The latest development in the industry is upending this dynamic. Private-markets giants are buying and partnering with insurers on an unprecedented scale. This is transforming their business models, as they expand their lending operations and sometimes their balance-sheets. America’s $1.1trn market for fixed annuities, a type of retirement-savings product offered by life insurers, has been the focus so far. But Morgan Stanley, a bank, reckons that asset managers could eventually pursue insurance assets worth $30trn worldwide. Regulators are nervous that this is making the insurance industry riskier. Is the expansion by private-markets giants a land-grab by fast-and-loose investors in a systemically important corner of finance? Or is it the intended consequence of a more tightly policed banking system?

Apollo, which has a well-deserved reputation for financial acrobatics, is leading the way. In 2009 it invested in Athene, a newly formed reinsurance business based in Bermuda. By 2022, when Apollo merged with Athene, the operation had grown to sell more fixed annuities than any other insurer in America. Today Apollo manages more than $300bn on behalf of its insurance business. During the first three quarters of 2023, the firm’s “spread-related earnings”, the money it earned investing policyholders’ premiums, came to $2.4bn, or nearly two-thirds of total earnings.

Imitation can be a profitable form of flattery. kkr’s tie-up with Global Atlantic, an insurer it finished buying this month, resembles Apollo’s bet. Blackstone, meanwhile, prefers to take minority stakes. It now manages $178bn of insurance assets, collecting handsome fees. Brookfield and Carlyle have backed large Bermuda-based reinsurance outfits. tpg is discussing partnerships. Smaller investment firms are also involved. All told, life insurers owned by investment firms have amassed assets of nearly $800bn. And the traffic has not been entirely one-way. In November Manulife, a Canadian insurer, announced a deal to buy cqs, a private-credit investor.

Read it all.

Wall Street titans are betting big on insurers. What could go wrong? https://t.co/GeGZs4ULQN

— Tim McBride (@mcbridetd on Bluesky) (@mcbridetd) January 24, 2024

he share of Americans who own stocks has never been so high.

About 58% of U.S. households owned stocks in 2022, according to the Federal Reserve’s survey of consumer finances released this fall. That is up from 53% in 2019 and marks the highest household stock-ownership rate recorded in the triennial survey. The cohort includes families holding individual shares directly and those owning stocks indirectly through funds, retirement accounts or other managed accounts.

The data provide the most comprehensive snapshot yet of how the Covid-era explosion in investing has reshaped Americans’ personal finances. Stuck at home during the pandemic with extra cash, millions jumped into the stock market for the first time. The elimination of commission fees on stock trading across U.S. brokerages made investing cheaper than ever.

“It created a whole generation of investors,” said Anthony Denier, chief executive of mobile brokerage Webull U.S.

Read it all.

The percentage of Americans who own stocks has never been higher. The pandemic and zero-commission trading created a whole generation of investors https://t.co/dbbcwsD9zg

— WSJ Markets (@WSJmarkets) December 18, 2023

The U.S. Treasury prefers its debt sales to be humdrum affairs. Lately, they are sparking fireworks in markets.

Scrutiny of Treasury auctions—whereby the government funds operations by selling the world’s safest bonds to big banks and dealers—has grown alongside their size. For years, many in Washington and on Wall Street assumed that investors would buy any number of bonds the government issued, no matter the fiscal outlook. Testing that assumption: the sale of $20.8 trillion of new Treasurys in the first 11 months of the year—set to surpass 2020’s record of just under $21 trillion.

Whether the market can absorb the rolling waves of debt without disruption is the biggest question on Wall Street ahead of this week’s planned Treasury auctions. A combined $108 billion of 3-year, 10-year and 30-year bonds hit the block Monday and Tuesday, along with $213 billion of shorter-term bills. The last 30-year auction was so poorly received that it rattled other parts of the markets. Investors fear that signs of weak demand might spread similar tumult, raise the cost of government borrowing and hurt the economy.

Read it all.

Why Treasury Auctions Have Wall Street on Edge (WSJ)

(full article in first reply below)

The U.S. Treasury prefers its debt sales to be humdrum affairs. Lately, they are sparking fireworks in markets.

