Tufts University will prohibit direct investments in coal and tar sands companies as part of a multi-part commitment to advance sustainability and address the urgent crisis of climate change. Additional actions include investing up to $25 million in positive impact funds related to climate change over five years and proactively calling on external investment managers to take environmental, social, and governance considerations into account in their investment processes.
The university joins a small number of U.S. colleges and universities with similar-sized endowments of approximately $2 billion or more to prohibit investments in coal and tar sands companies.
From campus operations to the classroom, sustainability at Tufts is a collective effort spanning departments, offices, schools, and campuses. The plan, approved by the university’s Board of Trustees, is in keeping with the university’s long history of leadership within higher education on issues of sustainability, ranging from initiating the Talloires Declaration in 1990 to its work today to minimize its carbon footprint, foster groundbreaking research and scholarship, and prepare students to become the next generation of leaders on climate change.
As part of its multi-part commitment to promoting further change beyond the university and enhanced transparency and accountability within it, Tufts will:
- Invest $10 million to $25 million in positive impact funds related to climate change over the next five years. A minimum of $10 million will be allocated, with the remainder structured as a match to encourage contributions to the endowment from those who are passionate about climate action.
- Proactively communicate with all current and future investment managers to inform them of Tufts’ decision to prohibit direct investment in coal and tar sands companies, impress upon them the university’s belief in the urgency of climate change, and encourage them to further integrate climate-change risk and other environmental, social, and governance considerations into their investment processes.
- Enhance transparency by creating a dashboard that will report on the university’s progress toward these actions as well as other relevant information regarding action on climate change and fossil fuels.
- Evaluate progress in light of the rapid pace of change in the fields of environmental sustainability, energy production/consumption, and investing, and revisit these actions in two to five years.
- Further integrate and advance the university’s efforts on environmental sustainability. The university would coordinate these efforts with the Campus Sustainability Council to connect their work in support of a broader, university-wide climate change mitigation plan.
“Tufts is committed to the mission of addressing the most consequential challenges of our time, including the urgent global crisis of climate change,” said President Anthony P. Monaco. “We are taking practical and symbolic steps to advance the cause of sustainability and positive environmental impact, both at Tufts and beyond.”
The university’s commitment follows the recommendations of a Responsible Investment Advisory Group (RIAG) composed of students, faculty, and staff that convened in the fall of 2020 to study the issue of potential divestment. The group reviewed actions taken by other universities and colleges as well as measures beyond divestment to promote sustainability, explored potential options and ramifications, and issued its recommendations [PDF] to the Board of Trustees this winter.
Under the plan, Tufts will prohibit direct investments in 120 coal and tar sands companies with the largest reserves. The university currently has no direct holdings in the restricted companies, and the change in investment policy will prevent it from acquiring any.
This restriction, which would cover virtually all public reserves in this space and most major energy companies, would apply to the Investment Office’s internally managed accounts and be implemented within six to 12 months. The companies in question would be determined by a list updated annually by an established third party commonly used by other universities for these purposes.
The university also will seek to influence the holdings in its other investments that it does not directly control, such as commingled funds, by attempting to move investment managers toward change.
“It is our hope that our actions and our voice, in combination with peer universities and others, will cause investment managers to accelerate their shift from fossil fuel investments to portfolios with more sustainable investments,” said Robert R. Gheewalla, A89, trustee and RIAG chair.
Faculty research related to climate change and climate change solutions can be found in virtually every school at the university. Tufts offered 585 courses related to sustainability over the past two years and seven graduate and undergraduate degree programs in sustainability and related fields. Last year, Tufts welcomed the first cohort of students in the master’s of science in sustainability program.
“The urgency of climate change is imperative, and the steps we are announcing today complement the many university programs on sustainability advanced through our scholarship, research, teaching, and campus operations,” added Monaco.
Q2 2021 Chinese Inbound Investment: M&A and Equity Investments – China Briefing
The period April-June 2021 saw an impressive array of investments into China, in a variety of different sectors. Despite political differences, the United States led the way closely followed by Asia and then Europe.
