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Nearly two-thirds of Canadian retail investors
are interested in allocating more funds to responsible
investment, RBC Global Asset Management survey finds.
"73% of Canadians believe responsible
investment portfolios are the way of the future; 81%
believe that responsible investment offers the same or
better returns than traditional investing; 61% rely on
their financial advisor for information about
responsible investment; 86% believe it is important that
companies they invest in act in a socially responsible
way"
[COMMENTARY] Though good, the number of
Canadians wanting to invest 'responsibly' really hasn't
changed much over the years. As always, the fact that
61% rely on financial advisors -- who mostly steer
these investors to 'non' responsible products -- is why
ethical and sustainable funds still represent probably
less than 5% of Canadian retail investment assets.
Nearly two-thirds of Canadian retail investors are
interested in allocating more funds to responsible
investment, RBC Global Asset Management survey finds,
press release, January 15, 2020, RBC Global Asset
Management, Canada.
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ESG Matters. "A link exists between
a company's ESG performance and its financial
performance, according to a study published Thursday
from ISS ESG, the responsible investment arm of
Institutional Shareholder Services. --
Pensions&Investments"
[COMMENTARY] ESG improves corporate
financial performance. Good corporate financial
performance allows for enhancing ESG action. Which comes
first? Or are they creating a virtuous feedback loop?
This is what this study tackles.
ESG Matters, by Dr. G Kevin Spellman, CFA, January
2020, Institutional Shareholder Services Inc., USA.
-------------------------------------------------------------
There Are 2,698 Signatories to the United
Nations' ESG Code. Has It Changed Anyone's Behavior?
"Most of these codes, particularly the UN
PRI, are meaningless. -- Alicia McElhaney"
[COMMENTARY] I agree. If there's no
detailed definition of the code's criteria and
no enforcements mechanism, they're largely a PR stunt.
There Are 2,698 Signatories to the United Nations' ESG
Code. Has It Changed Anyone's Behavior? By Alicia
McElhaney, January 8, 2020, Institutional Investor, USA.
-------------------------------------------------------------
ESG future-proofing can help to defy market
risks. "The European Insurance and
Occupational Pensions Authority (Eiopa) found in its
most recent stress tests of European pension funds that
sustainable investments would help them to withstand an
adverse scenario."
[COMMENTARY] In the market crash of
2008, subsequent studies showed that sustainable
investments outperformed.
ESG future-proofing can help to defy market risks,
by Elena Johansson, January 6, 2020, Expert Investor,
UK.
-------------------------------------------------------------
Proposed SEC rule changes could impede investor
activism. "The Securities and Exchange
Commission (SEC) is considering rule changes that could
undermine investors' ability to push for better
environmental performance at publicly traded companies
by creating new restrictions on who is eligible to file
shareholder proposals and how much support they need to
make it onto the proxy statement.
A network of corporate oil and gas interests appears
to be behind the new proposals, partly by manipulative
means, according to an extensive
Bloomberg investigation."
[COMMENTARY] It seems another step by
established fossil fuel groups to contain criticism of
their businesses.
Proposed SEC rule changes could impede investor
activism, by Sara E. Murphy, January 7, 2020,
GreenBiz, USA.
-------------------------------------------------------------
[US] Advisers welcome potential regulatory
scrutiny of ESG investing. "Investment
advisers say regulatory scrutiny of socially responsible
investing could provide a stronger foundation for a way
of constructing portfolios that is becoming increasingly
popular with clients."
[COMMENTARY] My initial reaction
wasn't positive that the SEC was looking into this. However, I concede that it could
be a positive development.
Regulatory authorities in the UK and the EU are already
establishing standards of various terms that investment
industry players would have to abide by. Perhaps this
SEC investigation would create similar rules as to the
use of terminology to that of the Europeans?
Advisers welcome potential regulatory scrutiny of ESG
investing, by Mark Schoeff Jr., January 3, 2020,
Investment News, USA.
-------------------------------------------------------------
No more heavy metals? New IBM battery chemistry
research could address mineral sourcing concerns.
"The materials for this battery are able to
be extracted from seawater, laying the ground for
less-invasive sourcing techniques than current material
mining methods. Just as promising as this new battery's
composition is its performance potential.
In initial tests, it proved it can be optimized to
surpass the capabilities of lithium-ion batteries in a
number of individual categories including lower costs,
faster charging time, higher power and energy density,
strong efficient and low flammability."
[COMMENTARY] Since this is an IBM
discovery, it has to be taken seriously. Should it work
out as indicated it will revolutionize the power
industry!
No more heavy metals? New IBM battery chemistry research
could address mineral sourcing concerns, by Heather
Clancy, December 31, 2019, GreenBiz, USA.
-------------------------------------------------------------
My latest podcast:
US Budget's Renewable Energy Winners. And More...
"Who are the US budget's renewable energy stock and
ETF winners and losers? Using MSCI and proprietary
methodologies Investor's Business Daily creates its best
50 ESG companies ranking.
New PIMCO ESG money market fund. Innovative and only
Catholic long/short mutual fund. New ethical and
sustainable robo advisors. My 1-hour investor tutorial
reduced in price! And more..."
