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Shareholder Values

 
"Forty-five percent of U.S. households prefer an environmental, social and governance (ESG) approach to investing… Among those between the ages of 30 and 39, this increases to 64%, and for those younger than 30, it is 67%."
-- Cerulli Associates
 
 (USA)
    October 2018

"While 77% of respondents said they want their financial services provider to inform them about responsible investments that are aligned with their values, only 27% said they had ever been asked if they were interested."
-- Responsible
    Investment
    Association (RIA)
 
  (Canada)
    December 2021

"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
-- Acquisition
    International
   
(UK) June 2015

 

Events

 

Global Ethical Investing News & Commentary

Commentaries by Ron Robins  E-mail us your feedback

Links may only be valid for a limited time    October 6, 2022

***List your event on our Events Page***

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Latest Podcast: Most Sustainable Stocks & Funds for 2022. Includes coverage of the following stocks: Life Time, Hurtigruten, Panera Bread, Yeti, Toro, Ecolab, Colgate-Palmolive, Tesla, Beyond Meat, Microsoft, Aflac, Enphase Energy, Intuit, Adobe, Waste Management, Chipotle, PepsiCo. Plus: First Trust Water ETF, iShares Global Clean Energy ETF, Fidelity US Sustainability Index Fund, Vanguard FTSE Social Index Fund ; and more...
-- By Ron Robins

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We Need to Create a Shared Language Around ESG. "Billionaires like Elon Musk call it a 'scam,' consumers and business leaders see it as a strategic priority to develop more sustainable business models, while governments are implementing ESG standards as a way to act in the public's interest."

[COMMENTARY] This article provides a useful perspective on defining ESG and how it might be understood from differing perspectives.
We Need to Create a Shared Language Around ESG, by Mark Horoszowski, September 26, 2022, Triple Pundit, USA.

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Nuclear Power Still Doesn't Make Much Sense. "In a common energy industry measure known as 'levelized cost,' nuclear's minimum price is about $131 per megawatt-hour, which is at least twice the price of natural gas and coal, and four times the cost of utility-scale solar and onshore wind power installations.

And the high price of nuclear power doesn't include its extraneous costs, such as the staggering price of disasters. Cleanup and other costs for the 2011 Fukushima disaster, caused by an earthquake and a tsunami off the Japanese coast, may approach a trillion dollars."

[COMMENTARY] I've been reading and listening to a lot of analysts say that nuclear (fission) is going to be the answer to reaching net-zero by 2050. However, this analyst's analysis makes a cogent and coherent case for avoiding relying on nuclear.

My principal concerns regarding renewables are that the surface areas required as well as the metals and materials needed will not be sufficiently available. What do you think?
Nuclear Power Still Doesn't Make Much Sense, by Farhad Manjoo, September 16, 2022, The New York Times, USA.

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Experts question economic, environmental value of wind power. "Martis explained to The Center Square that the manufacturing and transportation of turbines to their destination typically requires overseas shipping to U.S. ports, followed by over-the-road transport requiring several diesel-fueled 18-wheel semi-trucks per turbine."

[COMMENTARY] Though this article makes some interesting points, they might be invalidated due to the author's reliance on studies many years old.
Experts question economic, environmental value of wind power, by Bruce Walker, September 14, 2022, The Center Square, USA.

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Female directors improve corporate social responsibility. "Companies are more likely to take corporate social responsibility seriously if they have more women on their board of directors, new University of Sydney Business School research reveals."

[COMMENTARY] Here's another good quote from the article, "Our research indicates that improving gender parity on corporate boards reaps benefits by improving governance structure in the form of effective CSR committees, which has immediate and long-term benefits for companies, says Dr Anish Purkayastha."
Female directors improve corporate social responsibility, University of Sydney, September 8, 2022, Australia.

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The Politics of Values-Based Investing. "We do not expect the controversy about ESG investing to disappear anytime soon. Much of it is healthy, such as correcting for excessive claims that an ESG fund 'will make the world a better place' when there is no demonstrable way to show that it will.

Conservatives who complain that ESG investing is a way of forcing a social and environmental agenda on companies that has nothing to do with company profitability, perhaps even hurting it, need to look in the mirror if they are creating anti-ESG funds of their own. This is simply swapping out one set of values for another. Both are forms of Socially Responsible Investing."

[COMMENTARY] This is an excellent article by someone at the pinnacle of academia who studies corporate ESG and sustainability performance.
The Politics of Values-Based Investing, by Robert G. Eccles and Jill E. Fisch, September 7, 2022, Harvard Law School Forum on Corporate Governance, USA.

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100 Percent Renewable Energy Systems Could Power the Globe By 2050. "A new review from the Institute of Electrical and Electronics Engineers (IEEE) analyses over 600 peer-reviewed articles on 100 percent renewable energy systems. 'The main conclusion of most of these studies is that 100 percent renewables is feasible worldwide at low cost,'" the report determines."

[COMMENTARY] My concerns about material shortages are apparently dealt with in some studies.
100 Percent Renewable Energy Systems Could Power the Globe By 2050, by Andrew Kaminsky, September 5, 2022, Triplepundit, USA.

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Texas' Answer to 'Woke' Investing Looks Kind of Woke. "The same day Texas released its version of the index prohibitorum, it emerged that California would ban gasoline-powered cars by 2035. Now one can, of course, say that policy is misguided or too costly; that is a valid debate. But to say that firms lending to or investing in the oil industry shouldn't factor in the biggest car market in the US -- which also sets the regulatory agenda in many other states -- banning the biggest source of demand for oil is simply delusional."

[COMMENTARY] The above quote from the article is telling. It implies that by implementing the state's new financial guidelines, it's 'telling' the state's pensions, etc., to not divest assets/stocks that in the future might become stranded assets, thereby harming financial returns. Texas is doing the very thing it says it is trying to guard against!
Texas' Answer to 'Woke' Investing Looks Kind of Woke, by Liam Denning, August 30, 2022, Bloomberg, USA.

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Why sustainable investors may rue being too passive. "Passive sustainable funds are growing strongly. But investors in these funds are at risk of a mismatch between what they expect and the reality of what they receive."

[COMMENTARY] This article's author makes a strong case for active investing. That is where funds are actively managed compared to passive management of, say, an index or most ETFs.
Why sustainable investors may rue being too passive,
by Rory Bateman, August 30, 2022, Schroders, UK.

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Report Calls for "Unbundling" ESG Metrics for Impactful Investment for SDGs. "Util -- a financial technology company with a focus on sustainability -- has published a report ranking the top ten positive -- and negative -- contributing investment funds for each of the 17 SDGs."

[COMMENTARY] Two of the most interesting points are that firstly, the report finds that markets favor big companies as they can provide more SDG-relevant data than smaller companies. Secondly, fulfilling SDG goals requires a massive expansion of the mining industry, an industry that SDG-ESG investors mostly disdain!
Report Calls for "Unbundling" ESG Metrics for Impactful Investment for SDGs, August 24, 2022, International Institute for Sustainable Development.

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ESG -- A Defense, A Critique, And A Way Forward: An Evidence-Driven Pragmatic Perspective. "The evidence against claims related to 'woke' capitalism is thin. Both sides of the ESG debate make valid points while being simultaneously guilty of overstating their case relative to the observed data."

[COMMENTARY] The author is a professor at the Columbia School of Business. He seeks in this and future articles to examine all aspects of the debate surrounding ESG.
ESG -- A Defense, A Critique, And A Way Forward: An Evidence-Driven Pragmatic Perspective, by Shivaram Rajgopal, August 23, 2022, Forbes, USA.

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Can High ESG Ratings Help Sustain Dividend Growth? "To summarize, the analysis found that companies with higher initial ESG ratings experience greater subsequent stability of dividends and a lower likelihood of cutting or eliminating their dividends.

Low ESG ratings do not necessarily mean poor dividend growth, but companies with high ESG ratings appear to consistently deliver higher dividend growth. Finally, equity ESG indices integrating the ISS ESG Corporate Rating may potentially offer better dividend growth over time."

[COMMENTARY] This is a case where initial higher ESG ratings appear to have some predictive value! It gives comfort to those who may some reliance on ESG ratings.
Can High ESG Ratings Help Sustain Dividend Growth? By Subodh Mishra, August 18, 2022, Harvard Law School Forum on Corporate Governance, USA.

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On ESG Investing, The Economist Offers The Right Diagnosis But A Faulty Prescription. "Rather than proposing improved definitions and metrics based on better data, The Economist argues that 'it is better to focus simply on the E,' for environmentally sound investments."

[COMMENTARY] I agree with the writer of this article that The Economist's proposal to focus on the environment at the expense of the social and governance aspects of ESG is too narrow. I'm not surprised by 'establishment' publications arriving at such a conclusion, however.

ESG is all about looking at all aspects of a company that relate to its activities and that promote its financial well-being over the short, medium, and long-term.
On ESG Investing, The Economist Offers The Right Diagnosis But A Faulty Prescription, by Michael Posner, August 17, 2022, Forbes, USA.

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Doing Good: Where Sustainable Investing Gets It Wrong. "A high sustainability rating does not necessarily equate to real sustainability impact (and profit)."

[COMMENTARY] The article's authors suggest that "investors should pay more attention to funds' policies and track records around voting and engagement on sustainability issues than to their sustainability ratings."
Doing Good: Where Sustainable Investing Gets It Wrong, by Lucie Tepla, August 16, 2022, INSEAD, Singapore.

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What's wrong with ESG ratings? "'Is it possible for companies to effectively report on the vast number of potential stakeholder-related metrics that would be required (carbon emissions, pollution and waste, human capital management, supply chain practices, product use and safety, etc.)?' Similarly, should ESG ratings be subject to regulatory requirements similar to those applicable to major credit rating agencies?"

[COMMENTARY] This is a great review of the state of ESG ratings.
What's wrong with ESG ratings? By Cooley LLP, August 8, 2022, J D Supra, USA.

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How regulations are moving ESG into the risk and compliance field. "New regulatory rule-making around disclosure could push companies and financial services firms to move their ESG activities under the oversight of risk and compliance teams"

[COMMENTARY] It's easy to see that as ESG reporting becomes increasingly regulated that it'll require compliance oversight.
How regulations are moving ESG into the risk and compliance field, by Thomson Reuters Regulatory Intelligence and Compliance Learning, August 5, 2022, J D Supra, USA.

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Could ESG Options Undermine Participant Outcomes? "Overall, the researchers comment that their analysis paints a 'mixed picture about the actual participant interest, and drivers of demand, for ESG funds in DC plans and suggests that plan sponsors should take a thoughtful approach when considering adding ESG funds to an existing core menu.'"