Scrutiny of Treasury auctions—whereby the government funds operations by… pic.twitter.com/7QCf9L81Bf

— FXHedge (@Fxhedgers) December 11, 2023

Investors overseeing $23.6 trillion of funds have kick-started a campaign to pressure 100 companies to ramp up the fight against biodiversity loss.

Axa Investment Managers, Robeco, the Church Commissioners for England, Storebrand Asset Management and 186 other participants in the Nature Action 100 initiative have written to companies demanding “urgent and necessary actions” to protect and restore ecosystems, according to a statement released Tuesday.

The targeted companies include BHP Group Plc, Alibaba Group Holding Ltd, Nestle SA, Bayer AG, Amazon.com Inc. and Unilever Plc. They were selected based on their market values and participation in industries ranging from mining, food and pharmaceuticals to chemicals and forestry that are considered vital to reversing biodiversity loss by 2030.

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Investors overseeing $23.6 trillion of funds have kick-started a campaign to pressure 100 companies to ramp up the fight against biodiversity loss https://t.co/YBXl6RtBou

— Bloomberg (@business) September 26, 2023

The Church of England Pensions Board is today announcing its intention to disinvest from Shell plc and other oil and gas companies which are failing to show sufficient ambition to decarbonise in line with the aims of the Paris Agreement.

The new investment restriction announced today will apply to all oil and gas companies that do not have short, medium and long term emissions reduction targets aligned with limiting global warming to 1.5°C, as assessed by the independent Transition Pathway Initiative. The exclusion will apply to equity and also debt investments.

“Today we announce our intention to disinvest from all remaining oil and gas holdings across our equity and debt portfolio,” said John Ball, Chief Executive Officer of the Church of England Pensions Board. “There is a significant misalignment between the long term interests of our pension fund and continued investment in companies seeking short term profit maximisation at the expense of the ambition needed to achieve the goals of the Paris Agreement. Recent reversals of previous commitments, most notably by BP and Shell, has undermined confidence in the sector’s ability to transition”.

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Church Commissioners for England to exclude oil & gas companies from investments portfolio over failure to align with climate goals. Pensions Board also to disinvest from oil & gas companies failing to show ambition to decarbonisehttps://t.co/nSHPLTZOEYhttps://t.co/BbntlGm7G6

— Church of England in Parliament (@churchstate) June 22, 2023

The Church Commissioners and the Church of England Pensions Board are to remove Shell, BP, and other oil and gas firms from their investment portfolios, because they are not reducing their carbon emissions quickly enough.

The investment bodies were instructed by the General Synod in 2018 to disinvest from fossil-fuel companies by 2023 unless the latter could prove that they were on the path to tackling climate change, in line with the Paris Agreement (News, 13 July 2018).

The Commissioners, who manage a £10.3-billion endowment fund, announced on Thursday that they had “decided to exclude all remaining oil and gas majors from [their] portfolio, and will exclude all other companies primarily engaged in the exploration, production and refining of oil or gas, unless they are in genuine alignment with a 1.5°C pathway, by the end of 2023.

“In 2021, the Church Commissioners excluded 20 oil and gas majors from [their] investment portfolio. [They are] now also excluding BP, Ecopetrol, Eni, Equinor, ExxonMobil, Occidental Petroleum, Pemex, Repsol, Sasol, Shell, and Total, after concluding that none are aligned with the goals of the Paris Climate Agreement, as assessed by the Transition Pathway Initiative (TPI).”

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The Church Commissioners and the Church of England Pensions Board are to remove Shell, BP, and other oil and gas firms from their investment portfolios, because they are not reducing their carbon emissions quickly enoughhttps://t.co/AvBQ86cUjC

— Church Times (@ChurchTimes) June 22, 2023

Treasury Secretary Janet Yellen said that the government could become unable to pay bills on time by June 1. In that case, the Treasury Department could halt payments, such as to federal employees or veterans.

In a worst-case scenario, a failure to pay holders of U.S. government debt, a linchpin of the global financial system, could trigger severe recession and send stock prices plummeting and borrowing costs soaring.

Many economists don’t expect a default for the first time in U.S. history. But they outline three potential ways the standoff could affect the economy and financial system, ranging from not great to extremely scary.

Read it all.

