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If you don't know how this works, the following links will help you: A common definition of Sustainable Development Investment would establish norms and minimum thresholds to qualify as aligned with sustainable development. Strengthened reporting requirements are then needed to implement the definition, enable a proper assessment of corporate contribution to the SDGs, and penalize unsustainable practices. The FSDR 2020 recommended the adoption of global mandatory disclosures on climate-related financial risk like those promoted by the Task Force on Climate-related Financial Disclosures.
A ‘surprising’ newcomer enters the list, as an investing ‘trend’ continues.
As the world confronts the prospect of a severe recession, where are investors choosing to put their money and which fund sectors do they believe will prosper post-pandemic?
Data from interactive investor, Money Observer’s parent company, reveals the appetite for technology and healthcare shows no signs of abating and investors’ apparent migration from passive to active funds continued in May, with the number of passive funds in the top 10 list falling from five to four. In March, eight of the top 10 funds were passive. The flight to funds in Vanguard’s low-cost LifeStrategy range, waned in May with Vanguard’s LifeStrategy 60% Equity, down three places to seventh, and Vanguard’s LifeStrategy 100% Equity, down four places to 10th.
The most-bought funds list suggests that investors are putting their faith and money in the hands of investment professionals in such uncertain times. The actively managed Baillie Gifford American fund has continued its march up the table and now claims the second spot, while Vanguard’s LifeStrategy 80% Equity fund, which had held second place for six months straight, slips down to third. Among Baillie Gifford American’s top holdings are ‘lockdown champions’, such as the Canadian e-commerce company and Amazon challenger Shopify, Mastercard, and Zoom Video Communications.
Edinburgh-based Baillie Gifford now has three of its investment funds in the most-bought list, including Baillie Gifford Global Discovery, which has risen six places to the fourth slot since last month. The fund offers investors exposure to healthcare (42.9%) and tech (20.2%), with a geographical breakdown weighted towards the US (67%).
Baillie Gifford is also behind the list’s only newcomer in May: Baillie Gifford Positive Change, which has entered the table in ninth place. The global fund’s objectives are to invest in “products or behaviour [that] make a positive impact on society and/or the environment in the investment manager’s opinion”. Investments are made in businesses “addressing critical challenges in areas such as, but not limited to; education, social inclusion, healthcare and the environment”. The largest exposure is to the healthcare sector (35%), while its top 10 holdings include Tesla, Alphabet, and Taiwan Semiconductor Manufacturing Company.
While the resilience of tech and healthcare stocks are currently appealing to investors, many also have a desire to invest in a way that has a positive influence on the environment, which may also be a factor behind Baillie Gifford Positive Change entering the top 10.
Months of home-working by millions around the globe has confirmed the dominance of tech in our lives. However, as lockdown restrictions ease, and employers mull allowing more staff to work from home on a regular basis, the tech that makes it possible is likely to attract more investment. Tech funds such as Polar Capital Global Technology jumped three places to the sixth spot, while L&G Global Technology Index has climbed two places to fifth. Its top 10 holdings include Microsoft, Apple, and Facebook, with an 80% exposure to the US.
The biggest faller in the table was Lindsell Train Global Equity, which is down five places to number eight. The fund, which is overseen by star fund manager Nick Train, has consumer defensive stocks Unilever, Diageo, and Heineken, among its top 10 holdings.
Seemingly, nothing can dislodge the grip of Terry Smith’s Fundsmith Equity from the top of the table – it is the only fund to retain its place from last month.
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Investments in road and rail confirmed
Ludwig Schleritzko (ÖVP), the Mobility and Finance Minister, emphasized that it was “good news” for the companies and their employees in the construction industry. The aim is to help companies at least not make full use of the registered short-time work for their employees. Therefore, the state of Lower Austria as well as the highway and expressway operator Asfinag and ÖBB will actually carry out all planned investments this year, despite the corona crisis. Some are joint projects of the state with Asfinag or ÖBB, some are own projects. The state of Lower Austria is investing in the road construction program and joint projects with the ÖBB this year 189 million euros, Asfinag is investing 270 million euros in Lower Austria, the ÖBB 564 million euros. Of the 189 million euros that the state of Lower Austria is investing this year, 125 million euros will flow into the state road network. 700 construction lots in 400 communities will be realized. The biggest project is the Wieselburg bypass, as regional councilor Schleritzko emphasized. This project will be completed with a month of corona-related delay this November.
