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newsletter 08/2017

Our topics:

1. Customers

- oekom research provides Second Party Opinion for the Green Bond Programme of Deutsche Kreditbank (DKB)

- Bank für Sozialwirtschaft draws on oekom research’s sustainability expertise

2. oekom Services

- The new oekom Corporate Rating Report

- oekom Industry Focus Tobacco

3. Global Challenges Index

- Hanover Stock Exchange celebrates Global Challenges Index’s tenth anniversary: Sustainability with top performance

4. Market/Initiatives

- oekom research position on the announcement of the UK Corporate Governance Reforms

- Seek and you may find: Deloitte on the role of CFOs in sustainability management

- World Economic Forum’s Global Risks Report 2017

- ESG standard for Principles for Sustainable Insurance

5. Events

- Climate Week NYC: New Directions in Sustainable Investing - Using Innovative ESG Metrics to Reinforce the Paris Climate Change Agreement

- PRI in Person

1. Customers

oekom research provides Second Party Opinion for the Green Bond Programme of Deutsche Kreditbank (DKB)

With its latest Second Party Opinion, oekom research assessed the sustainability quality of the Second Green Bond Programme Deutsche Kreditbank (DKB) initiated on September 1st, 2017. With its new Green Bond programme, DKB aims to refinance the construction and operation of onshore wind power plants and solar power plants in Germany. The Second Party Opinion for the Green Bond Programme will stay valid for a period of three years until 31 August 2020. Following the initial issuance, oekom will carry out a re-assessment of the asset pool annually. The new programme underscores DKB’s commitment and ability to use Green Bonds as a regular funding instrument within its capital market transactions.

DKB has been active in the financing of renewable energy projects since 1996 and operates a specific, in-house competence centre for renewable energies. The Second Party Opinion that was given by oekom research contains a risks and benefits analysis of the projects and their specific categories and evaluates the sustainability quality of the green bond programme with the help of specifically designed indicators.

„We are very happy to announce our second Green Bond programme as the chosen projects show a representative extract of our approach to sustainability, which is especially based on the financing of renewable energies. We are sure that future investors will appreciate the positive evaluation of the projects as well as our outstanding performance in the oekom corporate rating", explains Thomas Pönisch, Head of Treasury at DKB.

In addition to the positive evaluation of the refinanced projects, oekom research attests a very good sustainability performance of the issuer DKB itself. Rated as „prime“ (B-) in the oekom Corporate Rating overall, the bank is also the best rated company within the Public and Regional Banks sector as at August 2017.

Contact: Uwe Jurkschat (Treasury department∙ Capital Markets); Tel.: +49 (0)30 12030-2924; Email: uwe.jurkschat@dkb.de

Bank für Sozialwirtschaft draws on oekom research’s sustainability expertise

Bank für Sozialwirtschaft is drawing on oekom research’s sustainability expertise for its European BFS Nachhaltigkeitsfonds Aktien I fund which goes on sale in September. The rating agency will regularly review the portfolio for concurrence with defined ESG criteria and specific exclusions, thereby ensuring the fund’s investments satisfy the demanding social responsibility expectations of the bank’s customers.

“Focussing on our customers’ exacting sustainability criteria, while simultaneously realising respectable earnings, are our fund’s top priorities,” says Anton Bonnländer, bank director at Bank für Sozialwirtschaft’s investment management division. “The top 50 euro-zone organisations are filtered from the 600 largest European equities, before applying further selection criteria and finally identifying the 30 with the highest dividend yields. In doing so, oekom research convinced us with its high-quality sustainability research, and its flexible handling of our unique requirements,” he continues.

Contact: Anton Bonnländer, Bank Direktor Geschäftsbereich Anlagemanagement at Bank für Sozialwirtschaft. Tel. +49 (0)221 97356-465; Email: a.bonnlaender@sozialbank.de

2. oekom Services

The new oekom Corporate Rating Report

oekom Rating ReportIn order to improve the usability of our sustainability research findings, oekom research redesigned the structure of the oekom Corporate Rating Report to take account of enhancements in our rating services as well as the feedback and suggestions of our clients and partners. Key new features include:


Layout and clarity on key information
A new layout with an accompanying colour scheme assists orientation and clarity. On page 1, industry-specific fields of investigation are prominently highlighted.

Qualitative assessments by analysts (“analyst opinions”)

All reports now feature an Executive Summary providing a qualitative assessment of the company’s sustainability risks and opportunities, as well as an appraisal of its governance performance.

Enhanced governance information

The report also features a refined social rating that includes a more detailed assessment of governance. Hence it will now be referrred to as the “Social and Governance Rating”. New governance information found in the report includes an ownership summary and the analyst’s appraisal of governance practices and risks.