U.S. lawmakers might have just days to act before the standoff over the debt ceiling reverberates through the economy https://t.co/JM1UfZ7HfW

— Real Time Economics (@WSJecon) May 22, 2023

The Federal Reserve is facing criticism over Silicon Valley Bank’s collapse, with lawmakers and financial regulation experts asking why the regulator failed to catch and stop seemingly obvious risks. That concern is galvanizing a review of how the central bank oversees financial institutions — one that could end in stricter rules for a range of banks.

In particular, the episode could result in meaningful regulatory and supervisory changes for institutions — like Silicon Valley Bank — that are large but not large enough to be considered globally systemic and thus subject to tougher oversight and rules. Smaller banks face lighter regulations than the largest ones, which go through regular and extensive tests of their financial health and have to more closely police how much easy-to-tap cash they have to serve as a buffer in times of crisis.

Regulators and lawmakers are focused both on whether a deregulatory push in 2018, during the Trump administration, went too far, and on whether existing rules are sufficient in a changing world.

While it is too early to predict the outcome, the shock waves that Silicon Valley Bank’s demise sent through the financial system, and the sweeping response the government staged to prevent it from inciting a nationwide bank run, are clearly intensifying the pressure for stronger oversight.

Read it all.

What happened at Silicon Valley Bank? The failure has accusing fingers pointed at the Fed. And at the central bank, it's kicked off a bout of regulatory soul-searching.

with @FlitterOnFraud https://t.co/qptaFO0iSO

— Jeanna Smialek (@jeannasmialek) March 15, 2023

It’s been a widely accepted trend in financial circles for nearly two decades. But suddenly, Republicans have launched an assault on a philosophy that says that companies should be concerned with not just profits but also how their businesses affect the environment and society.

More than $18 trillion is held in investment funds that follow the investing principle known as E.S.G. — shorthand for prioritizing environmental, social and governance factors — a strategy that has been adopted by major corporations around the globe.

Now, Republicans around the country say Wall Street has taken a sharp left turn, attacking what they term “woke capitalism” and dragging businesses, their onetime allies, into the culture wars.

The rancor escalated on Tuesday as Republicans in Congress used their new majority in the House to vote by a margin of 216 to 204 to repeal a Department of Labor rule that allows retirement funds to consider climate change and other factors when choosing companies in which to invest. In the Senate, Republicans are lining up behind a similar effort and have been joined by Senator Joe Manchin III, Democrat of West Virginia.

Read it all.

(NYT front page) The Cultural and Partisan Divide
Of Socially Conscious #Investing https://t.co/uLO6W0hcKW #economy #stockmarket #ESG #corporations #ecology #culture #21stc

— Kendall Harmon (@KendallHarmon6) March 1, 2023

Americans are more likely to predict negative rather than positive outcomes for five key aspects of the U.S. economy over the next six months. Higher inflation, unemployment and interest rates, as well as reduced economic growth and stock market values, are all expected.

A majority of U.S. adults (67%) expect inflation to rise, although more (79%) predicted that it would last year. At the same time, the public’s outlook for unemployment and the stock market have become more pessimistic and are now negative on balance. Expectations for economic growth and the stock market are the most pessimistic in Gallup’s periodic trend.

Gallup first asked Americans in October 2001 what they expected would happen with these five aspects of the economy and updated them monthly until 2006. Since then, Gallup has asked about them eight times, though not during the late 2007-early 2009 Great Recession. The latest results are from the Jan. 2-22 Mood of the Nation poll, which also found that Americans’ confidence in the economy remains low, mentions of inflation as the nation’s most important problem are still elevated and perceptions of the job market are positive but weakened compared with a year ago.

Read it all.

Americans are more likely to predict worsening rather than improving conditions for five economic aspects, including inflation, unemployment, economic growth, the stock market and interest rates. https://t.co/xsV2WlFSyE

— GallupNews (@GallupNews) February 6, 2023

What are the virtues that will bring the City to a golden age, not just successful by material standards, but good human beings; saving a legacy of global flourishing? What are they with next year the 10th Anniversary of the publication of the Parliamentary Banking Standards Commission report, which focused on virtue?

Ethics and virtues aren’t inscribed on paper or tablets.

