AIM awarded A$150m Sunsuper institutional mandate

Sunsuper, one of Australia's largest superannuation funds with more than $69 billion in funds under management, has awarded its first green bond mandate to London-based impact fixed income manager, Affirmative Investment Management (AIM}, with an initial investment of A$150 million.  The mandate's objective is to deliver a mainstream financial return while providing financing to generate positive environmental and social impact projects. 

AIM win Environmental Finance Sustainable Investment Award

Affirmative Investment Management (AIM) are pleased to share the news that our proprietary SPECTRUM Bond® process has been named Best fixed income firm initiative for ESG investment process, in the inaugural Environmental Finance Sustainable Investment Awards 2019. The winners were decided by an independent panel of judges comprised of some of the world’s most eminent institutional investors and asset owners.

AIM was particularly proud to receive this accolade as recognition of our growing status in the marketplace and our focussed and unique approach to fixed income investing. We were the youngest company among this year’s winners, most of whom were much larger and more established asset managers. We believe this is a reflection of how, in a short space of time, AIM has proven itself as a key thought leader and active participant within the impact bond space.

Every investment undertaken by AIM is evaluated and confirmed by AIM’s in-house dedicated verification team as having a clear environmental and/or social impact. All investments have been positively identified, using the AIM SPECTRUM® criteria, to ensure transparency, good reporting, commitment to impact metrics and adherence to responsible investment principles—they must also be consistent with our mandate to support climate action and attainment of the sustainable development goals. ESG is not only core to our process but intrinsic in our objective to generate positive impact.

This award follows on from last year’s success, when the Lombard Odier Global Climate Bond Fund, managed by AIM, won the EF Green bond fund of the year category. It affirms AIM’s singular approach to investing, at a time when the asset management industry, more broadly, is recognising the urgency to mobilise more capital in a structured way to address global warming and to finance the UN Sustainable Development Goals.

AIM joins UN PRI’s Investor Initiative for Sustainable Forests

AIM has joined forces with fellow UN PRI signatories to combat tropical deforestation linked to soy production and cattle farming, as well as palm oil.  The two Investor Working Groups engage companies exposed to deforestation risks, primarily through their supply chains. Tropical deforestation in particular is linked to greenhouse gas emissions, displacement of local communities and ecological damage.

As a member of the Working Group on Cattle and Soy Production, AIM calls on companies to eliminate deforestation by leveraging the following practices:

  • Awareness and Governance

  • Risk Management and Traceability

  • Strategy and Risk Mitigation

  • Metrics and Monitoring

AIM also fully endorses the investor expectations of the Working Group on Sustainable Palm Oil:

  • No deforestation

  • No development on peat

  • No exploitation of People and Local Communities

AIM’s collaboration with the UN PRI reflects its concern over unsustainable land use practices as well as its commitment towards strengthening ESG standards in this sector.

Stephen Fitzgerald receives the Order of Australia award

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Congratulations to Stephen Fitzgerald, who was honoured with being appointed an Officer in the General Division of the Order of Australia for his distinguished service to the investment management sector, to Australia-Europe business relations, and to cultural and environmental philanthropy.     

Awarded each year, on Australia Day, the Order of Australia honours represent the highest recognition for outstanding achievement and service by Australian citizens. The Officer of the Order (AO) recognises distinguished service of a high degree to Australia or to humanity at large. 

We are very proud of the contribution Stephen has made across a number of important fields, and his leadership and vision at AIM.

Impact Report Launched for LO-Funds Global Climate Bond Fund

Affirmative Investment Management (AIM) publishes first impact report for LO-Funds Global Climate Bond Fund

Affirmative Investment Management (AIM), has released the first annual impact report for the LO Funds – Global Climate Bond. The report details over 1000 projects and initiatives that were fully or partially supported by the impact bonds the Fund invests in. The executive summary of the report can be found here.

The Fund, launched as a result of a partnership between Lombard Odier Investment Managers and AIM in March 2017, is designed to enable investors to benefit from the transition to a greener economy and aims to deliver measurable environmental and social impact in addition to financial performance. In 2017, 92 countries received impact bond commitments and disbursements from the Fund, which invested in support of all 17 Sustainable Development Goals.