Among the projects currently being implemented by Asfinag in Lower Austria are the construction of the eleven-kilometer section of the S3 between Hollabrunn and Guntersdorf, which will be completed at the end of the year, and the general renovation of the Sankt Pölten junction on the A1 and S33. In most cases, corona-related interruptions or delays in the implementation of the projects at the beginning of the crisis would have occurred, said Alexander Walcher, Managing Director of Asfinag Bau Management GmbH.
At ÖBB, the focus is currently on making the north-south axis more attractive, such as through the double-track expansion of the Pottendorf line, and work is also being done on expanding the Vienna-Bratislava route. According to Franz Bauer, CEO of ÖBB Infrastructure AG, the biggest project currently is the construction of the Semmering base tunnel. In addition, work is being carried out to mitigate railway crossings, to make train stations more attractive and to expand park and ride spaces (together with the state).
At the request of the NÖN, Schleritzko emphasized that investments will also be secured “from today's perspective” for 2021. The budget state parliament for the actual determination of the budget takes place in June. Nonetheless, a supplementary budget in the autumn for the costs caused by Corona will be needed, said Schleritzko. The country alone has 160 million euros in running costs due to expenses such as the increase in the hotline 1450 and various other expenses. "On the other hand, we are also losing revenue." Asfinag plans to invest around 270 million euros in projects along Lower Austria's motorways and expressway network in 2021 as well. Franz Bauer from ÖBB also describes the investments as "secured" due to the current framework plan for 2021.
Von Anita Kiefer.
Sustainable Investment Must be Defined and Reported: DESA Policy Brief | News | SDG Knowledge Hub | IISD
A policy brief from the UN Department of Economic and Social Affairs (DESA) makes the case for a common definition of sustainable development investment. A shared understanding could help ensure a meaningful contribution to the SDGs and hold companies accountable for the social and environmental behavior, the authors argue.
The policy brief released on 28 May 2020 titled, ‘How can investors move from greenwashing to SDG-enabling?,’ observes that companies must help build a sustainable world, which they need in order to preserve their long-term financial performance. However, investors may lack tools to measure activity and hold companies accountable. A common definition of Sustainable Development Investment (SDI) would establish norms and minimum thresholds to qualify as aligned with sustainable development. The authors note that the Global Investors for Sustainable Development (GISD) Alliance launched in October 2019 is working on a shared understanding of sustainable investing.
The time has come to shift from voluntary to mandatory sustainability reporting.
A common definition would need to be followed by strengthened reporting requirements. Regulatory frameworks would “enable a proper assessment of corporate contribution to the SDGs, but also penalize unsustainable practices and discourage short-term thinking in capital markets.”
The brief notes that the Financing for Sustainable Development Report 2020, prepared by over 60 international agencies from the UN system and beyond, recommended the adoption of global mandatory disclosures on climate-related financial risk like those promoted by the Task Force on Climate-related Financial Disclosures (TCFD).
The authors also identify three challenges to sustainability reporting by companies. First, its voluntary nature: “the time has come to shift from voluntary to mandatory sustainability reporting.” Second, the quality and absence of meaningful KPIs that connect to the SDGs; only 23% of multinational companies’ sustainability reports connect the SDGs to numerical performance indicators, and “without numbers, sustainability reporting quickly becomes a public relations exercise.” Third, the variety in type of information, which makes it hard to compare different companies’ data.
Finally, the brief notes that Canada has pioneered an approach in which companies receiving financial assistance for crises like the COVID-19 pandemic must commit to stricter reporting requirements on socioeconomic issues, as well as carbon reduction targets.
The brief is part of a series aimed at helping policy makers facing difficult choices during the COVID-19 pandemic. The series has also addressed the impacts of the pandemic on youth, older persons, persons with disabilities, and indigenous peoples, and how it is affecting physical activity and wellbeing; and accountability at the national level and the relationships between States and people, among other topics. [Publication: Policy Brief 77: How can investors move from greenwashing to SDG-enabling?] [DESA policy brief series]
Author: IISD’s SDG Knowledge Hub