[COMMENTARY] It seems that employees investing in DC plans weren't motivated to invest in ESG funds. However, this could be because of the number of funds plan holders invested in, among other factors.
Could ESG Options Undermine Participant Outcomes? By Nevin E. Adams, August 2, 2022, National Association of Plan Advisors, USA.

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ESG is having a hard time but look to the long-term. "The future of green investing still seems secure--performance has been hit by a unique set of economic circumstances, younger investors are at the forefront of the ESG push, and managers are taking a second look at former no-go energy stocks as decarbonisation plans march forward."

[COMMENTARY] Yes, a unique set of circumstances has created a situation where ESG funds are underperforming. However, should global warming continue to pan out as per IPCC forecasts, quality ESG funds should perform well over the long-term as increasing efforts are made to reduce the effects of climate change.
ESG is having a hard time but look to the long-term, by Christopher Akers, July 28, 2022, Investors Chronicle, UK.

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ESG Underperformance Will Be Its Undoing. "While ESG investing gets promoted as a way for individuals to 'invest with their principals,' such has been a windfall marketing scheme by Wall Street firms."

[COMMENTARY] The writer, Mr. Roberts, completely misses the whole idea of ESG: that is for investors to invest in companies that not only reflect high personal values but to invest in companies that are dutifully applying ESG principles to their operations for long-term shareholder returns.

Over time, companies that pay attention to the environment, have good relations with all stakeholders, and are exceptionally well governed, are likely to have higher profits.

Yes, many financial firms have engaged in greenwashing and this is now being addressed by various regulatory authorities. But ESG investing will survive because over the long-term it'll simply make more money for investors.
ESG Underperformance Will Be Its Undoing, by Lance Roberts, July 28, 2022, Advisor Perspectives, USA.

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Investors Are Embracing ESG But Avoiding Impact. What They're Missing. "The belief that achieving positive social impact automatically means sacrificing attractive return on investment--drives many investors to avoid 'impact' but embrace 'ESG.'"

[COMMENTARY] The article quotes the Ford Foundation with achieving significant impact investment financial returns and is an encouragement for others to get into the impact space.
Investors Are Embracing ESG But Avoiding Impact. What They're Missing, by Roy Swan, July 27, 2022, Barron's, USA.

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They helped create ESG. Two decades later, some see a mess. "The goal of ESG investing was 'to try and create a positive virus that we could plant in mainstream finance and investment to start a different conversation that these issues are real, they're material, and they affect your long-term investments,' said Paul Clements-Hunt, the former head of the U.N. Environment Programme Finance Initiative, or UNEP FI, which played a crucial role in popularizing the idea."

[COMMENTARY] Yes, it is a mess. Nonetheless, ESG is seen by most investors as something that is proving itself of value! Can you imagine a world without it now?
They helped create ESG. Two decades later, some see a mess, Avery Ellfeldt, July 26, 2002, E&E News Climate Wire, USA.

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Put short selling on the ESG investing table, say hedge fund managers. "The study of how short sales affect ESG objectives has gained a lot of attention. According to a recent white paper by the Managed Funds Association and Harvard Management Company, short bets can lower capital investment in the most polluting industries by 3 to 8%. The white paper also states that short selling can raise the cost of capital and exert downward pressure on equity prices."

[COMMENTARY] Should short selling be considered a legitimate ESG practice? I think the answer is yes, provided certain well-known and historic safeguards are employed.
Put short selling on the ESG investing table, say hedge fund managers, by Jean Dondo, July 26, 2022, Wealth Professional, Canada.

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Amidst Criticism, ESG Reporting Should Be Reformed, Not Abandoned. "In response to the growing criticism of the rating system, EY released a new report on the state of ESG and recommended five actions to strengthen the credibility of the metric."

[COMMENTARY] It's good that one of the big accounting firms has issued such a report.
Amidst Criticism, ESG Reporting Should Be Reformed, Not Abandoned, by Andrew Kaminsky, July 21, 2022, Triple Pundit, USA.

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Have the merits of ESG investment been overstated? "How times change. A year ago, asset managers were trumpeting the qualities of environmental, social and governance (ESG) funds, as a slew of data showed that these had beaten their conventional equivalents over several periods.

Today, they have toned down their message after months of disappointing performance; negative stories about firms exaggerating the benefits of ESG; and the emergence of influential and increasingly vocal sceptics."

[COMMENTARY] There are two knowledgeable commentaries in this article about the merits -- or lack of them -- concerning the relevance of ESG based investing. I believe each side makes valid points.
Have the merits of ESG investment been overstated? By Tim Cooper, July 14, 2022, Raconteur, UK.

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The End of the 'Technological Era' of Oil, Gas & Coal. "The enaction of climate policies over the next decade will lead to lost profits of at least $1.4 trillion in the global oil and gas industry, finds a peer-reviewed analysis published in Nature Climate Change, much of which will impact private investors in Western Europe, while generating financial volatility larger in scale to the 2008 subprime mortgage crisis."

[COMMENTARY] After the EU agreed to include gas and nuclear power in their new 'green' taxonomy and Germany restarting coal-powered electricity generation, I wonder exactly when the big hit to fossil fuel assets will take place?
The End of the 'Technological Era' of Oil, Gas & Coal, by Nafeez Ahmed, July 11, 2022, Byline Times, UK.

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ESG questionnaires: why you shouldn't use them with clients. "Offering a questionnaire focused on ESG, and which doesn't cover Responsible, Ethical, Impact, Transition, UN's Sustainable Development Goals (SDGs) etc. is building up future compliance problems... I suggest you provide a document explaining how your firm arrived at its definition of ESG and what it covers. It will then be harder for the client to come back 3 years later and say 'I thought they meant X or Y for ESG.'"

[COMMENTARY] The title is misleading. What the author of this article is saying is that you must define terms such as ESG, so your client is clear about what they're agreeing to.
ESG questionnaires: why you shouldn't use them with clients, by Annie Gomes, July 11, 2022,  ifamagazine.com, USA.

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New litigation fears driving expanded responsibilities for in-house lawyers to prevent ESG risks. "Vincent Walden, CEO of Kona AI and FRAUD Magazine columnist, says the expanding ESG risk environment, including potential concerns of fraud, is very real. 'When company executives act in a different way that is counter to the company's code of conduct or social norms, it can cause significant financial harm to the company and thus significantly increase pressure to cover up or misstate certain facts,' Walden says, adding that while this may not be outright fraud, the critical role of governance comes into play."

[COMMENTARY] Many countries have, or are likely to, adopt legislation that either directly or indirectly allows individuals or groups to sue for damages concerning a company's ESG activities. This should promote greater corporate ESG engagement while possibly enhancing shareholder value.
New litigation fears driving expanded responsibilities for in-house lawyers to prevent ESG risks, by Thomson Reuters Regulatory Intelligence and Compliance Learning, July 8, 2022, JDSupra.com, USA.

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Canada's Best 50 corporate citizens of 2022 continue to conquer the markets. "The pay gap between Best 50 CEOs and their average worker is less than half that of run-of-the-mill big businesses. And their carbon productivity (which measures how much revenue a company generates per tonne of emissions) is double their peers. This approach has stood the test of time, proving that better corporate citizens can beat the market year over year.

The Best Corporate Citizens' stock market performance has outperformed its peers earning 499% gross return since it was first launched in June 2002, versus 366% for S&P/TSX Composite."

[COMMENTARY] Corporate Knights perform a great and honest assessment of Canada's best companies and the role they and all Canadian businesses play in furthering our quality of life.
Canada's Best 50 corporate citizens of 2022 continue to conquer the markets, by Toby Heaps, July 2022, Corporate Knights, Canada.

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Don't Count on ESG Outperformance. "New research shows that the significant outperformance of environmental, sustainable and governance - (ESG) - driven investing over the last decade was due to a sharp increase in concern among investors for climate-related issues. Whether that outperformance continues will depend on even more heightened concerns over the environment."

[COMMENTARY] Mr. Swedroe provides insight into the conclusions of several recent papers focusing on ESG returns.
Don't Count on ESG Outperformance, by Larry Swedroe, July 4, 2022, Advisor Perspectives, USA.

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ESG That's Risk Managed. "Whether ESG equity investors are motivated by the desire to do good or the expectation of superior performance, they face the prospect of potential selloffs merely by virtue of their exposure to risk. We therefore propose that ESG equity investors consider adding a dynamic component to their portfolios that cuts risk when market conditions are fragile and accepts risk when conditions are resilient."

[COMMENTARY] The authors' proposal to consider some active management in portfolios and the addition of risk measures could interest many investors and portfolio managers.
ESG That's Risk Managed, by Mark Kritzman and Cel Kulasekaran, June 27, 2022, etfdb.com, USA.

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EU agrees deal on company disclosures to combat greenwashing. "The European Union has reached a deal on corporate sustainability reporting requirements for large companies from 2024, a European Parliament committee said on Tuesday. Regulators have grown more worried about companies engaging in greenwashing, or making exaggerated climate-friendly claims to attract investor cash."

[COMMENTARY] One thing I particularly like is that disclosures will be externally audited by approved firms! This is something that's been missing in ESG reporting since the beginning of such reporting. If the statements and numbers reported aren't uniform among companies and independently verified what good is the reporting!
EU agrees deal on company disclosures to combat greenwashing, by Huw Jones, June 21, 2020, Reuters, UK.

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Low ranking ESG companies facing restricted lending. "Institutional owners are restricting lending of companies perceived as unsustainable, according to Travis Whitmore, senior quantitative researcher and head of securities finance research at State Street Associates."

[COMMENTARY] This is another reason why ESG is growing fast. The ESG naysayers on the American right need an education on the profit imperative that ESG offers to companies when properly implemented. And that's why high-ranking ESG companies find it easier to obtain funds.

It's convenient to say ESG is a socialistic political policy but the truth is it is usually a means to enhance corporate profitability!
Low ranking ESG companies facing restricted lending, by Carmella Haswell, June 20, 2022, Securities Finance Times, UK.

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ESG Funds Supporting Mining's Future. "Global law firm White & Case believes that ensuring that borrowers have taken appropriate ESG and sustainability considerations into account has become a priority for many mining investors as well as financiers across the spectrum -- from export credit agencies, development finance institutions and commercial lenders, through to stream and royalty financiers."