They can only be written on the human heart.

As a banker at the Commission in 2012 said when shown a dense two-page ethical code designed for use in a large dealing room – ‘it would make a rather good paper aeroplane’.

The greatest failures in our society come from the absence of the virtues of self-awareness; that we do believe in our own sinless perfection, and we don’t believe in sin.

If we can’t acknowledge our shortcomings, our sins, we don’t learn from our failures. And if we don’t think we need forgiveness, we don’t give it to others. Forgiveness oils the wheels of society, of politics, of the markets. It makes civilisation possible. After war it may take generations, reasonably and understandably, but without it the international future is of armies fighting by night on a darkling plain.

Read it all.

Archbishop of Canterbury says Russian invasion of Ukraine must not succeed https://t.co/MXIh0gRb1d

— BBC News (UK) (@BBCNews) December 2, 2022

The Church of England Pensions Board has joined five other pension funds to bring legal action against Volkswagen AG (VW), after it refused repeated attempts to reveal crucial information on its corporate climate-lobbying activities.

The funds, four Swedish and one Danish in addition to the C of E board, are all part of the Institutional Investment Group on Climate Change (IIGCC) and the Climate Action’s 100+ initiative. These have asked the company repeatedly to clarify its lobbying position. VW discloses trade association memberships, but does not disclose how the goals of these associations align with its own climate goals.

The boards wanted to table an agenda item at VW’s AGM, seeking publication of a report setting out how the company’s lobbying of policy-makers matched its stated ambition to support the Paris Agreement goals by becoming a net-zero company. VW refused to table the item.

The investors say that they tried over several years to get information before tabling the amendment. The case, supported by the legal charity ClientEarth, will test whether VW has the right to refuse the agenda item.

Read it all.

C of E Pensions Board joins fight to force VW to open its books on climate lobbying https://t.co/F1UtlH7M2M

— Church Times (@ChurchTimes) October 24, 2022

The Church of England Pensions Board, together with Swedish public pension funds AP7, AP2, AP3, AP4 and Danish AkademikerPension, has filed a case against Volkswagen AG, after it refused repeated attempts to reveal crucial information on its corporate climate lobbying activities.

This is the first time investors have started European litigation on a climate-related matter. The case was filed this week.

The case will test whether VW has the right to refuse to include an item on the company AGM agenda proposed by VW’s shareholders at the 2023 AGM having previously refused investors shareholder resolutions. The group of investors are represented by German law firm Hausfeld Rechtsanwälte LLP and supported by legal charity ClientEarth.

Read it all.

Pension funds bring legal action against VW over climate change lobbying activities
German carmaker Volkswagen is facing legal action by a coalition of five Swedish and Danish public pension funds and the Church of England Pensions…https://t.co/br98MdLCqE https://t.co/QLb35mqNTw

— MountainJadey🕷🇬🇧🇪🇺🇺🇦🌱⚖️ (@jadey_murray) October 20, 2022

It is hard not to feel a sense of foreboding. As the Federal Reserve has tightened policy, asset prices have plunged. Stocks, as measured by the Wilshire 5000 all-cap index, have shed $12trn of market capitalisation since January. Another $7trn has been wiped off bonds, which have lost 14% of their value. Some $2trn of crypto market-cap has vanished over the past year. House prices adjust more slowly, but are falling. Mortgage rates have hit 7%, up from 3% last year. And this is all in America—one of the world’s strongest economies.

Rising rates will slow the American economy and should break the back of inflation. But what else will they break? Since the Federal Reserve raised rates again on September 22nd, global markets have been in turmoil. When the British government announced unfunded tax cuts a day later, fire-sales by pension funds caused the yield on government bonds (or “gilts”) to spiral out of control. Contagion then spread to the American Treasury market, which is as volatile and illiquid as it was at the start of covid-19. The cost to insure against the default of Credit Suisse, a global bank, has risen sharply. These ructions indicate the world is entering a new phase, in which financial markets no longer just reflect the pain of adjusting to the new economic context—pricing in higher rates and lower growth—but now also spread pain of their own.

The most catastrophic pain is felt when financial institutions fail. There are two ways they do so: illiquidity or insolvency. Tighter monetary policy is likely to prompt or reveal both.