Q2 aggregate amounts were led by real estate, and logistics acquisitions and investments, suggesting that corporate MNC’s are buying into China’s Belt and Road Initiative projects while politicians continue to discredit it. Joint ventures (JV) and minority investments took place in multiple sectors from several Asian countries.
JVs/minority inbound investments were made from several European countries led by German and Scandinavian businesses. The UK saw a handful of small investments/JVs as well as one major exit. A notable next generation investment was made by Germany’s Volocopter, looking to bring flying taxis to China.
The second quarter of 2021 saw China inbound investments/pledges reach US$13.9 billion, down 2.1 percent from US$14.2 billion in Q1 2021, but still well above both Q3 and Q4 2020 levels. These investments were a mixture of controlling inbound acquisitions, minority stakes, JVs, and new plants/operations.
This quarter was led by acquisitions of controlling stakes across financial services, banks, investment banks, securities firms, asset and wealth managers, insurers, real estate, and logistics. We set out this activity by region below.
North America led with US$6.8 billion. Two large acquisitions by Blackstone, one of a Beijing-based commercial developer and one of a leading Chinese data management group, accounted for US$4.3 billion. Canadian-based Brookfield acquired a set of five mainland shopping malls for US$1.4 billion. There was a furry of investments/announcements by leading US financial services groups including JP Morgan – seeking to acquire the remaining 29 percent of its securities joint venture (estimate of US$40-50 million). This follows JPM’s Q1 acquisition of a 10 percent stake in China Merchants Bank, a leader in Chinese wealth management for US$410 million.
Morgan Stanley is interested in acquiring stakes in their Chinese securities and mutual funds JVs (approx. US$150 million)
Goldman Sachs launched its Chinese wealth management JV with ICBC wealth management. Goldman will control 51 percent.
Blackrock announced that it had received its license for a majority owned (50.1 ercent) wealth management JV with CCB and Temasek (Singapore). Blackrock also became the first global asset manager to start a wholly owned onshore mutual funds business.
There were also industrial JVs in lithium batteries, chemicals and gasification, venture capital (VC) and/or private equity (PE) investments into Chinese healthcare, with a focus on biopharma and biotech, into diary and into a newly launched industrial/PE fund for the Chinese beauty market. There were also a few smaller RE acquisitions as well. The quarter ended with Warburg Pincus announcing a JV with China’s Golden Union Group, to acquire under-utilized properties in Shanghai and Beijing and convert them into use, including serviced apartments, creative offices, or mixed-use commercial projects.
Asia Q2 announced deals with disclosed values totaling US$6.1 billion.
Not surprisingly, Hong Kong and Singapore ranked #1 and #2, respectively, by country.
The largest Asian inbound investment was AIA’s acquisition of a 24.99 percent equity stake in China Post Life for US$1.8 billion. Hong Kong also saw a US$500+ million acquisition of a Chinese shopping mall by a REIT and an inbound mainland Chinese hospital acquisition. Singapore saw three real estate/REIT transactions, one of which represented the successful IPO of GLP’s logistics REIT (a landmark China REIT transaction), the launch of DBS’ majority-controlled mainland securities JV, and a private placement by GIC into a leading tech platform.
This quarter also saw inbound JVs/partnerships involving many other Asian countries; Japan (Daiwa securities JV and an EV batteries JV), Korea (biopharma VC investment led by Mirae and a JV in lithium-ion battery recycling), Mongolia (metallurgical coal JV), Thailand (hospitality/hotels entry), and Australia, a US$1.4 billion lithium strategic partnership.
MENA China (Guangzhou) and Israel launched a second Sino-Israel biotech Fund, managed by prominent Israeli professionals, and is to be focused on Israeli and EU biotech companies in phase II/III clinical trials.