[COMMENTARY] The mining industry is increasingly engaging ESG not only to become more profitable but to also appeal to investors who hitherto have thought of mining as bad for the environment. The truth is there's absolutely now way ANY of the world's climate goals through electrification can be remotely achieved without vastly expanding mining capacities!
ESG Funds Supporting Mining's Future, by Collin Sandell-Hay, June 20, 2022, The Assay, Hong Kong.

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Proposed ESG Disclosure Requirements for Investment Advisers and Investment Companies. "The proposal on ESG disclosures for investment advisers and registered investment companies would introduce requirements for advisers and registered funds that consider ESG factors in their investment processes to disclose more about those factors' role in investment decisions.

The Names Rule proposal would extend the 80% investment policy requirement to registered funds with names that suggest the fund focuses on investments/issuers with particular ESG characteristics."

[COMMENTARY] Though, in general, I welcome the thrust of these regulations I can't help wondering if we're going into 'overkill' though! My concern is that regulators create such regulatory tightness that it kills the creativity of the sustainability, and ESG, ethos. Plus, the extra costs incurred in conforming to the regulations become a penalty for advisors and investors vis-a-vis 'conventional' funds and investments.
Proposed ESG Disclosure Requirements for Investment Advisers and Investment Companies, by Laura Ferrell, Sarah Fortt, and Betty Huber, June 20, 2022, Harvard Law School Forum on Corporate Governance, USA.

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Launched---9 th edition of the Global Prize Ethics & Trust in Finance for a Sustainable Future. "By launching the 9th edition (2022/2023) of the Global Prize Ethics & Trust in Finance for a Sustainable Future online, we want to encourage candidates to reflect on the role of ethics in shaping a more sustainable and responsible financial system. Such intellectual effort is made today more necessary and urgent than ever."

[COMMENTARY] I've helped publicize this prize since its inception as I believe inherently in its purpose! Please spread the word about it throughout your networks and encourage suitable candidates to participate.
Launched--9 th edition of the Global Prize Ethics & Trust in Finance for a Sustainable Future, press release, June 16, 2022, Switzerland.

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Millennials and Gen Z Are Fed Up With ESG Investing. "Ethically minded investors are growing more skeptical of ESG investing, wondering whether it actually furthers environmental or social justice aims. At the same time, demand for ethical investing is only going to increase as progressive millennials and Gen Zers accrue more financial assets, often by inheriting that money from their conservative parents."

[COMMENTARY] The title of this article is too strong considering its content. However, I do think that many young ESG investors would like to see much greater action by companies, regulators, and governments, on ESG matters.
Millennials and Gen Z Are Fed Up With ESG Investing, by Tanja Hester, June  13, ThinkAdvisor, USA.

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Boards Are Tying Goals to ESG Metrics. "Our analysis of three data points on board oversight of ESG issues, covered under the Shareholders and Governance stakeholder, has led to two key findings. First, disclosure on these data points is steadily increasing.

Almost a fifth of companies in the Russell 1000 Index report all three ESG governance data points we measure in 2022-up from around a tenth in 2020. Second, the Oil & Gas, Utilities, Energy Equipment & Services, and Chemicals industries have a much larger percentage of companies disclosing on all three ESG governance data points than other industries."

[COMMENTARY] The research shows that company boards are increasingly taking ESG considerations seriously. It shows that ESG enablement is becoming embedded in board activities.
Boards Are Tying Goals to ESG Metrics, by Molly Stutzman, Laura Thornton, and Matthew Nestler, JUST Capital, June 13, 2022, Harvard Law School Forum on Corporate Governance, USA.

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SEC Proposes New Rules for Sustainable Funds Aimed at Standardizing ESG Disclosures. "The U.S. Securities and Exchange Commission has proposed two rules that, if adopted, will help investors better identify, understand, and compare funds that feature environmental, social, and governance criteria in their investment process."

[COMMENTARY] Let me first say that I agree with stricter rules deterring greenwashing! Now should these new SEC rules be adopted I believe two things will happen. Firstly, there could be relatively fewer funds claiming ESG credentials. Secondly, fees will likely rise as fund expenses increase.

(Funds are already implying potentially higher costs. See SEC Greenwashing Rule Gives Funds Chills Over Emission Reporting, Bloomberg Law.)
SEC Proposes New Rules for Sustainable Funds Aimed at Standardizing ESG Disclosures, by Jon Hale, May 27, 2022, Morningstar, USA.

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It's Time to Give Companies Standalone Climate Ratings. "Investors are increasingly using ESG ratings for their investment decisions. But we need to assign companies a stand-alone rating focused on climate risk that's distinct from the ESG rating system. Such a climate-specific rating can distill complex information regarding a company's carbon footprint and climate risk into an intuitive, user-friendly format, while avoiding the flaws that currently mar ESG ratings."

[COMMENTARY] The argument is that many investors would want this.
It's Time to Give Companies Standalone Climate Ratings, by Felix Mormann and Milica Mormann, May 24, 2022, Harvard Business Review, USA.

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Comment: If We Don't Define ESG, Its Enemies Will. "Much more troubling is the growing animosity toward ESG on the political right in the United States. 'ESG,' in their telling, is just one more front in the anti-American progressive takeover of the country."

[COMMENTARY] Can there be a precise definition of ESG? What do you think? The highly respected Jon Hale at Morningstar writes in this piece that we ought to encourage the word sustainability rather than ESG.
Comment: If We Don't Define ESG, Its Enemies Wil, by Jon Hale, May 23, 2022, Morningstar, USA.

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Does integrated reporting quality matter to capital markets? Empirical evidence from voluntary adopters. "Potential implications of our results are that the standard setters should work to improve the specificity and rigor of their guidelines, and analysts should become more involved in developing IR guidelines to make them more relevant to their information needs. IR seems to unfold its benefits better in mandatory settings, which could call for regulators to make IR mandatory."

[COMMENTARY] This is a research paper. Integrated reporting--the combined reporting of the annual report, financial statements and ESG/sustainability information -- is studied here. I've been in favor of this reporting for decades. Also see Integrated Reporting as an Academic Research Concept in the Area of Business by Hugo Moraga.

However, it seems much work still needs to be done for it to be fully useful for investors.
Does integrated reporting quality matter to capital markets? Empirical evidence from voluntary adopters, Luca Leukhardt, Michel Charifzadeh, and Fabian Diefenbach, May 20, 2022, Corporate Social Responsibility and Environmental Management.

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Can Elon Musk save ESG? "As I explained in my recent three-part series on ESG ratings, the ratings reflect risks to companies and its shareholders, not necessarily to people and the planet. And while the ratings agencies insist they make that fact crystal clear, and most professional investors agree that they do, there remains a general -- and not illogical -- perception among many that high-scoring companies, from an ESG perspective, are 'good' companies for the world.

Moreover, ESG ratings primarily focus on whether a company has systems in place to manage their direct impacts and those of their supply chains. As such, they are relatively short-term in their focus."

[COMMENTARY] I'm so glad that the author of this article, Joel Makower, makes it clear that a high ESG rating may have nothing to do with whether the company is benefiting people and the planet! Some big tobacco and fossil-fuel companies also have high ESG ratings!
Can Elon Musk save ESG? By Joel Makower, May 23 ,2022, GreenBiz, USA.

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ESG-conscious companies worth 50% more, Schroders finds. "Referencing its SustainEx tool, Schroders found a 'good' company (one that is highly environmentally friendly) would be worth roughly 50 per cent more than a bad one with the same earnings.

Using its SustainEx, which looks at the dollar-value of the impact individual companies have on society before scaling this relative to their sales, Schroders found bad companies were valued at 17-times their last 12-months earnings. However, good companies were on 25-times."

[COMMENTARY] I can't comment on the methodology. However, Shroders is a highly respected firm in the ESG space. However, I would hope it gets peer reviewed and published in a suitable professional journal.
ESG-conscious companies worth 50% more, Schroders finds, by Carmen Reichman, May 20, 2022, FT Advisor, UK.

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The Benefits And Costs Of Climate-Related Disclosure Activities For Companies And Investors. "One can make the argument that if climate information and its analysis is useful for management and the board, the additional cost of reporting it externally is a relatively incremental one."

[COMMENTARY] Professor Robert Eccles opf Harvard and Oxford fame presents insightful information on this important subject.
The Benefits And Costs Of Climate-Related Disclosure Activities For Companies And Investors, by Robert G. Eccles, Tenured Harvard Business School professor, now at Oxford University, May 18, 2022, Forbes, USA.

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Lies, damn lies and diluted ESG metrics. "Fund managers talk to Nicholas Pratt about the dangers of ESG metrics that boil complex risks down to a single number."

[COMMENTARY] The lesson here is to understand the numbers before using them. If you don't understand them, don't use them.
Lies, damn lies and diluted ESG metrics, fund managers, May Edition, Funds Europe, UK.

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$100bn Assets Divestment By Oil Majors Sparks Environmental Concerns. "However, they frequently sell to buyers that disclose little about their operations, have made few or no pledges to combat climate change, and are committed to ramping up fossil fuel production.

A new study, however, warned of expected large environmental pollution with such uncoordinated efforts."

[COMMENTARY] Is it possible for governments to regulate the conditions under which polluting assets can be sold?
$100bn Assets Divestment By Oil Majors Sparks Environmental Concerns, by Chika Izuora, May 12, 2022, Leadership, Abuja FCT.

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Taking companies to court over climate change: who is being targeted? "Catherine Higham and Honor Kerry analyse climate cases filed in 2021 against companies in different sectors and consider what the future holds. They find that that while fossil fuel companies remain a primary target of activist litigation, climate litigants are now casting their net more broadly."

[COMMENTARY] How far could this go? As case law and regulation in this area build, can it become a strong influence on companies (and governments) to become more sustainable and climate-friendly?
Taking companies to court over climate change: who is being targeted? By Catherine Higham and Honor Kerry, May 3, 2022, London School of Economics, UK.

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University of Guelph study finds sustainability practices good for business in times of crisis. "A University of Guelph study found companies prioritizing sustainability in their business practices are better off in times of crisis and have economic growth."

[COMMENTARY] This study throws a different light on some understandings concerning ESG in difficult economic times. For instance, the researchers found that 'low' ESG companies did better than 'high' ESG companies in the 2008/9 financial crises. However, it reversed during the recent pandemic!
University of Guelph study finds sustainability practices good for business in times of crisis, by Guelph Today staff, May 1, 2022, Guelph Today, Canada.