-------------------------------------------------------------
'Fooling ourselves' to focus on 'amorphous'
social investing factors, says SEC Commissioner Peirce.
"'The notion that we can come together and
we can get our regulator to focus on an amorphous set of
qualities other than the long-term financial value of a
corporation, I think we're fooling ourselves,' she said
Tuesday on CNBC's Squawk on the Street."
[COMMENTARY] Commissioner Peirce clearly
represents President Trump's views in this area. I do
realize that there's a lot of greenwashing going on.
However, to try to determine exactly what is or is not
ESG is better left to the market. I say to her how about
defining 'value' or 'growth' investing while she's at
it!
'Fooling ourselves' to focus on
'amorphous' social
investing factors, says SEC Commissioner Peirce, by
Pippa Stevens, December 17, 2019, CNBC, USA.
-------------------------------------------------------------
10 Sustainable Investing Stories of 2019.
"We examine the developments and consider
their implications for 2020."
[COMMENTARY]An excellent overview of
what happened in US sustainable investing in 2019. Dr.
Hale goes from the immediacy of climate change, an
analysis of proxy voting, concerns around the SEC
rolling back proxy votes, to sustainable investment
flows and more.
10 Sustainable Investing Stories of 2019, by Jon
Hale, December 12, 2019, Morningstar, USA.
-------------------------------------------------------------
Conflicting ESG Ratings Are Confusing
Sustainable Investors. "There are many ways
to score a company on environmental, social, and
governance criteria, making the results difficult to
compare."
[COMMENTARY] Company ESG ratings by the
leading ESG rating firms show marked differences. All
ethical and sustainable investors should read this
article.
Conflicting ESG Ratings Are Confusing Sustainable
Investors, by Jacqueline Poh, December 11, 2019,
Bloomberg, USA.
-------------------------------------------------------------
Nasdaq Sustainable Bond Network [NSBN] Builds a
Framework for a Sustainable Future. "Nasdaq
formed the first Sustainable Bonds Market in 2015, and
NSBN enhances the sustainable bonds' investment process,
allowing investors to source detailed information on
sustainable bonds for product due-diligence, selection
and monitoring."
[COMMENTARY] This is a much-needed market
development for trading green bonds.
Nasdaq Sustainable Bond Network [NSBN] Builds a Framework
for a Sustainable Future, by MarketInsite, December
10, 2019, USA.
-------------------------------------------------------------
Green bonds set for shake up as EU agrees rules
for sustainable financial products. "The
$200 billion green bond market is set for a shake up
after the European Union on Thursday reached a deal on a
new set of rules governing which financial products can
be called 'green' and 'sustainable'."
[COMMENTARY] It's good to see some
standardization in the definition of green bonds. I hope
that these standards will give rise to similar standards
globally. That will help all investors.
Green bonds set for shake up as EU agrees rules for
sustainable financial products, by Jonas Ekblom,
December 5, 2019, Reuters, Belgium.
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Our (Morningstar) Sustainability Rating Methodology Got an
Upgrade. "The enhanced version differs from
its predecessor in three ways: First, it is focused on
material ESG risk, rather than on a
broader array of ESG issues, some of which may not be
financially material to investors. Second, company ESG
risks can now be compared across industries, rather than
only within industry peer groups. And third--the new
rating is simple and transparent, no longer requiring a
complicated calculation."
[COMMENTARY] The new ratings' regime is a
terrific upgrade from the previous one! Ethical and
sustainable investors will be well served by these
changes.
Our Sustainability Rating Methodology Got an Upgrade,
by Jon Hale, December 2, 2019, Morningstar, USA.
-------------------------------------------------------------
MSCI arms all investors with ESG ratings of
2,800 top firms. "The ratings provider said
in a statement it had made public on its website the
ratings on the companies in its All-Country World Index
.MIWD00000PUS 'to help ... identify the most financially
relevant ESG risks and opportunities.'"
[COMMENTARY] This is good news for all
ethical and sustainable investors! For company rating
information,
click here.
MSCI arms all investors with ESG ratings of 2,800 top
firms, by Simon Jessop, Carolyn Cohn, November 25,
2019, Reuters, UK.
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ESG in credit markets -- what's material?
"When it comes to applying ESG insights in
credit markets, we find some early evidence that a
deeper understanding of materiality can help deliver a
financial edge. What do we mean by materiality? It's
the connection between exposure to given sustainable
properties and returns or risk, as we write in our new
paper
Sustainability: the bond that endures."
[COMMENTARY] Provides a good outline of
what is material to investors concerning ESG from a
credit perspective.
ESG in credit markets -- what's material? By Andre
Bertolotti at Blackrock, November 25, 2019, Nasdaq, USA.
-------------------------------------------------------------
Fossil fuel divestment will increase carbon
emissions, not lower them -- here's why. "Recent
research suggests that divestment can
reduce the flow of investment into these companies. But
even if the divestment movement were successful in
reducing the economic power of these companies, IOCs
currently only produce about
10% of the world's oil.
