“ E X P L O R I N G S U S T A I N A B I L I T Y & S U I T A B I L I T Y ”

W I T H S R I S E R V I C E S & P A R T N E R S

J U L I A D R E B L O W

B A H O N S , D I P P F S

O C TO B E R 2 0 1 8

F U N D E C O M A R K E T. C O . U K

@ J U L I A D R E B L O W

# G M W 1 8For information only.

sriServices is not authorised to offer advice.

This presentation is for use by UK financial services professionals only.

Registered company - SRI Consultants Ltd, 03904843

OBJECTIVE: TO EXPLORE SUSTAINABILITY & SUITABILITY

Assessing suitability: the obligations

COBS 9.2.1R03/01/2018RP

(1) A firm must take reasonable steps to ensure

that a personal recommendation, or a

decision to trade, is suitable for its client

Sustainable

development:

Meeting the needs of the

present without

compromising the ability

of future generations to

meet their own needs.

Bruntland report 1987

AGENDA

• 12.45 Welcome

• 12.55 Introduction

• 1.50 4 x FM round tables

3.00 Break

• 3.20 DFM Panel

• 4.00 3 x FM round tables

• 4.55 Keynote - Lord Deben

• 5.25 Final remarks & close

• 5.30 Drinks

• 7.30 End

INTRODUCTIONSRI SERVICES & FUND ECOMARKET

• Who?

– 25 years in FS – previously NPI, Friends Provident, UKSIF

Director/programme chair,

– ‘Highly Commended’ - Corporation of London ‘Sustainable

City Awards’ 2015 (SF), finalist 2016. Investment Week SRI awards

finalist 2016, 2017 & 2018

• What?

• Online adviser friendly tools & support

– sriServices.co.uk & FundEcoMarket.co.uk

– Consultancy, partnerships, consultations

• Why?

Help match clients aims, opinions & lifestyles to investment

choices – because they want to!

Grow SRI & direct more investment to better companies.

Because investors hold most/all the cards – things need to change

& it makes financial sense.

INTRODUCTION

• Julia Dreblow SRI Services and Fund EcoMarket

• Simon Howard - UKSIF CEO

• Maria Varbeva-Daley - British Standards Institute (BSI)

• Eleanor Spencer - Zoological Society of London, (ZSL) ‘SPOTT: Business and Biodiversity Programme’

SHIFTING ISSUES & APPROACHES

• Ethical

• Environmental

• Clean Technology

• Sustainability

• Responsible

Ownership

• Stewardship

• Climate Risk

• Sustainable

Finance

• ESG

• Impact

• Tilts

ESG

/ S

RI A

war

e ‘s

tock

sele

ctio

n’

ESG/SRI aware ‘Responsible Ownership’

▪ Taxonomies & labels work ongoing

▪ Diverse stock selection & ownership

strategies

▪ ‘Wide & narrow’ definitions used

▪ Not ‘black & white’

▪ Transparency is key

ESTIMATED 8.3BN TONNES OF VIRGIN PLASTIC HAS BEEN PRODUCED TO DATE

fireweatheravalanche.orgMeteociel.fr

Getty Images - UKAFP - Greece

L O S I N G T H E

W A R

A CHANGING LANDSCAPE

• IFoA climate risk warning

• DWP pension trustee changes - ESG & Climate Change

• DCMS / Corley report ‘Growing a culture of social impact investing in the UK’

• BEIS etc supporting ‘Green Finance Initiative’ (post EU HLEG)

• FCA to respond - trustees review 2019

• Growing activity searching for taxonomies & labelling (eg IA)

• Obligatory fact finding calls (HLEG, GFI, TTF)

• Growing interest & activity – clients, advisers, portfolio planners, fund managers

• £19 bn ethical / sustainable funds AUM (EIRIS Foundation 2018)

C L I M A T E C H A N G E A C T

2 0 0 8

P A R I S C L I M A T E S U M M I T 2 0 1 5

S U S T A I N A B L E D E V E L O P M E N T

G O A L S 2 0 1 5

F S B / T C F D B A N K O F

E N G L A N D 2 0 1 5 ( O N W A R D )

G a m e

c h a n g i n g

t o o l s & r u l e s

Bank of England / PRA research found:

• 70% of (£11tn) banks ‘recognise Climate

Change poses a financial risk’

• 10% managing CC strategically.

• 30% consider it to be a CSR issue!