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Measuring health impacts could expand ESG metrics. "What has not been explicitly recognised is the impact of the private sector on human health. The fact that companies' activities, services and products affect human health is not disputed. These include not only direct effects such as respiratory diseases in coal miners, but also indirect ones such as obesity-driven illnesses caused by excess consumption of sugar through fizzy drinks and processed foods marketed by consumer goods companies.

Initiatives such as the sugar tax recognise that private sector activities have a significant influence on health outcomes and, as such, the private sector can be nudged towards behaviour that leads to more positive health outcomes."

[COMMENTARY] Some great points are made here. One is why should companies be allowed to make large profits while sickening the public and entities such as governments left to pay for the ill health created? Surely, companies should contribute to those costs in a meaningful way.

Arguments against such a policy include where do you draw the line as to what sickens the public, what the costs are, and who bears them?

Some sort of ESG score concerning product/service health effects could be useful!
Measuring health impacts could expand ESG metrics, by Joseph Mariathasan, May issue, IPE Magazine, UK.

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We've Opened the Door Too Wide for Oil and Gas Companies. "Under the fog of war and anxiety about the midterm elections, the White House is poised to hand over generous amounts of public money to a highly profitable energy industry -- support that could lock in additional emissions for decades to come."

[COMMENTARY] I believe energy prices should be largely left to the free market with support provided only to means-tested low-income groups. That way fossil-fuel prices can rise to a point where there's significant demand destruction and hence less need to support fossil fuel expansion.
We've Opened the Door Too Wide for Oil and Gas Companies, by Kate Aronoff, April 29, 2022, The New York Times, USA.

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ESG Ratings: Solution or Starting Point? "In our view, there's no substitute for integrating consideration of ESG factors into fundamental security analysis. Rather than outsource ESG assessments to third-party providers, investors and analysts must conduct in-depth, hands-on research and engage actively with issuers. That approach enables investors to achieve real insight into a business and its activities, and to get a proper understanding of its future prospects as well as its past."

[COMMENTARY] Most investors use the ESG raters because of convenience and rating expertise. Ideally, it's probably best to do all the in-depth ESG research yourself. But what investors or organizations have the time, money, and resources to do that? (However, when I started as an analyst in 1970, that's exactly what we did!)
ESG Ratings: Solution or Starting Point? By Michelle Dunstan, April 29, 2022, Advisor Perspectives, USA.

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With Too Much Love From Institutional Investors, Companies With High ESG Ratings May be Overvalued. Activists Are Taking Note. "Activists and others are looking for companies with low marks on environmental, social, and governance check lists."

[COMMENTARY] Some studies suggest greater stock profits can be had with companies who are just getting started with ESG.
With Too Much Love From Institutional Investors, Companies With High ESG Ratings May be Overvalued. Activists Are Taking Note, by Jessica Hamlin, April 22, 2022, Institutional Investor, USA.

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AllianceBernstein: Understanding Your Bond Portfolio's Carbon Footprint. "Transitioning to a net-zero carbon economy* is vitally important, and corporate bonds will play a critical role in the transition. To support that journey, sustainable investors should monitor the carbon impact of the corporate bonds in their portfolios. But there's a lot more to understanding a bond portfolio's carbon footprint than conventional metrics can show."

[COMMENTARY] Few investors know how the carbon footprint of a bond is computed. This article provides a good understanding of the issues involved.
AllianceBernstein: Understanding Your Bond Portfolio's Carbon Footprint, by AllianceBernstein, April 22, 2022, 3BLCSRWire, USA.

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A Deconstruction of the Short-Termism Thesis. "The only reasonable conclusion from reading [this book] it is that short-termism is like the proverbial emperor with no clothes. It may be emotionally satisfying, but there is very little, if any, empirical evidence to support its main theses.

It is, in other words, a theory in search of non-existing empirical support. It is more of a myth than a reality, and it should have no weight in policy decisions about the make-up of the modern corporation, its governance and its role in society, let alone in laws, regulations and court decisions impacting contests for corporate board seats and corporate control."

[COMMENTARY] For many of us short-termism in the financial markets is one of the deadly sins of the modern era. It's said to detract from long-term planning and action that would truly benefit business profits and society's living standards. This article reviews a new book by Professor Mark J. Roe entitled "Missing the Target: Why Stock Market Short-Termism Is Not the Problem." In the article, Charles Nathan reviews Professor Roe's book in which the professor destroys our notions of short-termism!
A Deconstruction of the Short-Termism Thesis, a book review by Charles Nathan, April 15, 2022, Harvard Law School Forum on Corporate Governance, USA.

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Moving to Clean Energy--Will It Take a War? "Despite the urgency coming from Russia's invasion of Ukraine, a transition from fossil fuels to clean energy cannot happen without first having acceptable alternatives, says Richard Ottinger, dean emeritus of Elizabeth Haub School of Law at Pace University. Solar and wind installations must be built first, and transmission lines. No country would accept the economic disruption of premature action on abandoning fossil fuels, he says."

[COMMENTARY] To plan and build for a clean energy future wherein we're able to stay within that 1.5-degree threshold, requires the kind of expenditures that governments -- and their taxpayers -- globally will not willingly make. However, should the Russian-Ukrainian war persist, that could change as fossil-fuel energy prices remain highly elevated.

Furthermore, I believe the public needs to accept very, very high fossil-fuel energy prices as the price to pay for a low carbon future.
Moving to Clean Energy--Will It Take a War? By Richard Ottinger, April 15, 2022, Bloomberg Law, USA.

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It's Been a Rough Start to 2022 for Sustainable Investing Stock Strategies. "As energy stocks surged and tech tumbled, sustainable portfolios had a tough quarter."

[COMMENTARY] I argue that most ESG funds are too concentrated in tech and financials. Though most of their investors desire a zero-carbon world, there's no way we get  there without massive new mineral (copper, silver, lithium, cobalt, etc.) -- read mining -- development. Many mining ventures are seriously engaging ESG in their operations and so could be incorporated into numerous ESG funds. Of course, getting ESG investors interested in mining is the holdup!
It's Been a Rough Start to 2022 for Sustainable Investing Stock Strategies, by Lauren Solberg, April 13, 2022, Morningstar, USA.

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ESG -- A Mystery and a Shock Poll. "Climate-related financial risks are getting growing attention -- but a new survey from BCG casts doubt on how seriously institutional investors are taking them. Just one in 20 investors polled by the consulting firm said that climate and ESG-related issues were among the three risks they took most seriously. And only 11 per cent of the 150 investors polled indicated that ESG is a primary consideration in day-to-day investment decisions."

[COMMENTARY] BCG is a reputable firm, so to have results like this in one of their surveys is surprising. This poll certainly seems an outlier. Has the Russia-Ukraine war changed things?
ESG -- A Mystery and a Shock Poll, by Andrew Stuttaford, April 10, 2022, National Review, Capital Matters, UK.

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Why investors may need to pivot from ESG towards carbon-intensive industries. "Investors have been keen to show their green credentials by shunning carbon-intensive industries. The cost of that virtue signalling is now becoming apparent."

[COMMENTARY] Most ethical and sustainable investors shun investing in companies producing lots of carbon in their operations. My thinking is twofold. Firstly, it's a moral issue if we choose to make fossil fuels 'scarce' thereby increasing the prices of everything, including food. Then, should governments subsidize food prices and fossil fuel purchases for the poor? (Look what's happening in many countries like Sri Lanka with its food and energy riots?)

Secondly, there's no way we can bring about a clean energy future without massive increases -- and numerous new mines -- in the production of copper, lithium, cobalt, silver, etc.

Hence, this author makes an interesting point. Incidentally, many major oil companies are moving into renewables, and mining companies are getting serious about ESG!
Why investors may need to pivot from ESG towards carbon-intensive industries, by Frederic Guirinec, April 1, 2022, Money Week, UK.

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An Inconvenient Truth About ESG Investing. "None of the high sustainability funds outperformed any of the lowest rated funds... companies in the ESG portfolios had worse compliance record for both labor and environmental rules."

[COMMENTARY] Though this writer got published in a highly prestigious journal, it seems he was quite selective in his choice of papers to include in this article. To me, this article speaks more about greenwashing among green funds than about their performance.
An Inconvenient Truth About ESG Investing, by Sanjai Bhagat, March 31, 2022, Harvard Business Review, USA.

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The Social Purpose Transition Pathway. "The purpose of this project is to assess the degree to which companies with a stated social purpose are governing, implementing, and disclosing progress on their purpose. This is the first Social Purpose Rating in the world focused on implementation...

Out of an initial sample of 197 businesses with headquarters or significant operations in Canada, only 34 met the gateway criteria of having a stated purpose that creates value for society, rather than solely for shareholders or customers, putting them ahead of most of their peers and competitors regardless of their placement in this rating exercise."

[COMMENTARY] Corporate Knights et al, have created a terrific new way of determining the value of 'S' in ESG, in Canadian companies. There's a listing of companies that all ethical and sustainable investors will want to review.
The Social Purpose Transition Pathway, by Corporate Knights et al, March 2022, Canada.

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ESG Is The Third Wave Of Change In Asset Management After Graham And MPT. "Amy Domini, one of Time's 100 Most Influential People, started one of the first socially responsible funds 30 ago. She sees ESG as the third major wave of change in asset management, with Benjamin Graham's value investing and modern portfolio theory being the first two significant waves of change."

[COMMENTARY] In this article one of the greats of socially responsible investing and ESG -- Amy Domini -- provides terrific insights into her investing approach.
ESG Is The Third Wave Of Change In Asset Management After Graham And MPT, by Jacob Wolinsky and Michelle Jones, March 28, 2022, Forbes, USA.

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The Rise of Anti-ESG Shareholder Proposals. "These proposals, though few, are increasing and contribute noise to analyses of ESG voting... Issues include ideological diversity of the boards, lobbying, charitable donations, and, more recently, issues around racial justice."

[COMMENTARY] Apparently, these 'anti' ESG proposals are mostly from conservative groups.
The Rise of Anti-ESG Shareholder Proposals, by Ruth Saldanha, March 28, 2022, Morningstar, Canada.

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ESG Standards Talk: A Step Towards One Global Disclosure Standard? "Finally we are looking at the possibility of one comprehensive global standard for disclosure on sustainability and ESG, which will help to develop a transparent and comparable understanding of how to report sustainability risks and what they mean."

[COMMENTARY] It seems that many of the leading ESG standards' organizations have some kind of understanding regarding ESG reporting. It's been a long time coming. Hopefully, it will provide stakeholders with corporate information that's material to the company's financial position and allows for cross-company comparisons. I just hope that such corporate reporting has independent auditing of the information and data provided by companies.
ESG Standards Talk: A Step Towards One Global Disclosure Standard? By Felicia Jackson, March 24, 2022, Forbes, USA.