The rest is mostly produced by national oil
companies (NOCs) -- state-owned behemoths such as Saudi
Aramco, National Iranian Oil Company, China National
Petroleum Corporation and Petroleos de Venezuela,
located mostly in low and middle income countries."
[COMMENTARY] An important analysis
concerning fossil fuel divesting.
Fossil fuel divestment will increase carbon emissions,
not lower them -- here's why. By Stefan Andreasson,
November 25, 2019, The Conversation, Canada.
-------------------------------------------------------------
IA launches ESG definitions. "The
[UK] Investment Association has launched industry-wide
definitions on responsible and ESG investing in an
attempt to create a common language for advisers, fund
managers and consumers."
[COMMENTARY] The UK's Investment
Association could be setting an industry standard that
might possibly be used globally. I'm happy to see this
occur as it has been a long time coming!
IA launches ESG definitions, by Imogen Tew, November
18, 2019, FT Advisor, UK.
-------------------------------------------------------------
'Formal Commitment' to ESG Investing Stalls.
"Managers cite client unfamiliarity with
ESG factors (26%), the perception that considering ESG
issues have a negative impact on performance (25%), and
difficulty defining the boundaries of ESG (25%) as major
challenges to client receptivity."
[COMMENTARY] I think that many managers
underestimate how knowledgeable and receptive to ESG
their clients are.
'Formal Commitment' to ESG Investing Stalls, by John
Sullivan, November 15, 2019, 401k Specialist, USA.
-------------------------------------------------------------
Millennials see retirement and financial
planning differently than other generations.
"Recent research from the Public Policy Forum (PPF)
in Ottawa shows millennials have a very different
perspective on retirement and financial planning than
previous generations... Its research outlines the many
challenges that financial planners and financial
advisors will have in securing millennials as clients."
[COMMENTARY] The research cited informs
advisors on how to approach and retain millennials as
clients.
Millennials see retirement and financial planning
differently than other generations, by Keith
Costello, November 15, 2019, Investment Executive,
Canada.
-------------------------------------------------------------
Enhancement to Sustainability Rating Emphasizes
Material ESG Risk. "Beginning this month,
our Morningstar Sustainability Rating incorporates this
concept of materiality by adopting a new company-level
ESG risk framework developed by Sustainalytics. As a
result, the rating now provides greater insight into how
well companies in a portfolio are managing the material
ESG issues they face both relative to their industries
and across industries."
[COMMENTARY] Morningstar is taking a big
step forward in its ESG company ratings by including
materiality in its ESG ratings -- courtesy of course to
Sustainalytics.
Enhancement to Sustainability Rating Emphasizes Material
ESG Risk, by Jon Hale, November 11, 2019,
Morningstar, USA.
-------------------------------------------------------------
World Bank launches ESG rating system for
sovereigns. "The free-to-use Sovereign
ESG Data Portal has been built to equip
investors with more detailed ESG information on
sustainable development policy indicators and provide
information which may support private sector investment
in emerging markets and developing countries."
[COMMENTARY] There's a huge trove of
information in this World Bank site. However, for ease
of use, it lacks an overall ratings' system where a
grade is assigned to a country's ESG performance.
World Bank launches ESG rating system for sovereigns,
by Joe McGrath, November 7, 2019, UK.
-------------------------------------------------------------
The Green Short: Funds Target Laggards in
Sustainable Shift. "Some mutual funds are
now shorting unsustainable companies. More than 1,900
funds aim to invest according to ESG criteria"
[COMMENTARY] It was inevitable that
shorting ESG laggards would arise. Now it's here. It's
becoming acceptable now that the stock prices of
companies leading on ESG criteria frequently outperform.
That's why over 1,900 funds aim to have an ESG focus.
I've said for decades that ethical and sustainable
investing -- ESG -- will become so commonplace that it
will just become that standard for markets everywhere.
It seems we're on the precipice of that reality!
The Green Short: Funds Target Laggards in Sustainable
Shift, by Lucca De Paoli, November 5, 2019,
Bloomberg, USA.
-------------------------------------------------------------
ANALYSIS: Tracking SEC's Evolving Approach to
ESG Disclosures. "The SEC is
moving--slowly--toward including environmental, social,
and governance (ESG) disclosures in public company
filings. Although the U.S. House of Representatives'
Financial Services Committee in July 2019 rejected a
bill that would have aligned ESG reporting standards
closer to those found in the EU and required climate
change risk factor disclosures, ESG is an issue only
likely to gain in prominence in the near future."
[COMMENTARY] As the article above this
one clearly shows, companies and the investment industry
itself are forcing the SEC to act.
ANALYSIS: Tracking SEC's Evolving Approach to ESG
Disclosures, by Preston Brewer, November 4, 2019,
Bloomberg Law, USA.
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Advisers [in the UK] face avalanche of ESG questions
from clients. "Nearly 70% have been asked
about responsible investing in the last six months."
[COMMENTARY] Is it finally happening?
Clients telling advisors about their personal values and
advisors actually responding to them? I've been waiting
decades for this day!
Advisers face avalanche of ESG questions from clients,
Cherry Reynard, November 1, 2019, International Advisor,
UK.
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