Private Sector Initiatives

Chicago Climate Exchange (CCX) Although there has been little progress made in GHG trading at the federal level in the United States, a private sector initiative, the Chicago Climate Exchange (CCX), does exist. (See Box 7.6.) The project is led by Chicago-based Environmental Financial Products and financed by the private sector with grants from the Joyce Foundation, via the Kellogg Graduate School of Management at Northwestern University. The initiative represents a voluntary GHG reduction...

Performance Of Environmentally Screened Funds

The Social Investment Forum trend report (1999) indicates that 79 percent of SRI funds use environmental performance as at least one screen. Thus it is instructive to examine research that has looked at broader socially screened funds, as well as those that specifically address environmental issues. In early studies of the impact of social screening on fund performance, Hamilton et al. (1993) found no significant difference between the returns of socially screened funds that used a combination...

Environmental Products In Fund Management

The socially responsible investing sector is, according to some estimates, worth over 2 trillion in the United States and over 25 billion in the United Kingdom (Elkington and Beloe 2000). The management of funds, therefore, becomes a focus of consideration, as fund managers not only take into account financial considerations, but also give priority to social and environmental issues. The following subsections look at techniques of SRI analysis as well as the selection criteria of a number of...

Weather Derivatives

Whereas the evolution of the cat bond market arose from the need for greater capacity within the (re)insurance industry, the weather derivatives market has evolved directly out of the oil and gas options futures markets, since climatic variability is a major contributor to volatility in demand for energy. Deregulation of the energy sector also played an important part in the development of weather trading, as price and volume volatility that once was absorbed by the taxpayer became the...

Structure Of The Global Market For Financial Capital

Today the global capital market is no longer a single, physical marketplace, but a network of individual markets arranged in a hub-and-spoke system. This network is centered on activities of financial intermediaries in the principal hubs in the United States and the United Kingdom, with Japan and Germany providing further cores of financial activity (Barton 2001). Globally, financial intermediation tends to be differentiated on the basis of whether it is primarily driven by market- or...

Environmental and Social Strategic Systems

Whereas the rating agencies discussed to this point take into account past environmental liabilities, historical compliance records, and present environmental management in their rankings, the following organizations go one step further by linking strategic decision making to potential corporate value. In these cases, researchers identify not only the company's capacity to manage environmental risk, but also its capacity to capitalize on opportunities those environmental challenges present....

Future Private Equity Funds

Black Emerald Group The Black Emerald private merchant banking group specializes in project and corporate financing for environmental technology, renewable energy, and related industries, worldwide. In response to the EU Council's directive to commit to 12 percent electricity production from renewables by 2010, the Black Emerald Group plans to generate significant Green Certificates and carbon credits through lease financing in Western Europe and selected Eastern European countries. Renewable...

Private Equity Funds with Carbon Credit Enhanced Internal Rate of Return

World Bank REEF Fund A member of the World Bank Group, the International Finance Corporation IFC provides loan and equity financing for private sector projects in the developing world. In 2000 the IFC, along with other founding investors, launched the Renewable Energy Efficiency Fund REEF , a carbon equity fund designed to help mitigate the impacts of climate change while generating profitable returns for investors. Projects that are eligible for the fund include on- and off-grid renewable...

Environmental Products And Services

In addition to risk management tools, banks have developed new products that both encourage improved environmental performance on the part of clients and provide environmental businesses with easier access to capital. Table 4.2 outlines some of the products and services that have TABLE 4.2 Environmental Products and Services Developed by the Banking Industry TABLE 4.2 Environmental Products and Services Developed by the Banking Industry Permanent balance used for loans and investments...

Traditional Insurance Mechanisms

Insurance will continue to be the principal vehicle for the transfer of business and personal risk. However, there are at least two circumstances in which insurance companies may find themselves unable or unwilling to accept certain risks that they may have covered in the past. First, there is the capacity issue. The magnitude and frequency of major catastrophic losses in the late 1980s and through to the present have challenged the capacity of traditional insurance and reinsurance markets....

Acknowledgments

In order to write a book that covers such a broad sweep of subject matter we have had to call on the advice of many people, and we are happy to acknowledge their contributions to the final product. Our first thank-you goes to our friend and colleague, Virginia Maclaren of the Department of Geography and the Institute for Environmental Studies at the University of Toronto. It was Virginia who suggested that we pool our various ideas and work on the book together. We also benefited from the...

Finance

A Guide to Environmental Risk Assessment and Financial Products This book is printed on acid-free paper. Copyright 2002 by Sonia Labatt and Rodney R. White. All rights reserved. Published by John Wiley amp Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under...

Environmental Management And Shareholder Value Creation

Research attempting to link environmental and financial performance see Chapter 6 reveals a growing sense that sound environmental management can lead to increased shareholder value, which is defined as Value for shareholders which is created when a business, over time, uses capital at its disposal to earn returns greater than, or equal to, the cost of that capital. Willis and Desjardins 2000, 9 Traditionally, environmental management has been seen as imposing a cost on a company and a green...