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Green investing: the global system for rating companies' ethical credentials is meaningless. "As the war in Ukraine rages, finance professionals on Wall Street and in Europe recently attracted outrage by suggesting that investing in arms manufacturers should be treated as ethical investing.

In the fight against tyranny, they argued that such an investment 'preserves peace and global stability' and defends 'the values of liberal democracies'. As such, it belongs in the increasingly lucrative investment category known as ESG or environmental, social and governance...

Unfortunately, the label is not currently worth the paper that it's written on - and not only because of the controversy over defence contractors. My recent research shows that this completely undermines ESG's potential as a force for good. As we shall see, however, regulators are at least making moves in the right direction."

[COMMENTARY] It was inevitable that the ESG 'label' would be abused in various ways. Advisors, ethical and sustainable investors, need to do their homework. New regulations and reporting standards will help. However, it's still buyer beware!
Green investing: the global system for rating companies' ethical credentials is meaningless, by Marc Lepere, King's College, March 23, 2022, UK.

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Why ESG Investors Put Too Much Emphasis on the Environment. "SEC Chairman Gary Gensler recently announced plans to formulate a human capital disclosure requirement for public companies. Reporting metrics might include worker turnover, skills and development training, compensation, benefits and workforce demographics related to diversity, health and safety."

[COMMENTARY] It's quite likely that most large companies determine these metrics anyway for internal assessments and use. Also, I agree that many ESG investors would be interested in such data. However, the increasing paperwork burdens being placed on businesses, particularly smaller enterprises, might be coming somewhat onerous.
Why ESG Investors Put Too Much Emphasis on the Environment, by John Engle, March 22, 2022, yahoo.com, USA.

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Hedge Funds Balk at 'Really Problematic' Rules Steering ESG. "Hedge funds keen to get a piece of the $40 trillion ESG market are voicing growing frustration over what they say is an absence of clear regulations for one of their most popular investment strategies.

Firms including Man Group Plc and BlueBay Asset Management LLP say disclosure rules for environmental, social and governance investing still don't explain how hedge funds should account for short selling. As a result, many are now turning to their lawyers to help them avoid the kinds of legal risks that might arise if they misstate their ESG positions."

[COMMENTARY] Short selling has always been controversial. However, given proper rules -- such as only being able to short a stock after a price uptick -- it's been part of stock market practices for millennia. It seems the new European Sustainable Finance Disclosure Regulation doesn't adequately cover rules for short-sellers.
Hedge Funds Balk at 'Really Problematic' Rules Steering ESG, by Lisa Pham, March 18, 2022, Bloomberg, UK.

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Clarity AI: Only 7% of a Sample of 31,000 Equity Funds Have More Than 10% 'Green Revenues,' as Defined in the EU Taxonomy. "The EU Taxonomy aims to align market participants on definitions of sustainability, but investors need to dig deeper to know just how 'green' a fund really is."

[COMMENTARY] I believe that it's a great idea ethical and sustainable that funds differentiate themselves according to how 'green' their revenues are. And it's happening. I really like what Corporate Knights are doing too. See Report: Meet the top 200 companies investing in a clean energy future.
Clarity AI: Only 7% of a Sample of 31,000 Equity Funds Have More Than 10% 'Green Revenues,' as Defined in the EU Taxonomy, press release, March 17, 2022, Clarity AI, USA.

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Coming to Terms with a Maturing ESG Landscape. The momentum and support for environmental, social and governance (ESG) integration into the investment process has reached critical mass. Most companies now recognize the strategic need to have an ESG story, and some are even leveraging ESG leadership as a key differentiator from competitors."

[COMMENTARY] This article is an informed opinion on the state of ESG today and where it's likely heading.
Coming to Terms with a Maturing ESG Landscape, by Peter Reali, Jennifer Grzech, and Anthony Garcia, at Nuveen. March 17, 2022, Harvard Law School Forum on Corporate Governance, USA.

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The False Promise of ESG. "But do ESG ratings really deliver on the promise? Are highly-ranked ESG businesses really more caring of the environment, more selective of the societies in which they operate, and more focused on countries with good corporate governance?

In short, is ESG really good? The answer is no. We demonstrate this by focusing on a group of companies that are now at the center of the world's attention: businesses with substantial operations in Russia."

[COMMENTARY] The title is misleading and only appropriate in a narrow sense. It's appropriate to European-based high ESG performing companies with operations in Russia. However, I acknowledge and am concerned about how ESG company measures are determined of subsidiaries in developing countries.
The False Promise of ESG, by Jurian Hendrikse et al, March 16, 2022, Harvard Law School Forum on Corporate Governance, USA.

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Morningstar's Jon Hale: Advisors' ESG 'Wave-Off' Is History. "Speaking with Barron's Advisor, Hale says sustainable-fund active managers may need to tweak their approach to continue outperforming. He weighs the potential impact should the Labor Department reverse the Trump-era policy of blocking retirement advisors from environmental, social, and governance (ESG) investment strategies.

And he explains why some financial advisors call creating a sustainable-investing niche the smartest thing they've ever done."

[COMMENTARY] Steve Garmhausen of Barron's interviews John Hale, Morningstar’s global head of sustainability research. There are some good insights into the present-day situation concerning sustainable investing.
Morningstar's Jon Hale: Advisors' ESG 'Wave-Off' Is History, by Steve Garmhausen, March 11, 2022, Barron's, USA.

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The failed promise of ESG and the Wall Street Journal. "In a just-published series of critical articles in The Wall Street Journal, columnist James Mackintosh outlines the 'failed promise' of ESG investing and describes it as 'absurd' to claim that investments in green bonds deliver higher yields.

He also warns that 'bubbles' in sustainable investing can 'sink your portfolio' and lectures that investors who think they can both save the world and make a profit need to go back to basics. His conclusion: 'These investments don't do much to make the world a better place.'"

[COMMENTARY] Mr. Howell reviews James Mackintosh's WSJ article and provides great insight into the pros and cons of ESG investing. Nonetheless, Mr. Mackingtosh's article can only be seen as a 'hit' job on the ESG approach.
The failed promise of ESG and the Wall Street Journal, by John Howell, March 9, 2022, GreenBiz, USA.

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Will Financial Advisors Need to Become JEDI Masters to Retain their Clients? "GenderSmart recently created an investor toolkit that applies an impact lens of justice, equity, diversity and inclusion (JEDI).

Financial advisors should note that 35% of clients who have sustainability goals are looking to switch wealth managers in the next three years, over twice as many as among clients without sustainability goals (15%)."

[COMMENTARY] In studies looking at the investment goals of women and younger people, many are seeking to move their money (much of it inherited) to advisors who cater to clients with ethical and sustainability investment goals.
Will Financial Advisors Need to Become JEDI Masters to Retain their Clients? by Andrea Longton, March 7, 2022, Wealth Management, USA.

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ESG Funds' Lack Truth in Labeling: Study. "94 funds had 'ESG' in their names yet 60 of those earned a 'D' or an 'F' on one or more ESG criteria."

[COMMENTARY] As You Sow and a team from the University of California did the study. So it's a quality study. This study provides more ammunition for the SEC to act aggressively on ESG fund greenwashing.
ESG Funds' Lack Truth in Labeling: Study, by John Sullivan, February 27, 2022, 401K Specialist, USA.

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How Does Incorporating ESG Relate to Fiduciary Duty? "In our annual survey of attitudes towards responsible investment, institutional investors cited fiduciary duty as the top reason for incorporating ESG in their investment approach."

[COMMENTARY] There's still much confusion concerning the role of ESG and sustainability in fiduciary duty. However, many experts in the field are arguing that with increasing climate change upon us and dramatically rising insurance costs as a harbinger of them, accounting for ESG and sustainability in a portfolio has to be included in good fiduciary management.
How Does Incorporating ESG Relate to Fiduciary Duty? By Melanie Adams, February 22, 2022, Responsible Investment Association of Canada, Canada.

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ESG Investing Needs to Expand Its Definition of Materiality. "What should the S in ESG refer to? It is logical to assume that it refers to social outcomes associated with our individual welfare or with thriving communities, and measures things like mental or physical health, education, and learning, or elements of subjective well-being like personal dignity or community cohesion. However, as currently conceived, the S in ESG regularly has very little to do with this intuitive and well-recognized understanding of social impact."

[COMMENTARY] This paper has an excellent discussion of what the 'S' should stand for in ESG!
ESG Investing Needs to Expand Its Definition of Materiality, by Tom Adams, Lindsay Smalling and Sasha Dichter, February 23, 2022, Stanford Social Innovation Review, USA.

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There is no silver bullet for ESG standardisation. "The ESG mobilisation of capital faces the Sisyphean challenges of political loggerheads and the slow crawl towards commercial-scale data."

[COMMENTARY] The issue of whether to include nuclear and natural gas in the new green EU Taxonomy has provoked significant discussion about what is 'green', etc. Similarly for companies, how do you measure their 'greenness'?
There is no silver bullet for ESG standardisation, by Jamie Gordon, February 23, 2022, etfstream.com, UK.

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The Evidence Mounts Against Active Share. "Active share is a measure of how much a fund's holdings deviate from its benchmark index, and funds with the highest active share tend to have the best performance.

Thus, while there's no doubt that, in aggregate, active management underperforms and the majority of active funds underperform every year (and the percentage that underperform increases with the time horizon studied), if an investor were able to identify the few future winners by using active share as a measure, active management could be the winning strategy."

[COMMENTARY] Active versus passive management of stock portfolios has been a hot topic for many years. It's true that in recent times passive portfolio management such as most ETFs where there are few if any, stock changes in any given year, has generally outperformed active portfolio management.

However, this analysis has generally been done in rising markets. Most of these passive ETFs have only arisen in the past twenty years too. We have yet to see what might happen in a long-term bear market, should such a situation arise. Many active managers maintain that's when active management will be the winner.
The Evidence Mounts Against Active Share, by Larry Swedroe, February 22, 2022, Advisor Perspectives, USA.

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Report: Meet the top 200 companies investing in a clean energy future. "The Clean200TM is an educational tool intended to give individuals the ability to research companies that are effectively balancing people, planet, and profit."

[COMMENTARY] The Clean 200 is one of the best lists around. What I especially like about this ranking is that the 'greenness' of a company's revenues is given high priority! This is not so in nearly every other such list or ranking.
Report: Meet the top 200 companies investing in a clean energy future, by Corporate Knights and As You Sow, February 16, 2022, Canada.