Read it all.

Rising rates will slow the American economy and should break the back of inflation. But what else will they break? https://t.co/9jMyduKXBk

— The Economist (@TheEconomist) October 5, 2022

The world’s financial markets are going through their most painful adjustment since the global financial crisis. Adapting to the prospect of higher American interest rates, the ten-year Treasury yield briefly hit 4% this week, its highest level since 2010. Global stock markets have sold off sharply, and bond portfolios have lost an astonishing 21% this year.

The dollar is crushing all comers. The greenback is up by 5.5% since mid-August on a trade-weighted basis, partly because the Fed is raising rates but also because investors are backing away from risk. Across Asia, governments are intervening to resist the depreciation of their currencies. In Europe Britain has poured the fuel of reckless fiscal policy on the fire, causing it to lose the confidence of investors. And as bond yields surge, the euro zone’s indebted economies are looking their most fragile since the sovereign-debt crisis a decade ago.

Read it all.

Even America’s economy, which has been resilient in the face of headwinds this year, is unlikely to keep growing through an interest ­rate shock as severe as the one it now faces https://t.co/JiaMak87kP

— The Economist (@TheEconomist) September 30, 2022

The Church Commissioners for England have committed €30 million into European sustainable infrastructure with Pioneer Infrastructure Partners SCSp

The investment marks a continuation of the Church Commissioners’ commitment to reaching net zero as a signatory of the UN-convened Asset Owner Alliance

Pioneer Infrastructure Partners SCSp has secured commitments from other large institutional investors, including Texas Municipal Retirement Systems

Read it all.

Church Commissioners for England invest €30 million in sustainable infrastructure https://t.co/D6rT2WbWQ3 #religion #anglican #ecology #naturalresources #stewardship #uk #investing #nature #environment #21stc

— Kendall Harmon (@KendallHarmon6) May 5, 2022

Many companies are still lobbying against the Paris Agreement, according to InfluenceMap, a nonprofit group that pushes for corporate action on climate. It says only 14% of 375 companies it tracks have aligned their detailed climate-policy engagement activities with the Paris Agreement.

“Corporate political engagement continues to represent one of the key barriers to delivering the Paris Agreement’s goals,” said Ed Collins, director of corporate lobbying at InfluenceMap.

Having a shared standard will make it easier for companies to show their public climate promises are serious, said Adam Matthews, chief responsible investment officer at the Church of England Pensions Board.

But companies that don’t sign up may face more shareholder pressure.

Read it all (registration or subscription).

💡Climate policy is one of the main interventions that will get us on a path to 1.5ºC. An impressive 21 resolutions have been filed in the US on Paris-Aligned Lobbying for the 2022 proxy season @CeresNews https://t.co/8YJ1H80sY7 via @WSJ

— Rebecca Hoffman (@rebeccahoffmn) March 14, 2022

In 2020, the FRC substantially reformed the code, which was launched in 2010, to impose stricter reporting requirements on investors that had signed up. Since its launch, it has been replicated in other jurisdictions and broadened to include new asset classes.

Signatories have to report on their stewardship activities and are reviewed annually by the FRC to remain on the list.

“Ultimately, what we want to see are concrete examples of stewardship activities and outcomes. Otherwise, its just a bland policy statement of intentions without application,” said Claudia Chapman at the FRC.

“We’re keen to narrow the gap between what is reported and what is done, and for the most part we are comfortable that those included on the list are doing what they say.”

Read it all (registration or subscription).

UK stewardship code adds 74 new signatories https://t.co/kpBki6AXex

— Finance News (@ftfinancenews) March 10, 2022

With a mandate to make a positive change, religious organisations are among the richest asset owners and investors, and are increasingly looking at impact investments to make market returns. Unique to these investments are faith values, which decide the sectors, regions, and projects that receive the funds. In many cases, those values fit comfortably within the SDG puzzle. However, overall, faith-based investors have yet to develop major impact investing portfolios.

While there are no publicly available figures for the value of the assets owned by religious organisations, they are estimated to own over 7% of the Earth’s land surface. The Islamic finance industry was estimated to be worth $2.4 trillion at the end of 2017, according to the 2018 Global Islamic Finance Report, and in 2020 was almost $3 trillion, a figure that is expected to grow at a compound annual growth rate of 5% until 2024.