Our impact report is an important component of the Fund for investors, evidencing the positive outcomes that result from their capital. The findings, stemming from a portfolio of mainstream fixed income investments, show that a pure play focus to investing, founded on deep analysis and engagement, can be beneficial to both investors and to broader society. The impact bond market has grown 173% on an annualised basis since 2007. As the market and the Fund size increases, so will the positive impact.
— Dr Judith Moore, Partner, Verification & Impact, AIM

AIM surveyed impact bond issuers to collect data on their disbursements, to determine impact indicators across the portfolio. 87% of the Fund’s impact bond issuer disbursements were dedicated to climate change mitigation activities associated with reducing greenhouse gas (GHG) emissions.  The Fund supported the avoidance of 78,431 CO2e per annum, the equivalent to taking 16,795 passenger vehicles off the road for a year, and low carbon transport in 26 countries, with capacity equivalent to 2 million passengers annually.

Other measurable portfolio-weighted impacts highlighted in the report includes:

  • Energy: Investing in energy solutions is critical for meeting the Paris Agreement and decarbonising sustainable development. Access to affordable, low carbon and reliable energy is a sustainable development priority reflected by Sustainable Development Goal (SDG) 7. The Fund supported 75 MW[1] of renewable energy installed capacity and over 244,450 MWh[2] of electricity generated annually, enough to power 19,644 homes in the US for 1 year.

  • Infrastructure: Current levels of investment into improving the energy efficiency of buildings is not on track to achieve a ‘2 degree scenario’. According to the International Energy Agency (IEA), buildings account for up to 40% of direct and indirect greenhouse gas emissions and up to 55% of global electricity demand. The Fund invested in issuers who made disbursements for green buildings in over 30 countries, resulting in 5,670 m² of area built to higher levels of energy efficiency.

  • Water resource management: As populations grow and natural environments become degraded, ensuring sufficient and safe water supplies is becoming more challenging. Promoting water quality and efficiency provides multiple benefits, from improved public health and food security to increased resilience against climate change and greenhouse gas emissions mitigation. The Fund’s impact bonds have supported 6,893 m³ in wastewater being treated daily – the equivalent to more than two Olympic-size swimming pools per day.

  • Financial inclusion and gender: The Fund invested in impact bonds that made disbursements to support SME loans (including microloans) to marginal groups or those in underperforming labour markets. A significant component within the Fund-supported SME loans were those to women-owned businesses (those with at least 51% owned by a woman/women, minimum 20% owned by women with at least one female senior executive, or women holding 30% or more seats on any board of directors). The Fund supported 5,687 SME loans in 17 countries, 4,713 of which were to women-owned businesses in emerging markets. 

About the fund

  • The Fund is a diversified investment grade portfolio seeking to simultaneously deliver a low carbon and climate-resilient economy and mitigate some of the effects of climate change, while targeting a higher yield than a typical investment grade portfolio with lower turnover

  • The portfolio purchases multi-currency denominated green, sustainable or social use-of-proceeds bonds and pure play bonds – only investing in impact bonds verified under AIM’s proprietary SPECTRUM Bond® framework

  • The Fund seeks a higher yield than the Bloomberg Barclays Global-Aggregate Index with comparable credit quality.


[1] MW refers to megawatts, which is equivalent to 1,000 kilowatts. This measures the maximum output of electricity that a generator can produce under ideal conditions at full capacity, representing the renewable energy power potential of a project.

[2] MWh refers to megawatt hours. To understand the unit of MWh: a wind turbine with a 1.5 MW capacity, running at an average 30% capacity for 24 hours over 365 days, will generate 1.5 x 0.3 x 24 x 365 = 3,942 MWh of electricity per annum.

 

Carbon Yield Insights Report Launched

 
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Carbon Yield Insights Report Summarizes Experience of Applying Carbon Yield On Over 55 Green Bond Issuers To Quantify Climate Change Mitigation Impact

Launched in New York at the Sustainable Finance Forum by Affirmative Investment Management (AIM) and ISS-climate, the Carbon Yield Insights Report summarizes the experience of applying the Carbon Yield on over 55 green and sustainability bond issuers over two years, as part of AIM’s impact reporting. The issuers combined have financed over 800 projects across 80 countries.