Controversy screening

The new colour-coded layout provides a simple overview of key facts at a glance. It highlights: the severity; the number of controversies; revenue thresholds (where applicable); and other essential information such as where the controversy takes place (the company, its suppliers or financiers).

Further information is available at clients@oekom-research.com

oekom Industry Focus Tobacco

IF Tabak The 11 publicly listed companies of the tobacco sector that form part of the oekom Universe cover more than 50 per cent of the worldwide demand for tobacco products. They manufacture almost exclusively tobacco products and tobacco-related goods, including cigarettes, cigars and snuff tobacco, but also e-cigarettes and paper wraps for use with tobacco products.

Despite the high average value for the performance of the industry as a whole (oekom performance score of 34,19 out of 100), no single company is awarded the Prime status, as oekom research has very strict requirements for this sector which no company is able to fulfill. At the moment, the best performing companies of the tobacco sector are Philip Morris International (US), British American Tobacco (GB) and Japan Tobacco Inc (JP), each with the rating C.

The oekom Industry Focus Tobacco can be ordered at no charge from communications@oekom-research.com.

3. Global Challenges Index

Hanover Stock Exchange celebrates Global Challenges Index’s tenth anniversary: Sustainability with top performance

The Global Challenges Index (GCX) is celebrating its tenth anniversary following the Hanover Stock Exchange’s pioneering decision to position itself in the realm of sustainable investment products back in 2007. In realising this strategy, the Exchange cooperated with sustainability rating agency oekom research to develop the GCX as an international sustainable stock index. Since then, its performance has demonstrated impressively that socially responsible companies offer superior growth opportunities, thereby positioning them better to return higher yields. With a circa 114 per cent rise (at 31 August 2017) since its launch, the GCX has considerably outperformed leading indices such as the DAX30 (up 60 per cent) and Euro Stoxx 50 (up 10 per cent).

While GCX companies must fulfil oekom research’s stringent sustainability requirements and have been awarded oekom Prime status on the one hand, they must also actively contribute towards the seven global challenges defined by the UN: climate change, drinking water supplies, biodiversity, sustainable forestry, population increase, poverty and socially responsible governance. To ensure this, the Hanover Stock Exchange and oekom research regularly review and rebalance the index’s composition accordingly.

Since its launch ten years ago, the GCX has not only been characterised by its above-average appreciation, but also by a high degree of continuity, with 42 per cent of the original shares of September 2007 still retained. These include organisations such as SAP, AMD, Henkel, Nordex, Vestas Wind and Union Pacific. The best performers since day 1 of the GCX have been Coloplast (WKN: A1KAGC / ISIN: DK0060448595, up 397 per cent), Shimano (WKN: 865682 / ISIN: JP3358000002, up 395 per cent) and Union Pacific (WKN: 858144 / ISIN US9078181081, up 342 per cent). GCX companies predominantly come from the renewable energies, technology, software & IT, healthcare & pharmaceuticals, and transport & logistics sectors.

The index’s constituents undergo a regular, semi-annual review. At the time of the most recent rebalancing on 15 September 2017, all the GCX’s organisations fulfilled the defined criteria, thus resulting in no changes to the index’s composition.

More information at http://gcindex.boersenag.de/de/ 

4. Market/Initiatives

oekom research position on the announcement of the UK Corporate Governance Reforms

On August 29th the UK Government set out a package of corporate governance reforms designed to increased boardroom accountability and enhance trust in business. The current intention is to bring the reforms into effect by June 2018.

oekom research generally welcomes the Corporate Governance Reforms which focus on the areas of executive pay, employees’ voices and corporate governance in privately held businesses. Although they are still expandable in several aspects, the reforms will at least bring more clarity and transparency to the disclosure of compensation ratios within companies. Our rating expertise shows that, in general, the public disclosure of pay ratios seems to be a sensitive topic for companies around the world. A huge amount of time and money is being invested in lobbying activities to prevent legislation requiring companies to report on the issue. In our sustainability rating, which covers environmental, social and governance aspects of corporate management, the evaluation of the company's transparency regarding CEO to employee compensation ratio is an important factor when it comes to assessing governance performance. However, the overwhelming majority of companies do not disclose this information.

As of September 2017, from those companies within the oekom Corporate Rating that are incorporated in the UK, only 9 per cent either disclose their CEO pay ratio or provide information on CEO and employee remuneration in such a way that allows for a quick and easy calculation of the ratio. Out of the FTSE 100, only less than 4 per cent of companies provide such disclosure. The majority of companies that have this level of transparency include all relevant components of remuneration (base salary, bonus, stock gains etc.) in their disclosures. The current performance of UK listed companies is slightly better than that of the overall oekom universe, which covers more than 6,200 issuers worldwide (5,500 corporates and 700 (sub-)sovereigns) and of which currently only 7 per cent of companies disclose pay ratio information. Countries demonstrating a notably stronger performance in the disclosure of pay ratios are India, Sweden and Brazil.