“What we do see is a big trend where faith-based investors have woken up and now understand that a lot of their assets are stuck in very traditional investment vehicles, as they need those revenues and returns from those investments to maintain churches, pay pensions, etc. So it is important for them to make sufficient returns, but they are also realising that in some cases there is a complete misalignment between their values and those funds they have been investing in,” says Maarten Toussaint, COO of FIIND Impact, an investment consultant and advisor, working with faith-based investors.

Even though faith-based investors have noble intentions, their investments are not bereft of returns. “We target market rate with our returns,” says Aaron Pinnock, senior impact investment analyst at the Church Commissioners for England. The portfolio’s target is returns of CPIH +4%. “So, in the last 30 years, our returns have averaged just over 9%, and that’s the kind of target that we are looking for going forward. We are not looking at impact as taking financial returns off the table, but it has to meet the kind of return requirement that will make other investments possible.”

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Is faith based finance making a dent in impact investing?https://t.co/CaGUYYtSc0@OperationNoah @EpiscoClimate @greenfaithworld pic.twitter.com/SB0PG36rhy

— Green Anglicans (@Greenanglicans) February 11, 2022

Read it all.

On the third anniversary of the mining disaster that killed 270 people in Brumadinho, in Brazil, the Church of England Pensions Board has stepped up the pressure on companies to adopt new global safety standards.

The disaster happened when a mine-waste facility, a tailings dam, collapsed. The new Global Industry Standard on Tailings Management was developed in response by a coalition of investors led by the Pensions Board and the Council on Ethics of the Swedish AP Funds…. Now, they have published the names of the companies that have committed themselves to the new measures.

Seventy-nine mining companies — one third of those employing tailings dams — have either made a commitment to the new Global Industry Standard on Tailings Management or are still assessing their compliance. The list includes several of the largest companies, including BHP, Anglo, Glencore, Rio Tinto, and Vale.

The Brumadinho disaster of 2019 is not an isolated incident. Another 12 such collapses have been reported in the past three years. In three instances — two of which took place in Myanmar and one in Peru — workers were killed. The collapses also cause significant environmental damage.

Read it all.

Pensions Board puts pressure on mining companies to adopt global safety standards https://t.co/JZiUKABDIl

— Church Times (@ChurchTimes) January 28, 2022

The Church of England’s National Investing Bodies (NIBs) are delivering on their 2018 commitment to General Synod to engage with and disinvest from high carbon emitting companies that are not making progress to align with the goals of the Paris Agreement by 2023.

Twenty companies have made climate-related changes to stay off the Church’s restricted list since 2020.
Following extensive engagement efforts by the NIBs, nine companies made changes to meet the 2021 hurdles. As a result they stayed off the restricted list for a further year, while 28 companies that did not meet the latest climate hurdles were restricted.

These actions are part of the NIBs’ commitment to transitioning their portfolios away from companies that are unwilling to act and align their businesses with the Goals of the Paris Agreement. The climate hurdles were set by the NIBs using Transition Pathway Initiative (TPI) data. Additional exacting hurdles will come into force in 2022 and 2023.

The NIBs are founding members of TPI and are investor engagement leads in the Climate Action 100+ (CA100+) global engagement initiative. As long-term investors, the NIBs will continue to engage with companies to meet their climate objectives and build alliances with like-minded investors to engage with company boards and executives.

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Twenty companies have made climate-related changes to stay off the Church’s restricted list since 2020.https://t.co/aN0w4Eu3Ib?

— St Eds Cathedral (@stedscath) January 21, 2022

Goldman Sachs has gamed four omicron outcomes: “severe downside”, “downside”, “false alarm”, and a surprise “upside”. These scenarios have starkly different implications for asset prices and macroeconomic policy over the next year. Get it wrong at your cost.

You can already see this tension playing out in wild moves on global bourses, or in oil prices, with each snippet of fresh information.

Markets have taken a fresh beating this morning on warnings from Moderna that it is “not going to be good” for the existing vaccines. But if the disease is indeed milder, a slippage in antibody protection levels may not matter, and we still have T-cell memory as the next line of defence.

