The World faces it last chance to prevent fatal warming as 190 countries will meet in Copenhagen in December to try to agree to a global framework to replace the Kyoto Protocol on fighting global warming, which expires in 2012. "It is now 12 years since Kyoto was created. This makes Copenhagen the world's last chance to stop climate change before it passes the point of no return," European Union Environment Commissioner Stavros Dimas told a climate conference in Budapest on Friday.
Meanwhile, college endowments are rethinking the aggressive strategies they adopted after chasing the impressive performance of the Yale endowment which has had a 17.8 percent average annual return over the last decade. Endowments have suffered, and for the year ending September 30, endowments and foundations were down on average 13.2 per cent compared with average public and corporate pensions, which were down 14.8 per cent and 15.5 per cent respectively, says Northern Trust. Considerable losses have most likely ensued since then, and this has caused endowments and pensions to rethink the structure of their asset allocation. Endowments in the US are often the first to incorporate new strategies and asset classes in their portfolios. Speaking at a recent conference in New York, Donald Lindsey, CIO of George Washington University says, "Rather than think about asset allocation, think about a macro view of the world. What are the major forces that are going to have a significant impact and really change the world in the next 10 years? Are there investable themes that can be capitalized on?" Core to an endowments investment policy is stewardship, the necessity to maintain purchasing power of invested principal for future generations, while meeting the liabilities of current generations.
Institutional investors behaviour must change in the months and years to come to better match the fact that their long-term horizons for liabilities and investments and diversified portfolios give them a direct and genuine fiduciary interest in the long term economic health and well-being of the world. Now is the opportune time for institutional investors to capitalize on the sustainable themes that will be crucial to ensure long-term economic growth. Institutional investors, including pension funds, should accept some degree of responsibility for the investment practices which have cause the global economic crisis, the UN Principles for Responsible Investment (UNPRI) Initiative has said. The body, which has over 500 members, said institutional investors should admit they made ‘mistakes’ in the run up to the crisis – but should work together in order to improve risk management and responsible investment practices in the future. California Public Employees' Retirement System (CalPERS) chief executive and UNPRI board member Anne Stausboll said: “CalPERS believes integrating responsible investing with our asset management is part of our fiduciary responsibility.
I urge all institutional investors to become signatories of the UN PRI and to attend the following event put on by the CFA Society of the UK Energy and Sustainable Investing Group who I have been working in collaboration with:
The New Era in Pension Fund Investing
Experiences from CalPERS
Russell Read, founder of C Change Investments and former CIO of CalPERS will give you invaluable investment lessons based on his experiences as chief investment officer at Calpers, the largest public pension fund in the US and a recognised global leader in the investment industry.
Russell’s lecture will cover the following key issues:
- New tools/approaches needed for asset allocation and risk management— influence of private markets
- Growth versus value inflection point — re-emergence of energy and materials
- New centrality of emerging market investments
- Divergence of public pension funds from private pensions, insurance companies, & foundations/endowments
- Value-added, principled ESG investing
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