Europe (excluding the UK) saw numerous JVs/investments into China, however, very few of these disclosed any value. The aggregate disclosed values for FDI into China amounted to US$750 million.
Germany invested in two China JVs, focused on electric batteries as well as one on fuel cells – all involving leading brands from both countries. There was a JV launched to focus on monorail components, another to bring German flying taxis (Volocopter) into China and one to fund a Series C of a Chinese drone maker. Perhaps the most pressing Q2 German/China JV was the one between Fosun Pharma and BioNTech, which is designed to produce up to 1 billion of additional vaccine doses per year to mainland China, which needs this additional domestic vaccine capacity. (BioNTech also announced that it would be launching new regional vaccine production facility in Singapore).
BASF’s new engineering plastics compounding plant at the BASF Zhanjiang Verbund site (US$10 billion) is also on track with the first production plant to come commence operations at the site in 2022. German inbound VC investment volume was much lower in Q2 versus Q1 as Bertelsmann (BAI) – which made 5 VC investments in Q1, made none in Q2.
BASF and Bosch VC funds saw much lower VC investment activity in Q2.
France saw Sanofi launch a new global research institute in China (its fourth such global institute), Air France/KLM acquired an additional US$200 million to increase its stake in China Eastern (still below 10 percent) and TOTAL released updated data on its solar panel JV (TEESS) with Envision, which appears to be making strides into the Chinese commercial and industrial user segment.
Other European countries
Norway saw two JVs, one to develop offshore wind in the Yellow Sea and one with UAC, a supplier of fiberglass pressure vessels, to build a large-scale production facility in China.
Finland – Finnair announced a new JV with Shanghai’s Juneyao Air to expand air services between Finland and China.
Switzerland – Clariant opened its new production facility for light stabilizers.
Italy – Daerg Chimica, a specialist in car washing business operating in 45 countries, announced the launch of its Chinese business.
Netherlands – LyondellBasell announced that Jiangsu Fenghai will use its Spheripol 400 kilotons per annum (KTA) and Hostalen ACP300 KTA Hostalen technology for its new facility to be built in Lianyungang.
UK – (amounts with disclosed values of estimated US$250 million) – saw the acquisition of a majority (73 percent) stake in a small Chinese industrial company, acquisition of a 10 percent stake in a regional Chinese freight organization, a JV involving China Everbright Fund providing growth capital for IP Group’s China based portfolio companies, a chemical manufacturing JV, a JV in life sciences/AI, a small petrochemicals JV (via Shell), and a data focused JV involving Unilever, Alibaba’s Brand DataBank, and Fudan University.
A sizeable infant formula business exit was made by Reckitt Benckiser, a leading UK consumer health group.
Included in this analysis are transactions and/or investments which have both been signed and announced. Omitted from this analysis are transactions involving publicly traded debt or equities.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at firstname.lastname@example.org.
Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.
Smaller groups feel the pinch as investment research costs slide – Financial Times
The price of corporate research published by independent providers dropped 8 per cent last year as cut-throat competition from large investment banks continued to squeeze revenues for smaller analytics companies.
Independent research providers have complained to regulators in the UK and Europe that their businesses are being hurt by what they say is unfair competition after large banks slashed the cost of research services in recent years.
“Unfair, anti-competitive pricing by investment banks remains the single most fundamental problem for independent research providers. Seventy-eight per cent of independent research providers believe that urgent regulatory action is needed to address predatory pricing by investment banks,” said Steve Kelly, special adviser at Euro IRP, the trade body which represents 70 independent research providers.
Euro IRP estimates that research pricing by independent providers has on average declined by about 40 per cent since the introduction of the sweeping package of European market rules, known as Mifid II, in 2018.
Under Mifid, asset managers must split the cost of buying research from any trading costs incurred for buying and selling securities, an arrangement known as “unbundling”. This was designed to prevent investment banks and brokers from offering research to portfolio managers as an inducement to direct trading orders to them.