The Carbon Yield initiative—launched in 2016 with support provided through The Rockefeller Foundation’s ‘Zero Gap’ innovative finance portfolio —is one of the first methodologies to present a comparable, quantifiable metric that can be used by a variety of stakeholders, such as issuers, investors and analysts. The methodology looks at the projects financed via a green bond and then allocates to the bond the greenhouse gas emissions (GHG) mitigated based on the projects’ capital structure[1].

Since 2008, green bonds have presented a viable potential scalable solution to fund climate change mitigation and adaptation projects – growing to over US$340BN in terms of amount outstanding.[2] The vast majority of green bonds aim to fund mitigation-related activities, making them a powerful tool for supporting the Paris Agreement, the global initiative to limit the human-induced global temperature increase from pre-industrial levels to two degrees Celsius within this century.

The scale of mitigation, however, can vary greatly across green bonds and their funded activities. The Carbon Yield methodology provides transparency and information to investors and policymakers about the climate change mitigation potential of diverse projects to guide allocation of capital to optimize for GHG abatement. Investors can aggregate the Carbon Yields of different bonds in their investment portfolios to obtain a portfolio level Carbon Yield. This can then be communicated to their own investors and other stakeholders as part of their impact reporting. By using the Carbon Yield, investors can ensure that the mitigation impacts of their green bond holdings are being calculated consistently.

The new Carbon Yield Insights Report summarizes the experience and five key findings in applying the Carbon Yield, over a broad range of issuers – from European corporations to multinational development banks – and more importantly, a broad range of funded activities across a breadth of geographies.


Key Findings

  1. Renewable energy generation remains the most prominent sector in high Carbon Yield results– that is, renewable energy generation results in larger amounts of GHG emissions avoided per $1,000 invested than any other sector. A global comparison of Carbon Yields shows an inherent bias towards renewable energy generation investments, particularly in emerging markets, due to their carbon-intensive grids and heavy reliance on fossil fuels, when looking at the GHG avoidance results alone. Going forward, as the green bond market expands, it may be more appropriate to compare the Carbon Yields within a region or on a peer basis.

  2. Projects targeting energy efficiency show mixed results. The context in which, and the sector and technology where these efficiencies take place, matters. For some investors, investing in improving energy efficiency in carbon-intensive, fossil-fuel based technologies may be considered a highly impactful strategy and part of a low-carbon transition, while others may find it highly counterproductive in the journey towards a two-degrees future, since the project would make carbon-intensive technologies more competitive and long-lasting. The user of the Carbon Yield data therefore needs to consider the metric in relation to the above – it is not always the case that the larger the number the better.

  3. As a measure of impact on investment – costs matter. Technology capital and operating costs differ across geographies. Project costs and the green bond investment share of the total project cost are also critical to appropriately allocate impact. Currently this information can be very difficult to ascertain, and the report highlights the importance of this type of data in limiting double counting. The Carbon Yield methodology is unique in its guidance on apportioning impact to fixed income investments and recognizes the role of both equity and debt capital for the activities funded.

  4. Carbon Yield results quality is highly dependent on data accuracy and availability. There is a considerable variation in issuer reporting and further disclosure, but in the past two years, there has been improvement, and most issuers are interested and willing to engage with investors, such as AIM, to provide better information. The state of reporting would likely improve if more investors showed a greater interest in the results, which includes querying the reported data and requesting information where gaps exist.

  5. GHG emissions footprint data helps contextualise abatement results. In 2018, AIM and ISS-climate introduced GHG emissions footprint analysis, to supplement the Carbon Yield, a measure of emissions avoidance. This is to help mitigate some of the high baseline effects found in the Carbon Yield – for example, a Swedish green building project may have a low carbon yield, resulting from a smaller differential between project and baseline emissions as buildings are generally built to higher efficiency standards. However, the overall Scope 1 and 2 emission levels may be lower compared with a project in another country yielding higher levels of avoidance due to higher baseline emissions. Both types of information are important.