For the sake of argument – as a Gedankenexperiment – I assume that the benign picture from South Africa holds up over the winter and that we will land at the optimistic end of the Goldman spectrum.

Read it all.

"The dam will break across the world rapidly if omicron proves to be as mild as it looks and wins the transmission contest against delta," writes Ambrose Evans-Pritchard.

"The urge for normality will overcome all else" https://t.co/vgXEIw6CL8

— The Telegraph (@Telegraph) November 30, 2021

The first annual analysis of major energy company transition plans to be released since COP26 has found that only 1 in 10 are ambitious enough to keep global warming to 1.5°C.

This energy sector report is the first to feature TPI’s 1.5°C benchmark which assesses corporate targets against the IEA’s pathway to keep to 1.5°C of warming.

TPI assessed 140 of the largest energy companies (76 electric utilities, 58 oil & gas, 6 diversified miners involved in coal mining) on ‘Carbon Performance’ finding that 10% were aligned with a pathway to keeping global warming to 1.5°C, and a further 24% were aligned with a ‘Below 2°C’ pathway.

Read it all.

New energy report from @tp_initiative finds only 1 in 10 companies are ambitious enough to keep global warming to 1.5°C@actmatthews says investors need to engage: "if we reshape demand we reshape the energy providers."https://t.co/pRgCKA93OB

— Church of England Environment Programme (@CofEEnvironment) November 29, 2021

Vladimir Lenin believed that a tiny vanguard could, through force of will, harness historical forces to transform how global capitalism works. He was right. However, the revolutionaries have not been bearded Bolsheviks but a few thousand investors, mostly based in Silicon Valley, running less than 2% of the world’s institutional assets. In the past five decades, the venture-capital (vc) industry has funded enterprising ideas that have gone on to transform global business and the world economy. Seven of the world’s ten largest firms were vc-backed. vc money has financed the companies behind search engines, iPhones, electric cars and mrna vaccines.

Now capitalism’s dream machine is itself being scaled up and transformed, as an unprecedented $450bn of fresh cash floods into the vc scene. This turbocharging of the venture world brings significant risks, from egomaniacal founders torching cash to pension pots being squandered on overvalued startups. But in the long run it also promises to make the industry more global, to funnel risk capital into a wider range of industries, and to make vc more accessible to ordinary investors. A larger pool of capital chasing a bigger universe of ideas will boost competition, and is likely to boost innovation, leading to a more dynamic form of capitalism.

The vc scene has its roots in the 1960s and has been a misfit in the financial world. In contrast to Wall Street’s suits, sophistication and Hamptons mansions, it prefers fleeces, nerdiness and Californian villas. Its distinctiveness is also a matter of intellectual emphasis. As mainstream finance has grown bigger, more quantitative and more preoccupied with slicing and dicing the cashflows of mature firms and assets, vc has remained a cottage industry that cuts against the grain, seeking to find and finance entrepreneurs who are too callow or strange to sit in a room with staid bankers, and ideas that are too novel for mbas to capture in financial models.

The results have been striking. Despite investing relatively modest amounts over the decades, America’s vc funds have seeded firms that are today worth at least $18trn of the total public market.

Read it all.

The Economist on venture capital – https://t.co/tAGOJSvyBr

I've made this argument for several years, VC is the asset class of the exponential age – complex, intangible driven businesses need this class of capital.

— Azeem Azhar (@azeem) November 27, 2021

The Church of England too is ditching stocks over climate concerns, even if Joffe says she believes that “having a seat at the table” is generally more effective. Last year, the church’s two investment bodies restricted investments in companies including Berkshire Hathaway and Korea Electric Power Corp over climate change concerns.

Joffe says a tougher approach, involving activism and divestment, “will have to become more mainstream”, especially if asset managers and asset owners are to meet their net zero commitments.

For companies, this means a tougher time from shareholders, says Tom Matthews, a partner who specialises in corporate activism at White and Case. He adds the “narrative around climate change has shifted significantly versus where it was in 2015”, when the Paris agreement was signed. “We’re seeing companies getting targeted because they haven’t woken up quickly enough.”

As for Aviva Investors, Baig says he believes the UK asset manager will end up selling out of at least some of the companies it is targeting because they are not making progress quick enough. “We have to be bold enough to walk way,” he says.