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We Need Universal ESG Accounting Standards. "ESG accounting is a mess. Competing initiatives mean there's no uniform set of standards for measuring a company's progress on sustainability. The good news is that a new initiative, the International Sustainability Standards Board, promises to do for sustainability reporting what the International Accounting Standards Board (IASB) does for financial reporting -- develop standards for companies to report their performance to investors."

[COMMENTARY] This is a highly insightful article by people who know what they're talking about.
We Need Universal ESG Accounting Standards, by Robert G. Eccles and Bhakti Mirchandani, February 15, 2022, Harvard Business Review, USA.

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The problem with ESG scores. "ESG ratings should place increased emphasis on CO2 intensity and emissions rather than the current focus on disclosing corporate policy and objectives, according to an Organisation for Economic Co-operation and Development (OECD) report on the Asia Pacific region."

[COMMENTARY] I see this issue could become big in the years ahead as climate-warming increases. Investors might want to place increasing emphasis on a company's carbon emissions than just their ESG score.
The problem with ESG scores, by Mubaasil Hassan, Curation, UK.

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The truth about dirty assets. "The shift to the shadows is problematic for two main reasons. First, the claims being made by listed firms (and esg funds) that they are helping to decarbonise the planet are questionable. Selling a polluting asset does not, in itself, reduce emissions at all, if it keeps pumping oil or digging up coal.

Second, as dirty assets pass into private hands, it becomes harder to tell if their owners plan to reduce their output over time, or expand it."

[COMMENTARY] Great points made in this article. Now, should there be regulation that those buying such assets be required to reduce the carbon intensity of these assets over time?
The truth about dirty assets, February 12, 2022, The Economist, UK.

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The risk of not talking to clients about ESG is losing them, RI expert says. "I've worked with hundreds of advisors across Canada to help them get comfortable and proactive in the space and, from what I've heard, they've never lost a client by bringing it up. In fact, they've gained clients. However, some who haven't brought it up have said they've lost clients."

[COMMENTARY] I've argued this point for decades. Advisors must become proficient in ESG investing or gradually see their client base erode.
The risk of not talking to clients about ESG is losing them, RI expert says, staff, February 11, 2022, The Globe and Mail, Canada.

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EU 'green' label for gas and nuclear sparks sustainable investing crisis. "The fear 20 years ago that a green investment label could itself enable greenwashing is now playing out two decades later in Europe."

[COMMENTARY] An old colleague, Eugene Ellmen, who authored this article has unique insights into the EU positioning on this matter. His article is well worth reading.
EU 'green' label for gas and nuclear sparks sustainable investing crisis, by Eugene Ellmen, February 8, 2022, Corporate Knights, Canada.

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Survey: Just 23% of Investors Align Most Investments to Their Values. "The NerdWallet survey of more than 2,000 U.S. adults -- including 1,608 who currently have investments -- conducted online by The Harris Poll asked investors about their thoughts on socially responsible investing, including whether they invest this way and how much of their portfolio aligns with their value systems."

[COMMENTARY] At least the numbers are moving in the right direction. When, as in the USA, many investors are climate-change skeptics, these numbers aren't surprising. It'll be interesting to see how they change in the years ahead.
Survey: Just 23% of Investors Align Most Investments to Their Values, by Erin El Issa, February 8, 2022, Nasdac.com, USA.

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ESG Investing Needs More Rigorous Standards To Evaluate Corporate Conduct. "The batteries in electric cars like the ones Tesla manufactures require cobalt, a mineral found in abundance in the Democratic Republic of Congo (DRC). While electric vehicles are important in the effort to combat climate change, there are credible reports of serious human rights violations at informal cobalt mines in the DRC, including widespread exploitation of child labor and safety hazards in deep, unstable tunnels...

Does Tesla deserve to be treated as an ESG champion?

[COMMENTARY] One of the top holdings of most ESG-sustainable funds is Tesla. Renewable energy requirements are growing massively for copper, cobalt, silver, etc. They require numerous new mines to satisfy such demand -- and often from questionable jurisdictions. Are ESG-sustainable funds and investors in their excitement for such companies like Tesla overlooking the additional climate impacts of renewable energy? Should renewable energy-based companies, therefore, be given such high valuations?
ESG Investing Needs More Rigorous Standards To Evaluate Corporate Conduct, by Michael Posner, February 1, 2022, Forbes, USA.

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U.S. markets regulator flags risks for ratings firms in ESG boom. "The SEC's 2021 report, which is based on exams of ratings firms, said that by adding ESG factors, ratings firms may deviate from their usual methodologies, policies or procedures which may not be properly disclosed to investors, the SEC said.

Adding ESG ratings also raises the risks of new conflicts of interest if firms feel pressure to give higher ESG ratings than warranted when the subject is also a client, the SEC said."

[COMMENTARY] The SEC raises valid concerns. How they can be handled is an open question.
U.S. markets regulator flags risks for ratings firms in ESG boom, by Chris Prentice, February 1, 2022, Reuters, USA.

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Green Stocks Have Lower Returns but Less Risk. "Firms with high sustainable investing scores earn rising portfolio weights, leading to short-term capital gains for their stocks -- realized returns rise temporarily. However, the long-term effect is that higher valuations reduce expected long-term returns.

[COMMENTARY] The phenomenon of high ESG performing stocks having relatively high prices and thus not performing as well as rising ESG performers has been observed before. This is why some investors -- such as Engine No 1's ETFs -- believe that higher returns are possible by investing in 'low' ESG performing companies and motivating those companies further on the ESG path.
Green Stocks Have Lower Returns but Less Risk, by Larry Swedroe, January 31, 2022, Advisor Perspectives, USA.

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What The Wall Street Journal Missed About Sustainable Investing. "Sustainable investing is hardly a 'craze,' as The Wall Street Journal headline called it. Crypto is a craze; SPACs are a craze; day-trading meme stocks during the pandemic is a craze. Sustainable investing is part of a long-term shift in the way people approach their investments, and it is helping bring about a systemic shift toward stakeholder capitalism."

[COMMENTARY] Well said. Jon Hale. It's typical of ultra- conservative media to fall 'behind-the-times.' Ethical investing -- and one of its newer incarnations, sustainable investing -- has been around since biblical times. It's just that in this age of global warming and its climate/environmental impacts, people everywhere have come to recognize that sustainable investing has to be given high priority. It's here to stay and will continue to grow!
What The Wall Street Journal Missed About Sustainable Investing, by Jon Hale, January 28, 2022, Morningstar, USA.

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How does ESG impact the function of audit? "Auditors need to stay abreast of the evolving issues and reporting requirements connected to ESG or they risk leaving themselves vulnerable to charges of professional negligence."

[COMMENTARY] Environmental groups in many countries are taking governments to court to force them to not only meet their climate change commitments but also to ensure a clean future environment. It's understandable, therefore, that companies -- and their auditors -- could face similar legal challenges by stakeholders of these companies.
How does ESG impact the function of audit? By Allianz Global Corporate & Specialty, January 2022, Germany.

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Wall Street blunts momentum of fossil fuel divestment. "Both Citi and BlackRock see potential downsides to withdrawing their funds from fossil fuel companies. And it's not all about profits, but rather having a say over how those firms navigate what may be a rocky clean energy transition, they said."

[COMMENTARY] I've been agreeing for some time now with the opinion that engaging in dialogue with companies who are ESG/fossil-fuel use laggards is a good policy. Also, there's the added investment benefit that as these laggards implement ESG/fossil-fuel reduction policies the shares of such companies are likely to see better gains than already highly performing companies on those metrics.
Wall Street blunts momentum of fossil fuel divestment, by Andrew Freedman, January 20, 2022, AXIOS, USA.

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Switch to ESG indices has not pleased all European investors. "Not all professional fund buyers are happy with passive funds being repurposed as sustainable."

[COMMENTARY] When funds switch their goals, it's easy to understand that current holders of those funds might feel cheated. Ethically, shouldn't the fundholders have a voice in such matters?
Switch to ESG indices has not pleased all European investors, by Ed Moisson, January 19, 2022, Financial Times, UK.

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Study Shows Canadian Financial Advisors are Comfortable Engaging With Clients on ESG, but Subject Matter Knowledge Is Limited. "Some advisors appear to be overestimating their knowledge. Advisors' demonstrable knowledge was similar regardless of their self-assessed knowledge levels. Of those advisors who said their RI knowledge was excellent or very good, one-fifth did not correctly identify 3 true statements out of 10 statements about RI."

[COMMENTARY] The good news is that most Canadian advisors are fine engaging clients on ESG considerations concerning their portfolios. However, since many, many, advisors lack ESG product knowledge, their ability to suitably advise clients on ESG investments rings hollow.
Study Shows Canadian Financial Advisors are Comfortable Engaging With Clients on ESG, but Subject Matter Knowledge Is Limited, press release, January 19, 2022, Responsible Investment Association, Canada.

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The 100 most sustainable corporations of 2022. "Corporate Knights' 2022 ranking of the world's 100 most sustainable corporations is based on a rigorous assessment of nearly 7,000 public companies with revenue over US$1 billion."

[COMMENTARY] One of the best, if not the best, independent assessments of the most sustainable companies whose stocks you can buy.
The 100 most sustainable corporations of 2022, by Corporate Knights staff, January 19, 2022, Canada.

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The European Central Bank's vision for green bond standards forgoes inclusivity. "The European Central Bank has suggested that the proposed EU Green Bond Standard (EU GBS) become mandatory for all green bonds. Karim Henide disagrees.

He writes that the EU GBS is so narrow that only a fraction of the current green bond market is eligible under this standard. Issuers on the margins may not have the capacity to adhere to the degree of ambition and scrutiny expected at the level of the EU GBS label."

[COMMENTARY] Is this another case of bureaucrats not listening to markets! Yes, the green bond market needs regulation, but if the regulation is rigid and costly, it'll harm the development of climate change.
The European Central Bank's vision for green bond standards forgoes inclusivity, by Karim Henide, January 17, 2022, London School of Economics, London, UK.

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Opinion: Do 'ethical' pension funds have a private equity problem? "'The people running public pension plans these days like to boast about their 'ethical' investment policies, for example when it comes to the environment or 'diversity, equity and inclusion.' Meanwhile they pour billions of dollars into secretive private-equity funds in pursuit of extra profits. Now comes yet more evidence that some of those private-equity managers in turn are using that money for the opposite of ethics."