Looking ahead, as the green bond market continues to grow, and discussions around further standardisation continue to develop, for example the European Union’s High-Level Expert Group on Sustainable Finance (HLEG), the market remains dependent on voluntary initiatives. The AIM team is proud to have co-developed and been the first to apply the Carbon Yield. It is a publicly-available methodology aligned with GHG accounting best practice, designed to promote consistency in reporting around GHG abatement for green bonds. As investors we consider sustainability verification and impact reporting as a critical part of our business.
— Stuart Kinnersley, Co-Founder and Managing Partner, AIM.
It is an honor to be part of pioneering this important methodology. Quantitative estimations of the positive climate impact of green investments is key in effectively addressing climate change, through helping investors to identify projects with the highest climate change mitigation potential.”
— Maximilian Horster, Head of ISS-climate
We are witnessing the devastating daily consequences of climate change around the world, but the cost of addressing this challenge is staggering. The Rockefeller Foundation is proud to support the development of the Carbon Yield, with the goal of spurring investment in effective, impactful green projects.
— Saadia Madsbjerg, Managing Director, The Rockefeller Foundation.

About the Carbon Yield methodology

This methodology, funded by The Rockefeller Foundation, was produced as a collaboration between Lion’s Head Global Partners (LHGP), ISS-ESG and Affirmative Investment Management (AIM). The Carbon Yield does not offer investment advice and does not hold views on any specific investment, investment tool or investment strategy. Download the full summary of the Carbon Yield methodology here or visit the official website http://carbonyield.org/ .


Media contacts

The Rockefeller Foundation

Kavita Tomlinson, Dey

ktomlinson@dey.nyc

ISS

Sarah Ball, Associate Director, ISS

sarah.ball@issgovernance.com

 

Affirmative Investment Management

Lisa Wong, Partner, Impact

Lisa.wong@affirmativeim.com


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About Affirmative Investment Management (AIM)

Affirmative Investment Management Partners Limited (AIM) is a dedicated green and social bond asset management company. It is an independent, owner managed Private Company established in 2014. AIM comprises of a team of individuals who have been strong advocates and instrumental in the evolution of the green bond market. Creating the original green bond eligibility template, the world’s first green bond fund and the longest performance track record in the market place demonstrating no sacrifice to investment return.  AIM investments support the 17 UN Sustainable Development Goals and the Climate Change Paris Agreement (UN COP 21) and our approach is a fusion of mainstream portfolio management and sustainability principles. For more information, visit www.affirmativeim.com

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About ISS ESG

ISS ESG is the responsible investment arm of Institutional Shareholder Services Inc., the world’s leading provider of environmental, social, and governance solutions for asset owners, asset managers, hedge funds, and asset servicing providers. Under the ISS ESG umbrella are three discrete units that draw on deep historical and industry expertise, including: ISS-ethix, which enables investors to develop and integrate responsible investing policies and practices, engage on responsible investment issues, and monitor portfolio company practices through screening solutions; ISS-climate, which provides data, analytics and advisory services to help financial market participants understand, measure, and act on climate-related risks across all asset classes; and ISS-oekom, which provides corporate and country ESG research and ratings and enables its clients to identify material social and environmental risks and opportunities including through advisory services. ISS ESG clients rely on the expertise of all three to help them integrate responsible investing policies and practices into their strategy and shareholder voting decisions. For more information, visit issgovernance.com/esg.

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About Rockefeller Foundation

For more than 100 years, The Rockefeller Foundation’s mission has been to promote the well-being  of humanity throughout the world. Together with partners and grantees, The Rockefeller Foundation strives to catalyze and scale transformative innovations, create unlikely partnerships that span sectors, and take risks others cannot –or will not. For more information, please visit www.rockefellerfoundation.org.


[1] The Carbon Yield enables investors to determine the potential avoided emissions of Green Bonds.

[2] Bloomberg, as of August 2018

Affirmative Investment Management (AIM) Launches AIM US$ Liquid Impact Fund LLC

May 16, 2018

LONDON, UK – Today, Affirmative Investment Management (AIM) announces the launch of its latest impact fund:  the Delaware based AIM US$ Liquid Impact Fund LLC (US$ LIF).  The market for fixed income impact investments has been growing rapidly. US$ LIF is managed by AIM’s portfolio management team, led by Justin Eeles, Partner.  AIM has a track record of managing impact bond strategies since 2015.