“…And we invite you to engage on the PRA’s next

steps so that we may work together to ensure the

safety and soundness of financial firms as we

transition to a low-carbon world”

Mark Carney 26/9/18

FUND ECOMARKET

• Overview

– Ethical/SRI information only

– Whole of (retail) market

– Focused on key areas / challenges

– Advice process driven

– Open to all, free to use (sponsored)

– Reliable & comprehensive

– Independent

• Benefits

– Variety of uses eg research, advice &

training

– Helps build reputation, trust & ‘the market’

– Compliments existing tools

37

12

5

3

24

13

2

Sustainability Themed - 37

Environmental Themed - 12

Social Themed - 5

ESG Plus -3

Ethically Balanced – 24

Negative Ethical - 13

Faith – 2

0 5 10 15 20 25 30 35 40

SRI Styles

(primary funds, Sept 2018)

107 Primary (OEIC/SICAV) entries,

97 of which are OEICs

‘SRI STYLES’ IN NUMBERS

FUND ECOMARKET FILTERS

CHOICES:

•Offer

• Specialise

• Ignore

What can or should you

do differently?

What advice do your

‘interested clients’ need?

What can regulators

usefully do?

What help do you need?

INTRODUCTION

✓Julia Dreblow SRI Services and Fund EcoMarket

• Simon Howard - UKSIF CEO

• Maria Varbeva-Daley - British Standards Institute (BSI)

• Eleanor Spencer - Zoological Society of London, (ZSL) ‘SPOTT: Business and Biodiversity Programme’

www.goodmoneyweek.com @goodmoneyweek

Simon Howard

Chief Executive, UKSIF

Screened, Themed and Engaged 2018SRI Services

Simon Howard, Chief Executive, UKSIF

Good Money Week is the campaign to help grow and raise awareness of sustainable,

responsible and ethical finance.

Make money and make a difference

Included in this year’s content….

And hits from last year…

0%

10%

20%

30%

40%

50%

60%

70%

2010 2011 2012 2013 2014 2015 2016 2017

www.goodmoneyweek.com @goodmoneyweek

Is it only about the money?

I am only concerned about whether my investments make money

I am equally concerned about whether my investments make money or make a positive difference

0%

10%

20%

30%

40%

50%

60%

70%

2010 2011 2012 2013 2014 2015 2016 2017 2018

www.goodmoneyweek.com @goodmoneyweek

Is it only about the money?

I am only concerned about whether my investments make money

I am equally concerned about whether my investments make money or make a positive difference

Don’t know 22%, was 13%

0

5

10

15

20

25

30

35

40

45

Only money Mainly money Equal Mainly adifference

Only positivedifference

Don't know

Change 2018 against 2017

2017 2018

31

Investment in the retail sector: Responsible Investment Sector Size- retail £m

www.goodmoneyweek.com @goodmoneyweek

Vigeo Eiris/EirisFoundation

Inv. Association

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Vigeo Eiris Inv. Asn.

Sticks in the wind….12 months on

Law Commission Government has changed DB pension lawFCA to consult on DC in Q1

Government and Social InvestmentImplementation groups- 120 SRI people involvedEar of Government….Pressure on FCA re advice

EU High Level Expert GroupAction plan “Ask about client ESG preferences“

Useful stuff…..

Deforestation, Climate and Responsible Investment

Image: Shutterstock

Tropical deforestation

• Worst years on record 2016-17

• Area equivalent to Vietnam cleared

• Palm oil, timber and pulp, soy, and cattle

Image: Shutterstock

Indonesia haze crisis

• 120,000 active fire alerts

• Emissions exceeding those of USA

• $16bn cost to the Indonesian economy

• Record company fines

• Licence moratoria Image: Shutterstock

IOI Group’s RSPO suspension

What can investors do?

• Engagement as a priority – divestment could lead to increased deforestation

• If screening, should not rely on certification alone

• Understanding both the issues and company progress is key IUCN 2018

More resources available

…

Developed by the Zoological Society of London (ZSL), SPOTT – Sustainability Policy Transparency Toolkit – is an online platform supporting sustainable commodity production and trade. SPOTT assesses commodity producers and traders on the public disclosure of policies, operations and commitments related to environmental, social and governance (ESG) issues. Investors, buyers and other key influencers can use SPOTT assessments to inform stakeholder engagement, manage risk, and increase industry transparency.