Read it all.

Stay or sell? The $110tn investment industry gets tougher on climate https://t.co/JqKFSC5rdn

— FT Markets (@FTMarkets) November 9, 2021

More than 30 leading financial institutions, representing over US$ 8.7 trillion in assets under management, including the Church Commissioners for England, have committed to tackle agricultural commodity-driven deforestation as part of broader efforts to drive the global shift towards sustainable production and nature-based solutions.

Ending deforestation and implementing natural climate solutions could provide a third of the solution to achieving the Paris climate target, help halt and reverse biodiversity loss, and support human rights and food security.

With most deforestation driven by unsustainable production practices for palm oil, soy, cattle products and pulp and paper, resulting in more carbon emissions annually than the EU, action on these commodities is particularly urgent, which is the focus of the commitment made today.

Today’s commitment – to use best efforts to eliminate agricultural commodity-driven tropical deforestation from portfolios by 2025 – is clear evidence of the increasing awareness of the systemic risks and associated actions needed to address deforestation related to production of these commodities and accelerate the transition to sustainable commodity production.

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Church Commissioners among leading financial institutions to commit to actively tackle deforestation https://t.co/cMS0hHVQWs

— Simon Sarmiento (@simonsarmiento) November 2, 2021

Since becoming founding members of the Financing a Just Transition Alliance in 2020, the Church Commissioners for England and Church of England Pensions Board have been active in identifying concrete steps that the financial sector can take to ensure that no-one is left behind as part of the transition to a low carbon economy.

This engagement with high carbon emitting investee companies has focussed on the issue of a Just Transition, ensuring that workers and communities are not left behind and are appropriately supported in the low-carbon transition.

Each company was actively considering how to address and achieve a Just Transition. However, their approaches varied greatly depending on factors such as location, developed versus emerging market, relationship with unions, governance, company size, status as local or international company, and ability to transfer and reskill employees within their own operations. For example, one company that the Commissioners is engaging with is training the operators of coal-fired facilities in a developing country to work in the fishing industry.

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Alan Smith, Senior Advisor – ESG (Environmental, Social and Governance) Risk and Inclusion, and former Global Head of Risk Strategy at HSBC, is to be the next First Church Estates Commissioner, Downing Street announced today. Alan has also been a Church Commissioner since 2018.
The First Church Estates Commissioner chairs the Church Commissioners’ Assets Committee, a statutory committee responsible for the strategic management of the Church Commissioners’ £9.2 billion investment portfolio.

The Archbishop of Canterbury, Justin Welby, Chair of the Commissioners’ Board of Governors, said: “I am delighted that Alan has chosen to use his skills and experience to serve the Church and greatly look forward to working with him. Climate change is the most urgent challenge we face, and Alan’s knowledge of environmental issues and risk management will be critically important for the Commissioners’ work. I’d also like to thank Loretta Minghella for her hard work and leadership during her time at the Church Commissioners.”

The Archbishop of York, Stephen Cottrell, said: “We are pleased that Alan will succeed Loretta. Alan’s experience as a Commissioner and his role on the Commissioners’ Audit & Risk Committee means he’s extremely well suited for this leadership role.”

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The Church Commissioners are delighted to announce Alan Smith as next First Church Estates Commissioner.

Read more on our website 👇https://t.co/VykZFgy9QV

— The Church of England (@churchofengland) July 27, 2021

The Church Commissioners has, over the last year, expanded its responsible investment activities from being largely focused on climate change to include engaging with companies in a wide range of sectors across a number of integrated issues include biodiversity, human rights and controversies.

Olga Hancock, Senior Engagement Analyst for the Church Commissioners spoke to Responsible Investor as part of a panel of experts focussing on due diligence and supply chains. In the discussions, Olga spoke on the work of the Investor Policy Dialogue on Deforestation, for which she Co-Chairs the Indonesia workstream, the work of the National Investing Bodies of the Church of England on Extractives, and the work of the CCLA led “ Find It Fix It Prevent It” Modern Slavery Initiative.

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https://t.co/19mKDU3XmK

— Gill Kimber (@WardenGill) June 21, 2021