The US$ LIF only invests in high grade issuances that have been evaluated and approved by AIM’s in-house Verification team. In addition to sustainability criteria, the evaluation process focuses on the engagement and transparency of reporting by the issuer and the measurable impact of the underlying proceeds. To align with AIM’s mission to help mobilise capital to address the major challenges the world faces, the fund supports those issuers that have demonstrated a commitment to aiding the transition to low carbon growth and supporting the UN Sustainable Development Goals.

The launch of the US$ LIF is testiment to AIM’s commitment to offer a pure play debt impact product across the entire yield curve.  We hope this will lead to an increased supply at the short end, helping to broaden, deepen and grow the overall impact bond market, something AIM is committed to facilitating.
— Stuart Kinnersley, Managing Partner

AIM has been running the Liquid Impact strategy for almost 3 years. Last July, AIM issued the landmark annual impact report for this strategy. This incorporated the Carbon Yield metric which AIM helped develop with key partners:  Lions Head Global Partners and South Pole Group (now ISS Ethix), and funded by The Rockefeller Foundation.

The Lombard Odier Global Climate Bond Fund, managed by AIM, was awarded ‘Green Bond Fund of the Year’ by Environmental Finance in March 2018. AIM has also recently announced a strategic Alliance Partnership with Colonial First State (CFS) and the launch of the Affirmative Global Bond Fund in Australia on the CFS platform.

 

Contact

Alya Kayal at Alya.kayal@affirmativeim.com

 

About Affirmative Investment Management

Affirmative Investment Management Partners Limited (AIM) is the first dedicated impact bond manager focusing solely on bond and cash investments that generate positive environmental and social externalities. It is an independent partnership established in 2014 with 19 investment professionals and is headquartered in London with representatives in Washington and Sydney.

AIM investments support the 17 UN Sustainable Development Goals (SDGs) and the Paris Agreement on climate change (UN COP 21) and their approach is a fusion of mainstream portfolio management and sustainability principles.

AIM will provide an Annual Impact Report on the US$ LIF’s impact from activities funded, such as water saved, and CO2 emissions avoided. This also allows AIM to ensure the bonds continue to meet the Fund’s sustainability and ESG criteria and align to UN SDGs.

Colonial First State announces new Alliance Partner offering

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Colonial First State (CFS) has unveiled its latest strategic Alliance Partnership with Affirmative Investment Management (AIM), to facilitate a new global fixed income offering, the Affirmative Global Bond Fund. This partnership brings the world’s first dedicated impact bond fund manager to retail investors in Australia and addresses a growing demand for impact investing.

AIM’s unique investment approach focuses solely on fixed income and cash investments that generate positive environmental impacts and social benefits, without compromising financial returns - it is a fusion of mainstream portfolio management and sustainability. Drawing on the experience of a team of leading experts in investment, sustainability and fixed income portfolio management, AIM strives to deliver positive solutions to global challenges.

CFS’s Affirmative Global Bond Fund is a diversified investment grade portfolio investing for the medium to long-term. Its investable universe consists only of issuers and issues that meet strict ESG and impact criteria.

The new Fund reflects the growing demand for investment products that adopt meaningful and measurable sustainable practices.
It enables our investors who wish to make a positive impact on society and the environment to mobilise their capital with a clear understanding of how their assets will be deployed, without compromising on risk or returns.
Our strategic partnerships are with highly specialised global investment managers that enable exclusive access to a broader suite of funds and we are delighted to be bringing the Affirmative Global Bond Fund to the Australian market.
— Peter Chun, General Manager Distribution, Colonial First State
Responsible investing has often been perceived as coming at a cost: either lower returns or increased risk. Our approach seeks to combine mainstream portfolio management and impact, without compromising either. Our partnership with CFS is an exciting opportunity to finance positive solutions to global challenges with a trusted Australian partner.
— Stephen Fitzgerald, Co-Founder and Managing Partner, AIM

The Affirmative Global Bond Fund will initially be offered on CFS’s FirstChoice and FirstWrap platforms from May 2018, alongside other Alliance Partners of Colonial First State, including Acadian, Aspect, Generation and Sanlam.