eleanor.spencer@zsl.org SPOTT.org

Sustainable finance standardization

02/10/2018

46

3 October 2018

Copyright © 2018 BSI. All rights reserved

Maria Varbeva-Daley, Sustainability & Energy Sector Lead

BSI Group

Advisory Services

Training

Standards

National Standards

BodyPolicy,Engagement

Market Development,Committee management

Sales, Membership, ICT Platforms

Information Solutions

Assessment and

Certification

Compliance support

Copyright © 2018 BSI. All rights reserved

International and European standards bodies

ISO(International Organization for Standardization)164 National Standards Body members globally

IEC(International Electrotechnical Commission)

80 members (National Committees)and 80 affiliates globally

ITU(International Telecommunications Union)Agency of the UN. Members are national

governments and industry (UK member)

CEN

(European Committee for Standardization)

CENELEC(European Committee for Electrotechnical

Standardization)

CEN & CENELEC have 33 member countries (EU ×28, EFTA ×3, FYROM and Turkey).

24 countries including the UK have common members of both CEN and CENELEC.

ETSI (European Telecommunications Standards Institute)

Industry, government and NSB members

Copyright © 2018 BSI. All rights reserved.

ISO CASCO(ISO committee on conformity

assessment)

Who uses standards, and what are they for?

Standards can be about anything• All sectors, all sizes of business

Trade: UK, Europe, international

Standards avoid ‘Technical Barriers to Trade’

• Supply chain and fair/equal competition

• Customer relationships, business credentials

• Consumer protection

• Self-regulation

• Cost management

• Stimulate innovation

• Manage business risk

Separating standards from regulations

Standards Regulations

• Voluntary, market-led

• Written by experts (industry, government, consumers etc.)

• Legitimacy through consensus and public consultation

• Can be supported through measurement, testing, certification, accreditation

• Can be used to demonstrate compliance with regulations

• Minimum legal requirements

• Written by government

• Laid before Parliament

• Regulators can get confused: many uses of the word ‘standard’

Copyright © 2018 BSI. All rights reserved.

BSI’s international influence

02/10/2018

Copyright © 2018 BSI. All rights reserved 51

• BSI is one of the six permanent members of the ISO Council and the Technical Management Board.

• BSI’s Director of Standards is currently Vice-President (Policy) of ISO. He is the first VP from the UK for 30 years.

• The UK participates in more ISO technical committees than any other country.

• BSI runs 75 ISO technical committees, just behind DIN (DE) and ANSI (US).

• The origins of the following business standards—some of the world’s most used standards—can be traced back to BSI

Year Standard British Standard ISO Standard1979 Quality management BS 5750 ISO 90011992 Environmental management BS 7750 ISO 140011995 Information security BS 7799 ISO 270011996 Occupational health and safety BS 8800 ISO 450012002 IT service management BS 15000 ISO 200002007 Business continuity management PAS 56 ISO 223012008 Risk management BS 31100 ISO 310002008 ICT continuity BS 25777 ISO 270312008 Asset management PAS 55 ISO 550002009 Energy management BS EN 16001 ISO 500012016 Anti-bribery management BS 10500 ISO 37001

Sustainable finance standardization - background

02/10/2018

Copyright © 2017 BSI. All rights reserved

52

• Drive from within the finance industry to align the global financial system with Sustainable Development

• Recognition of the role of the finance sector in mobilising finance to respond to global challenges

• Research and wide engagement highlight the need for:• Strengthening the impact of existing initiatives by providing detail and assurance • Consistent integration of Sustainability/ESG considerations in decision-making• Common definitions, terminology and metrics to improve transparency and

comparability, to promote uptake of sustainable finance

• Green & sustainable finance - of growing importance to national and international policy and regulatory agendas, e.g. FSB TCFD, EU HLEG, Clean Growth Strategy…

• Increased recognition of the role of international/formal standardization in delivering on sustainable finance aspirations, but no global structures or standards covering sustainable finance in its totality or responsible/sustainable investment

• Leadership opportunity for the UK in sustainable finance: HMG-Industry (GFI)-NSB collaboration

What is being proposed and why

02/10/2018

Copyright © 2018 BSI. All rights reserved 53

WhyEstablish UK leadership in sustainable finance through the delivery of internationally applicable standards. In support of HMG measures to build on UK's global leadership in green finance as part of the move to a low carbon economy. In response to challenges and opportunities highlighted by the financial community.

WhatA holistic standards development programme, led by fast-track (PAS) projects, intended to later inform standards at the ISO level.