Investment banks responded by slashing the price of their research. JPMorgan, for example, now offers asset managers access to all of its written research output for an annual fee of $10,000, with face-to-face meetings with analysts costing more.
Large banks which primarily earn revenues elsewhere can absorb this drop but smaller, research-focused companies have been left exposed. Some independent providers also believe that investment banks are using research as a loss leader, funding this activity from other parts of their business in order to facilitate the selling of other more lucrative services to clients.
“Research for investment banks is a route to clients to whom many other, much more profitable services can be sold,” said Kelly.
JPMorgan declined to comment.
In April, the Financial Conduct Authority proposed that research produced by independent providers should be exempted from the Mifid rules covering inducements that apply to investment banks.
Prices charged per research assignment vary enormously but Kelly said “declines and ongoing pressure” were widely reported by Euro IRP members, particularly smaller providers.
Richard Kramer, founder and chief executive of Arete Research, an independent provider, said he believed that many investment banks were pricing research services below cost.
“Almost all of the investment banks are cross-subsidising the cost of their research services from other activities,” said Kramer. He also questioned the value of some research. “How are investors well served when 80 per cent of the recommendations by bank analysts are ‘buys’? The research produced by the sycophants and stenographers at investment banks is part of a promotion machine, advertising other banking services,” he said.
Is BCE (TSE:BCE) A Risky Investment? – Simply Wall St
Legendary fund manager Li Lu (who Charlie Munger backed) once said, ‘The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.’ It’s only natural to consider a company’s balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that BCE Inc. (TSE:BCE) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?
When Is Debt A Problem?
Generally speaking, debt only becomes a real problem when a company can’t easily pay it off, either by raising capital or with its own cash flow. Part and parcel of capitalism is the process of ‘creative destruction’ where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
What Is BCE’s Net Debt?
The image below, which you can click on for greater detail, shows that BCE had debt of CA$24.4b at the end of March 2021, a reduction from CA$29.7b over a year. However, because it has a cash reserve of CA$2.61b, its net debt is less, at about CA$21.8b.
How Healthy Is BCE’s Balance Sheet?
The latest balance sheet data shows that BCE had liabilities of CA$9.53b due within a year, and liabilities of CA$32.4b falling due after that. Offsetting these obligations, it had cash of CA$2.61b as well as receivables valued at CA$3.81b due within 12 months. So it has liabilities totalling CA$35.5b more than its cash and near-term receivables, combined.
This deficit is considerable relative to its very significant market capitalization of CA$56.1b, so it does suggest shareholders should keep an eye on BCE’s use of debt. Should its lenders demand that it shore up the balance sheet, shareholders would likely face severe dilution.
In order to size up a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and its earnings before interest and tax (EBIT) divided by its interest expense (its interest cover). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.
BCE’s debt is 2.7 times its EBITDA, and its EBIT cover its interest expense 4.7 times over. Taken together this implies that, while we wouldn’t want to see debt levels rise, we think it can handle its current leverage. Sadly, BCE’s EBIT actually dropped 9.1% in the last year. If earnings continue on that decline then managing that debt will be difficult like delivering hot soup on a unicycle. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if BCE can strengthen its balance sheet over time. So if you’re focused on the future you can check out this free report showing analyst profit forecasts.
Finally, a company can only pay off debt with cold hard cash, not accounting profits. So we clearly need to look at whether that EBIT is leading to corresponding free cash flow. Over the most recent three years, BCE recorded free cash flow worth 69% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.
BCE’s EBIT growth rate and level of total liabilities definitely weigh on it, in our esteem. But the good news is it seems to be able to convert EBIT to free cash flow with ease. Looking at all the angles mentioned above, it does seem to us that BCE is a somewhat risky investment as a result of its debt. Not all risk is bad, as it can boost share price returns if it pays off, but this debt risk is worth keeping in mind. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet – far from it. For example BCE has 4 warning signs (and 1 which is significant) we think you should know about.
When all is said and done, sometimes its easier to focus on companies that don’t even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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