The establishment of an Alliance Partnership in the impact bond space forms part of CFS’s strategy to address climate change by helping Commonwealth Bank of Australia fund $15 billion of low carbon projects by 2025.

Editor’s Note: Stephen Fitzgerald will be presenting at the Colonial First State Investment Roadshow early in May. Please contact media@cba.com.au for further information.

 

Contact:

CBA Media - media@cba.com.au, +61 2 9118 6319

AIM - kate.temby@affirmativeim.com, +61 2 8074 3860

 

 

About Colonial First State

Colonial First State (which includes Colonial First State Investments Limited ABN 98 002 348 352 AFSL 232468 (CFSIL) and Avanteos Investments Limited ABN 20 096 259 979 AFSL 245531 (Avanteos) (trading as Custom Solutions) is the issuer of investment, superannuation and retirement products to individuals and corporate and superannuation fund investors, as well as being the operator and administrator of investment platforms.

CFSIL and Avanteos are owned ultimately by Commonwealth Bank of Australia ABN 48 123 123 124. The Commonwealth Bank of Australia and its subsidiaries do not guarantee performance or the repayment of capital of Colonial First State (including CFSIL and Avanteos).

This document may include general advice but does no take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) available from the product issuer carefully and assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision. PDSs for Colonial First State products are available at www.colonialfirststate.com.au.

About Affirmative Investment Management

Affirmative Investment Management Partners Limited (AIM) is the first dedicated impact bond manager focusing solely on bond and cash investments that generate positive environmental and social externalities. It is an independent partnership established in 2014 with 19 investment professionals and is headquartered in London with offices in Washington and Sydney.

AIM investments support the 17 UN Sustainable Development Goals (SDGs) and the Paris Agreement on climate change (UN COP 21) and their approach is a fusion of mainstream portfolio management and sustainability principles.

AIM delivers mainstream financial returns with positive environmental and social impact. Through its ongoing engagement with bond issuers to provide transparency and reporting, AIM provides an Annual Impact Report on the portfolio’s impact from activities funded, such as water saved and CO2 emissions avoided. This also allows AIM to ensure the bonds continue to meet the Fund’s sustainability and ESG criteria and align to UN SDGs.

IDA's Road to the Capital Markets

On April 19, 2018, the International Development Association (IDA) made its debut in the capital markets, joining a select group of top-tier supranational issuers with its first bond—a US$1.5 billion benchmark on the back of an orderbook totalling US$4.6 billion from investors around the world.

International Year of the Reef 2018

On 14 February, the Prince of Wales' International Sustainability Unit hosted 'International Year of the Reef 2018 – An Opportunity for Increasing Coral Reef Resilience Through New Collaborative Models’, which was attended by key representatives from the public sector, private sector, finance, science and NGO communities. The objective of this day-long meeting was to explore how existing efforts to mitigate the acute threats to reef ecosystems - from climate change, pollution and overfishing - can be scaled up and how different sectors can collaborate to provide financial incentives to improve coral reef health and resilience.

A member of the Board of the Great Barrier Reef Foundation since 2010, Stephen Fitzgerald participated in the panel discussion, alongside GBRF Managing Director, Anna Marsden, and they subsequently welcomed HRH The Prince of Wales to Australia’s Lady Elliott Island, for a round table and tour earlier this month. Attended by senior executives from BHP, Qantas and Lendlease, as well as Great Barrier Reef Marine Park Authority head, Russ Reichelt and top reef scientist, Ove Hoegh-Guldberg, this event also marked the launch of a reef islands restoration project to create a series of ‘arks’ that will provide a haven for thousands of species of reef wildlife and plants in an increasingly challenging environment.

This ambitious programme was initiated with a significant donation from Stephen’s foundation, with matched funding from the Queensland and Australian Governments, and has subsequently been supported by Australian property and infrastructure group, Lendlease.