market firms employ at least one full-time person in the area of sustainability?
20%
How does an engagement process typically function?
- Engagement priorities are defined
- portfolios are scanned for relevant targets
- an engagement strategy will be defined
- tools to succeed
- final analysis
What are challenges for recycled gold?
Cost
Scale
Provenance
How much (%) does the EU embrace sustainability?
80
Do exclusions help people and planet?
The use of exclusions does not have a direct material positive impact on people and planet
What are challenges for use-of-proceed bond?
Greenwashing risk
Liquidity risk
Portfolio construction risk
2 Challenges when implementing exclusion?
- Data quality
- Differing values
Challenges to MSCI rating?
- difficult to compare different sectors
- big firms have consultants to increase their rating
Which 3 countries have the least developed regulatory ecosystem?
US, China and Turkey
Does engagement impact investment returns?
Does engagement impact investment returns?
There is some evidence engagement can increase investment returns.
What are sustainable mortgages?
What are sustainable mortgages?
Sustainable - often called green - mortgages reward borrowers who either purchase an energy efficient home or commit to make improvements (bonus 110%)
Who has the most developed regulatory ecosystem?
European Union and Brazil
Do exclusions decrease investment returns?
maybe -ciclical
How much (in%) data produced by a corporate is suitable for potential comparison?
around 50% (the rest is idiosyncratic)
The issuance of bonds exceeds since their 2008 debut exceeds?
3 tril
How many banks are using “double materiality”?
52%
According to Goldman Sachs, how many assets are managed with sustainable engagement?
USD 1 trillion
Which bank got the most fees from fossil fuel issuance?
Wells Fargo
According to the Global Sustainable Investing Alliance (GSIA), how big is the sustainable investing industry?
35 tril
What are the ratings used by Sustainalitics?
the higher the worse
Negligible (0-10) Low (10-20) Medium (20-30) High (30-40) Severe (40+)
What are the characteristics of thematic investing?
Growth bias
diversification
purity
Active
How popular are traditional approaches, according to Goldman Sachs?
How popular are traditional approaches, according to Goldman Sachs?
sustainable public debt market funds receive just 20-30 per cent of the inflows enjoyed by their equity counterparts
What are the advantages when building a sustainable investing strategy in a large firm?
Large pool of existing assets
Impressive media footprint
Impressive network
Lots of resources
On what will the assessment for sutainable mortgages be based on?
an Energy Performance Certificate
(EPC)
In Europe, how much (in %) thematic fund assets are active funds?
90
How many (%) private market firms employ at least 30% women at the executive level?
10
What are the skills and expectations of an Environmental Social Governance (ESG) integration expert?
Skills: Research, academic, theory, financial materiality, investing
Expectations: To build a credible process that supports investment performance and client needs
How much is the Micro-credit ecosystem worth?
200 bill
What do private wealth investors care a lot about in sustainable investing?
What do private wealth investors care a lot about in sustainable investing?
Confidence in the manager’s advice and integrity, a sense of security, investment returns, purpose
What are the disadvantages when building a sustainable investing strategy in a large firm?
Complex organization
Multiple stakeholders
What are the advantages when building a sustainable investing strategy in a smaller firm?
Board and CEO level support
Closely knit organization
Limited bureaucracy
What are the skills and expectations of an Industry talking head?
What are the skills and expectations of an Industry talking head?
Skills: Public speaking, investor/client presentations, networking
Expectations: To raise the profile of the firm and to build sustainability-related credibility in the marketplace
How many sustainable regulation were there in 2022?
around 850
How many (%) private market firms consider diversity and inclusion important for investments?
90%
Integration Process
- Material ESG issues will be identified
- Measurement of ESG issues will be defined
- Economic rationales
- Financial impacts will be assessed
Do sustainable private markets add financial performance?
yes, 20% excess returns
How many key issues does MSCI consider?
35
How popular is thematic investing in 2020?
USD 800 billion
What are challenges for microcredit?
Event risk
Foreign exchange risk
Liquidity risk
How many thematic funds out of 10 outperformed a conventional benchmark?
Just one in 10 thematic funds outperformed a conventional benchmark.
How much (%) does Asia embrace sustainability?
55
Which bank got the most fees from sustainable issuance?
BNB Paribas
How many (%) private market firms have formal diversity and inclusion strategy?
40%
40
What are the three categories of the Credit Suisse categorization for banks?
Green
Transition
Social
Does integration impact investment returns?
positive relationship between ESG adherence and performance
What were the typical characteristics of sustainable private markets investments?
Charitable foundations
Small tickets
High costs
Concentration in emerging markets
Focus on bottom of the pyramid
What is the Principles for Responsible Banking (PRB)?
a framework for ensuring bank
practice aligns with the Sustainable
Development Goals and the Paris
Climate Agreement.
What do institutional investors care a lot about in sustainable investing?
Investment returns, the manager’sability to manage money, process,resources