[COMMENTARY] The article describes some unsavory practices in these relationships!
Opinion: Do 'ethical' pension funds have a private equity problem? By Brett Arends, January 12, 2022, MarketWatch, USA.

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Can Global Regulators Save the ESG Movement From Itself? "Without state intervention and global standards, the environmental, social, and governance movement is a recipe for greenwashing and corporate deception."

[COMMENTARY] Yes, I favor increased government regulation concerning corporate ESG reporting standards, how they're measured, and who gets to audit them. We're certainly not there yet.
Can Global Regulators Save the ESG Movement From Itself? By Michael Moran, January 10, 2022, Foreign Policy, USA.

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The Non-Performance Benefits of ESG Investing. "The above findings should not lead to questioning whether ESG strategies can offer substantial value to investors.

Instead, they suggest that investors who look for value-added through outperformance are looking in the wrong place -- ESG strategies should be considered for the unique benefits they can provide, such as hedging climate or litigation risk, aligning investments with norms and making a positive impact for society.

In addition, ESG investors get an added benefit by employing strategies that tilt toward factors with higher expected returns -- a strategy employed by the sustainable investment funds of Dimensional."

[COMMENTARY] Two particularly interesting studies are reviewed here. What has always concerned me in most ESG portfolios is the overweight of tech and financials in them. Now, if in the years ahead we are to fulfill our renewable energy ambitions, massive increases in mining for lithium, copper, cobalt, silver, etc., will be needed. Will ESG investors and funds turn to miners that mine in a 'most' sustainable way?
The Non-Performance Benefits of ESG Investing, by Larry Swedroe, January 3, 3022, Advisor Perspectives, USA.

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4 Best ESG Stock Screeners. "While this list is a great starting point for any potential ESG investors, it's essential to supplement it with your own research as well."

[COMMENTARY] I'm biased towards Sustainalystics since I've been aware of their sincerity and quality of ESG research since their beginning days over two decades ago!
4 Best ESG Stock Screeners, by The Impact Investor, January 1, 2022, USA.

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ESG shares underperform oil and gas in 2021. "As of December 29, US giants Exxon and Chevron had added 48 per cent and 40 per cent respectively in 2021. The duo have helped power global energy equity funds past many of the hundreds of US and European sustainable funds as defined by Morningstar, a data provider."

[COMMENTARY] In my view, there are two reasons this is happening. First, still relatively high fossil-fuel demand yet with low investment in new replacement production that is forcing higher fossil-fuel prices. Secondly, it could be that divestment helped forced down the price of many fossil-fuel producer stocks to a point that higher fossil-fuel prices gave way to higher profits. Thus, their shares became attractive to many investors and sent their stock prices higher.
ESG shares underperform oil and gas in 2021, by Patrick Temple-West and Kristen Talman, December 30, 2021, Financial Times, UK.

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Today's widely adopted ESG ratings and net-zero pledges are mostly worthless, two pioneers of sustainable investing say. "Scores of new funds are claiming to practice environmental, social and governance investing, but their managers are failing to put in the work of determining whether companies they own adhere to those standards. And that's leading to style over substance, two long-time ESG portfolio managers said in an interview."

[COMMENTARY] There are some useful insights in this article concerning ESG ratings. However, I stand by my contention that just as investors have differing views about a stock, so should ESG raters have different opinions too. However, I do believe that ESG raters need to be transparent about their methodologies and market performance integrated into their data.
Today's widely adopted ESG ratings and net-zero pledges are mostly worthless, two pioneers of sustainable investing say, by Debbie Carlson, December 28, 2021, MarketWatch, USA.

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CFA Institute Publishes First Global ESG Disclosure Standards. "The Standards are intended to address current issues with ESG investing, such as inaccurate disclosure practices, and aim to support investors with complete, reliable, consistent, clear and accessible information. The Standards have been designed to accommodate the full range of investment vehicles, asset classes and ESG approaches offered in markets around the world."

[COMMENTARY] Frankly, the CFA Institute should've been out with these years ago. But, better late than never. We'll have to see how they work in practice.
CFA Institute Publishes First Global ESG Disclosure Standards, by Bennett Jones LLP, December 17, 2021, USA.

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An ESG analysis on the Covid-19 crisis. "Our framework highlights how Social and Governance performance have a close correlation with the outcome of the COVID-19 pandemic in the various economies of our selected universe.

Additionally, this study should serve as a driving force for continuous investment in a sustainable and responsible array of public policies. Economies that suffered the most from the COVID-19 pandemic were also those whose sovereign spreads widened during the pandemic, putting further financial pressure on their economies."

[COMMENTARY] This is a fascinating study on which countries -- and why certain countries -- outperformed economically during one phase of the Covid-19 pandemic.
An ESG analysis on the Covid-19 crisis, by FTSE Russell, November 23, 2021, UK.

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2021 RIA (Canada) Investor Opinion Survey. "While 77% of respondents said they want their financial services provider to inform them about responsible investments that are aligned with their values, only 27% said they had ever been asked if they were interested. About one-third of respondents said they currently own responsible investments, similar to last year."

[COMMENTARY] This is a problem I've been concerned with since I began in the investment industry over 50 years ago. It goes back to how the 'know-your-client' rule is legally interpreted.

I believe it's the major financial institutions that have never wanted to include the understanding of a client's personal values applied in this rule. Canada's RIA is lobbying to get this changed. They now have the backing of many Canadian financial heavyweights, so perhaps it'll finally be changed!
2021 RIA (Canada) Investor Opinion Survey, December 8, 2021, RIA (Canada).

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Why sustainable business needs better ESG ratings. "Environmental, social, and governance data is noisy -- and may not help firms protect the planet. Here's what to keep in mind as you measure and invest."

[COMMENTARY] Beth Stackpole provides good insight into the state of ESG corporate reporting and how ESG rating agencies rate companies on ESG measures. Also, the writer asks tough questions about the relevance of what's being reported and potential outcomes concerning sustainability.
Why sustainable business needs better ESG ratings, by Beth Stackpole, December 5, 2021, MIT, USA.

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Rating Muni Bonds on ESG and Impact. "Across muni-bond sectors, there are more than 200 data-driven metrics and 5 million annual data points to measure performance. VanEck and HIP Investor have partnered to track the overall impact and sustainability of 122,000 entities that could benefit from muni bonds."

[COMMENTARY] This article presents a good analysis of how US muni bonds can be ESG rated. This will be of interest to many investors.
Rating Muni Bonds on ESG and Impact, by Paul Herman, December 5, 2021, ETF Trends, USA.

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Investor Guide To Natural Capital by HSBC Asset Management. November 2021

[COMMENTARY] Though for institutions, this guide is also incredibly useful and informative reading for all ethical and sustainable investors.

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Is your 'green' fund really any different to one without the trendy label? Top experts warn they can be almost identical - and demand a crackdown. "Leading investment experts are calling for the country's [UK] financial regulator to act swiftly to stop the mis-labelling of green investment funds by some of the world's biggest asset managers."

[COMMENTARY] This is probably the same situation in most western countries. With the enormous growth in green funds, it's, frankly, expected that many funds would jump on the bandwagon that aren't really green or sustainable.
Is your 'green' fund really any different to one without the trendy label? Top experts warn they can be almost identical - and demand a crackdown, by Jeff Prestridge, November 27, 2021, Financial Mail on Sunday, UK.

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Oil Nations Are Selling Billions In Green Bonds. "Saudi Arabia, the world's biggest oil producer, has announced plans to boost oil production further, from the current 12 million barrels a day to 13 million barrels a day by 2027. The UAE has an even more aggressive growth plan, with state-controlled oil company ADNOC saying it will increase oil output by 25% to produce 5 billion barrels a day by 2030. Meanwhile, Qatar continues to invest heavily in African oilfields and is building the world's largest liquified natural gas (LNG) terminal."

[COMMENTARY] One major concern is that these states become huge green bond issuers while also greatly expanding their fossil-fuel production--which becomes increasingly difficult to finance! Hence, is the green bond issuance 'subsidizing' fossil-fuel investment?
Oil Nations Are Selling Billions In Green Bonds, by Alex Kimani, November 27, 2021, Oilprice.com, UK.

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Institutional investors wary of companies' ESG promises. "92% of investors are concerned that companies aren't effectively executing on their net zero promises."

[COMMENTARY] It's easy for companies to make promises that are many, many, years into the future! Particularly when it promotes your stock price. However, presenting detailed plans for achieving those promises is still rare. And that's what creates investor skepticism of such 'promises.'
Institutional investors wary of companies' ESG promises, by Lynn Pollack, November 25, 20221, Benefits Pro, USA.

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Company valuations and climate strategies are poles apart. "Analyses of companies globally by management consultancy Kearney in November seen exclusively by Reuters, as well as data by Credit Suisse Group AG published in April, found that companies that lowered their emissions in sectors where doing so was expensive and government regulation was limited were valued less, on average, than more emitting peers."

[COMMENTARY] There's a vicious or virtuous circle that's happening -- depending on your viewpoint -- as regard to fossil-fuel prices. High prices please many investors! Hence, companies fully engaged in fossil fuel production are reaping big profits. Environmentalists love it too as it dampens fossil-fuel demand. However, consumers are mad about it.

For many investors and fund managers, it's a bit like why not invest in tobacco companies? They usually make huge profits, often have great ESG ratings, and are included in many ESG indices and ESG funds? You see my point!

Also, its increasingly difficult to find funding for fossil-fuel developments thus limiting potential future supply. So, many investors see investing in 'purer' fossil-fuel plays as a win-win-win! Similarly, in many industry sectors.
Company valuations and climate strategies are poles apart, by Elizabeth Howcroft and Simon Jessop, November 24, 2021, Yahoo! Finance, USA.

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Green Bond Impact Ratings: Turning Brown into Green. "This special report examines how ESG factors are changing the landscape in fixed income investing, and how institutional investors and security issuers are navigating the new terrain."

[COMMENTARY] A great article on this timely subject.
Green Bond Impact Ratings: Turning Brown into Green, from the Nov 2021 PGIM Fixed Income ESG Special Report, November 23, 2021, Institutional Investor, USA.

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Bob Eccles and Jean Rogers on ISSB and the future of ESG reporting. "So what does the formation of the ISSB mean for the evolution and efficacy of ESG reporting? To answer that, I checked in with those who I thought would know better than most: Jean Rogers, founder of the Sustainability Accounting Standards Board (SASB) and, as of this month, global head of ESG at Blackstone; and Robert Eccles, founding chairman of SASB, professor of management practice at Oxford and a founder of the International Integrated Reporting Council (IIRC)."