See the reform's aspects in detail here: http://uksif.org/wp-content/uploads/2017/08/UKSIF-Summary-Brief-Corporate-Governance-Reforms.pdf

Seek and you may find: Deloitte on the role of CFOs in sustainability management

Study DeloitteSustainability risks are becoming increasingly critical for businesses as shareholder and other investors’ expectations rise in this area. If ignored, they can quickly develop into financial risks. But if identified, measured and communicated early on, they can undoubtedly contribute towards improving a company’s performance and safeguarding its reputation.

A position paper drawn up by management consultancy Deloitte says companies which directly address these challenges and simultaneously incorporate CFO policy competence are in a better overall position here. This allows them to generate additional enterprise value while at the same time fulfilling ESG and stakeholders’ growing demands for responsible risk management.

The report can be downloaded here: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/risk/us-sustainability-reporting-pov.pdf

World Economic Forum’s Global Risks Report 2017

Global Risks ReportFor over a decade, the Global Risks Report has been looking into global risk trends and their closely-knit interrelationships. Environmental protection was identified as one of the key challenges this year, alongside a broad spectrum of political and social trends. Over the past ten years, a range of environmental risks – notably extreme weather conditions, the failure to implement climate protection measures, adapting to climate change, and water-related disasters – have crystallised as consistent, central traits of the GRPS risk landscape. Closely linked to this is a large number of other risks, such as conflicts and migration. The environmental concerns voiced in this year’s Global Risks Report are greater than ever before.

Further information on the report is available here:

ESG standard for Principles for Sustainable Insurance

The Principles for Sustainable Insurance (PSI) have set up a taskforce to develop an ESG standard for the insurance industry. oekom research will be in the Technical Advisory Group, supporting the taskforce.

The PSI has been exploring ESG issues for the insurance industry since 2009. The newly intensified efforts can be traced back to the stricter requirements demanded by international standards such as the Guiding Principles on Business & Human Rights, the OECD Guidelines for Multinational Enterprises, the Equator Principles for Project Finance, the Convention on Cluster Munitions, the UK Modern Slavery Act and the UN SDGs, to name but a few. In addition, insurance companies are increasingly realising that in failing to consider ESG criteria they run the risk of damaging their reputation. The PSI workforce is planning to launch an online poll in the fourth quarter of 2017 to incorporate as many insurance companies as possible into the development of the standard. Development of the ESG standard and presentation of its results are planned by the end of 2018.

Further information is available at: http://www.unepfi.org/psi/wp-content/uploads/2017/07/PSI-ESG-standard.pdf


5. Events

Climate Week NYC: New Directions in Sustainable Investing - Using Innovative ESG Metrics to Reinforce the Paris Climate Change Agreement

A growing number of investors want to ensure that their portfolios align with their environmental values in general and with their desire for action to address climate change in particular. But many remain sceptical that the ESG metrics available in the marketplace distinguish between companies that are helping to advance the world community’s commitment to decarbonisation and a clean energy future from those that are not. They are even more doubtful that the existing ESG metrics will allow them to identify those corporations whose sustainability leadership will translate into material financial outperformance.

Featuring leading experts on innovative ESG metrics, this special Climate Week event that takes place on 20 September 2017 will offer a lively discussion about improved ways to gauge sustainability leadership and systematically connect financial and ESG metrics – with the promise of delivering both financial outperformance and better environmental outcomes.

oekom research´s head of the New York Office and Director Business Development North America, Ariane de Vienne will participate as panelist at the event.

More information at http://www.climateweeknyc.org/event/new-directions-sustainable-investing-using-innovative-esg-metrics-reinforce-paris-climate

PRI in Person

oekom research will be present at its own stand as a partner at this year’s PRI in Person in Berlin from 25 to 27 September, where it will be informing about its current portfolio of sustainability research products and services. It will also be providing a preview of the findings of its latest Impact Study. oekom research investigated the impact of sustainable investments on companies for the first time back in 2013. This year’s study polled a much larger number of companies, and its scope was broadened to cover many categories of new and topical questions.

oekom research will be represented in Berlin by Robert Haßler (CEO), Till Jung (Head of Business Development), Dr. Julia Haake (Director International Business Development), Ariane de Vienne (Director Business Development North America), Jaspreet Duhra (Senior Manager Client Relations UK), Marie-Bénédicte Beaudoin (Manager Client Relations France), Lorenz Stör (Manager Client Relations) and Philipp Rühle (Director Research Services).

Further information is available at: https://www.unpri.org/events/pri-in-person-2017-2017-09-25-2017-09-27-43/register


top news

oekom research provides Second Party Opinion for the Green Bond Programme of Deutsche Kreditbank (DKB)


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Statement on the USA´s termination of the Paris Climate Agreement


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