Impact• Promote better understanding of sustainable finance, and the economic, environmental and social benefits

associated with adoption of related practices• Provide greater consistency and reliability in how Sustainability (and ESG) considerations are integrated into

investment decision-making• Improve transparency and investor confidence, providing a means for organizations to demonstrate practices are

sustainable, responsible and meet with globally-agreed standards• Mobilize finance to accelerate growth of sustainable products, services, projects• Build broad consensus on common use of definitions, methodologies and reporting measures• Complement existing standards, codes and initiatives, avoiding duplication and scaling-up their impact

Programme deliverables and timeframe

02/10/2018

Copyright © 2018 BSI. All rights reserved 54

Programme launch/workshop

Workshop Workshop Workshop

PAS project 1

PAS project 2

PAS project 3

Publish 2019

2019

2019

2018 Priority tasks

ISO Technical Committee established

Agree standardization priority areas

Agree scopes for three PAS projects

Draft standards programme (PAS)

Copyright © 2017 BSI. All rights reserved

55

Product level (e.g. fund,

bonds)

Process

(fund manager)

Principles (concepts)

Sustainable Finance Framework – Guide

Overarching framework, principles, key terms and definitions

Sustainable Investment

Management –Requirements

Fund-level –specification

Confo

rmity

asse

ssment

➢ Enable fund-labelling➢ Define categorisation➢ Signal features/intentionality➢ Transparency on fund holdings

➢ Managing and reporting on ESG integration, stewardship

➢ Align to overarching policy➢ Demonstrate transparency

to clients/ asset owners

ESG Banking or Insurance?

Financial Institutions (with focus on SMEs), policy makers

Fund managers, investment consultants

Fund manager/

IFA

Audience

Questions?

Contact:

02/10/2018

maria.varbeva-daley@bsigroup.com

Copyright © 2018 BSI. All rights reserved

FUND MANAGER ROUND TABLE SESSIONS

•JanusHenderson – Hamish Chamberlain, fund manager and Head of SRI, Global Sustainable Equity Fund

•Kames Capital – Craig Bonthron, fund manager, Global Sustainable Equity Fund

•Liontrust – Chris Foster, investment analyst, Sustainable Future Funds

•M&G – Ben Constable-Maxwell, deputy fund manager, Positive Impact Fund

•Rathbones – Bryn Jones, Head of Fixed Income, fund manager, Ethical Bond Fund

•Sarasin & Partners – Alex Bibani, fund manager, Responsible Global Equity Fund

•Unicorn – Simon Moon & Fraser Mackersie, joint fund managers, Ethical Income Fund

AGENDA

• 12.45 Welcome

• 12.55 Introduction

• 1.50 4 x FM round tables sessions

• 3.00 Break

• 3.20 DFM Panel

• 4.00 3 x FM round tables

• 4.55 keynote - Lord Deben

• 5.25 Close

• 5.30 Drinks

• 7.30 End

DFM / PORTFOLIO PLANNER PANEL

RSMR – Stuart Ryan

Financial Express – Charles Younes

EQ Investors – Damien Lardoux

Tribe Impact Capital – Amy Clarke

Rathbone Greenbank Investments – Kate Elliot

➢What does ‘sustainable and suitable’ mean to you?

➢What do you look for when selecting funds in this market?’

➢Why do you invest where you do?

FUND MANAGER ROUND TABLE SESSIONS

•JanusHenderson – Hamish Chamberlain, fund manager and Head of SRI, Global Sustainable Equity Fund

•Kames Capital – Craig Bonthron, fund manager, Global Sustainable Equity Fund

•Liontrust – Chris Foster, investment analyst, Sustainable Future Funds

•M&G – Ben Constable-Maxwell, deputy fund manager, Positive Impact Fund

•Rathbones – Bryn Jones, Head of Fixed Income, fund manager, Ethical Bond Fund

•Sarasin & Partners – Alex Bibani, fund manager, Responsible Global Equity Fund

•Unicorn – Simon Moon & Fraser Mackersie, joint fund managers, Ethical Income Fund

KEY NOTE ADDRESS:

‘CLIMATE CHANGE & WHY IT MATTERS TO INVESTORS’

• Lord Deben (John Gummer)

Chair of Personal Investment Management & Financial Advice Association (PIMFA) and Sancroft

S U S T A I N A B I L I T Y & S U I T A B I L I T Y

BECAUSE IT ’S NOT

EITHER / OR

CLOSE

• Thank you for attending

• Thank you to our event sponsors –

Liontrust, Unicorn, M&G,

JanusHenderson, Rathbones,

Sarasin & Partners Kames & all

presenters

• Thank you to Fund EcoMarket

sponsors & users!

• Feedback welcome

• … drinks in the Mezzanine