[COMMENTARY] This is a good insightful discussion of the newly formed International Sustainability Standards Board (ISSB) and what it might mean for all ethical and sustainable investors.
Bob Eccles and Jean Rogers on ISSB and the future of ESG reporting, by Grant Harrison, November 17, 2021, GreenBiz, USA.

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Advisers must be careful not to create 'inherent bias' towards ESG - P1. "Advisers could soon have to ask clients about their sustainability preferences in a similar way to attitude to risk, as ESG becomes ingrained in the investment process, according to Quinitin Rayer, head of research and ethical investing at P1 Investment Services."

[COMMENTARY] I've been waiting over forty years for investment advisory professionals to realize what has been obvious since the beginnings of their profession! To properly serve a client the 'Know-thy-client' rule should also mean 'know-their-values'. Otherwise, how can you properly advise a client financially!

However, this article seems to also warn that advisors need to caution their clients about overly favoring ESG. To me, that arises from a mindset that doesn't properly understand ESG.
Advisers must be careful not to create 'inherent bias' towards ESG - P1, by Julia Bahr, November 17, 2021, Professional Advisor, USA.

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Majority of investors see gap between ESG preferences and current portfolio. "The study set out to examine the client side of ESG investing and establish investors' attitudes in the UK, the US and Singapore towards ESG investing, their true ESG preferences, the strengths and weaknesses of their existing financial adviser on the subject and what would constitute for them the ideal ESG investment experience. Investors' ESG preferences were shown to vary widely and be distributed right across the spectrum of available forms of sustainable investment."

[COMMENTARY] This study suggests that the 'know-thy-client' rule is not properly applied by advisors and that investors aren't doing enough research themselves. It's laziness by both groups. Blaming each other is at least a start in hopefully correcting the situation!
Majority of investors see gap between ESG preferences and current portfolio, press release, November 15, 2021, Capital Preferences, USA.

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Bonds are an ESG blind spot in investing. "BBVA Global Markets Research has estimated that in late 2020 the stock of green, social and sustainable bonds had yet to reach $1tn out of a market total of $128tn. While this green exposure is rising fast from a low base, it is indisputably minuscule."

[COMMENTARY] The writer seems to believe that ESG is partly a 'marketing ploy' among equity asset managers. He's probably right to some extent. But he gives the impression that the bond markets are more sophisticated. Hence, the reason for green bonds being such a small proportion of total bond issuance.
Bonds are an ESG blind spot in investing, by John Plender, November 10, 2021, Financial Times, UK.

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ESG investing has a blind spot that puts the $35 trillion industry's sustainability promises in doubt: Supply chains. "Investors' trust in ESG funds may be misplaced. As scholars in the field of supply chain management and sustainable operations, we see a major flaw in how rating agencies, such as Bloomberg, MSCI and Sustainalytics, are measuring companies' ESG risk: the performance of their supply chains."

[COMMENTARY] The issue of supply chains is coming to the fore! The reason why ESG rating companies have largely ignored it is because it's complex, difficult -- and costly to evaluate. My guess is until a way is found to cover such increased costs, fully including supply chain issues into ESG scores will be mixed at best.
ESG investing has a blind spot that puts the $35 trillion industry's sustainability promises in doubt: Supply chains, by Tinglong Dai and Christopher S. Tang, November 9, 2021, The Conversation, Canada.

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Why Investor Engagement with 'Dirty' Companies Is Better Than Divestment. "Investors who espouse environmental, social and governance (ESG) principles will achieve little by selling their shares in ESG-unfriendly companies, according to a new research paper titled 'The Impact of Impact Investing' by finance professors Jonathan B. Berk at Stanford University and Jules H. van Binsbergen at Wharton.

Instead, investors could have more success if they buy those so-called 'dirty' stocks and then engage with those companies' managements to adopt ESG-friendly policies, the paper contended."

[COMMENTARY] This theme of engagement rather than divestment for poorly performing companies concerning fossil fuels and ESG performance, has become commonplace among academics and some ethical investors too. Yet, student groups continue to press for divestment in university endowments.
Why Investor Engagement with 'Dirty' Companies Is Better Than Divestment, by Knowledge@Wharton, November 8, 2021, USA.

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A Sign of the Times: The ESG Buyback. "In an ESG buyback, the company commits part of the buyback profits to finance a socially responsible or green initiative. Early adopters include BIC, Campari and Enel."

[COMMENTARY] I'm not sure how to view this. It is a good way to use 'excess profits.' However, when companies can't see a way to utilize profits to enhance their own business I think they need new management!
A Sign of the Times: The ESG Buyback, by Theo Vermaelen, November 8, 2021, INSEAD Knowledge, France.

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IFRS announces global sustainability standards board. "Efforts to establish a global consensus for climate and sustainability disclosures took a major step as the International Financial Reporting Standards Foundation (IFRS) announced a series of 'significant developments' including its new International Sustainability Standards Board (ISSB)."

[COMMENTARY] This development is great news and timely. I and many others associated with ethical and sustainable investing have decades called for this development.

UPDATE: Canadians are happy too, that one of the three main offices of the new Board will be in Montreal.

IFRS announces global sustainability standards board, by Sam Alberti, November 3, 2021, Accountancy Age, USA.

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Most Automotive Leaders Back Hydrogen over BEV, Study Claims. "The study run by automotive technology management consultants, Expleo, is based on the views of 225 senior executives from the automotive industry, split equally between the UK, France and Germany. It 71% of respondents believe hydrogen has significant ecological advantages of battery powertrains but there remains uncertainty around infrastructure and green hydrogen which is holding investment back."

[COMMENTARY] This survey covered European car maker directors. Would American directors also favor hydrogen- fueled vehicles over BEV's? It's interesting that governments continually push BEV's and the general public aren't aware that the directors of most European automakers prefer hydrogen-fueled vehicles!

Anyway, I recall reading that the latest research on 'green hydrogen' suggests that it's not so clean after all!
Most Automotive Leaders Back Hydrogen over BEV, Study Claims, by Paul Myles, October 28, 2021, TU Automotive, UK.

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US holds back on support for global sustainability standards. "Objections to new international outfit aiming to bring clarity to ESG investment hinge on its broad approach."

[COMMENTARY] Such standards should have existed for many years already. As usual, regulators are behind the curve and by the time they get basic standards together, markets will be ahead on phases 2 and 3 of standards.
US holds back on support for global sustainability standards, by
Alan Livsey, October 31, 2021, Financial Times, UK.

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ESG metrics trip up factor investors. "Adding an ethical tilt to a portfolio may not necessarily lead to better returns."

[COMMENTARY] This article provides a good discussion of implementing ESG into factor-based investing.
ESG metrics trip up factor investors, by Emma Boyde, October 31, 2021, Financial Times, UK.

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New Research: Ethical and unethical investments under extreme market conditions. "This study examines the time-varying volatility and risk measures of ethical and unethical investments.

We compute the value-at-risk and expected shortfall using the MS-GARCH model based on the Bayesian estimation framework.

Ethical investments are less affected than unethical investments during global financial crises.

Investors consider ethical investments as a hedging asset for their portfolios in the downside risk."

[COMMENTARY] This research confirms the findings of previous studies that show ethical investments outperform during market downtowns.
Ethical and unethical investments under extreme market conditions, by Petter Olofssona, Anna Råholm, and Gazi Salah Uddin at Linköping University, Sweden; Victor Troster, Universitat de les Illes Balears, Palma, Spain; and Sang Hoon Kang, Pusan National University, Republic of Korea. October 2021, International Review of Financial Analysis.

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Why Divestment Doesn't Hurt "Dirty" Companies. "A new analysis finds that selling off stocks in corporations that don't meet your values has minimal impact on their behavior."

[COMMENTARY] This research agrees with the activist funds that say you need to invest in 'dirty' companies to change them. When enough investors seeking corporate change invest in companies performing poorly in ESG metrics, they can influence or change the boards of these companies and effect change that way. Hence, investment, rather than divestment, is the key to moving companies in the direction of ESG.
Why Divestment Doesn't Hurt "Dirty" Companies, by Alexander Gelfand, October 27, 2021, Stanford Business, USA.

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Does Divestment From Fossil Fuels Really Work? "Private equity funds are very keen to grab the available stocks, bonds, and assets, as the margins in oil and gas, and even coal, are very impressive and will remain so for longer.

National oil companies and non-Western oil and gas giants will be happy to produce every last drop of oil, gas, and even coal they can.

Private equity funds, with a much shorter investment horizon than funds, will be pushing for higher production sooner, which will not only produce higher emission levels but will constrain the price competitiveness of renewables."

[COMMENTARY] As many experts have said, fossil fuels have to be made increasingly expensive to drive consumption to renewables. However, cheap fossil fuels create cheap mass food, cheap transportation, etc. Hence, the political reticence to properly tax fossil fuels.
Does Divestment From Fossil Fuels Really Work? By Editor OilPrice.com, October 27, 2021, Yahoo! News, USA.

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100 Best ESG Stocks Combine Performance And Value With Values. "IBD's third annual Best ESG Companies special report, featuring our table of top ESG companies with both high Dow Jones ESG scores and superior IBD Composite Ratings, can help investors pick the best ESG investments."

[COMMENTARY] Worth reviewing, particularly by ethical and sustainable investors.
100 Best ESG Stocks Combine Performance And Value With Values, by Alexis Garcia, October 25, 2021, Investor's Business Daily, USA.

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Navigating the thicket of ESG metrics. "Sustainable investing may be gratifying for wealthy individuals and families, but it is far from simple. A lack of standards in the measurement and reporting of ESG (environmental, social and governance) products and funds can leave investors confused. And when it comes to impact investments, capturing the right data takes time, effort and, often, a hands-on approach."

[COMMENTARY] This FT article is a good review of some of the approaches dealing with this important subject.
Navigating the thicket of ESG metrics, by Sarah Murray, October 24, 2021, Financial Times, UK.

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Is Mandatory Fossil-Fuel Divestment Coming For Your 401(k) And IRA? And How Much Will It Cost You? "Over the past several years, pension funds in Scandinavia have announced divestment from oil and gas companies, and the NEST retirement savings fund in the UK, that is, the government-managed IRA-like fund into which workers are defaulted if their employers don't otherwise provide benefits, has said it will likewise pull its assets from coal mining, tar sand oil production, or arctic drilling.

In the United States, in 2020, a pair of representatives proposed legislation that the Thrift Savings Plan, the 401(k)-like plan for government employees, likewise 'decarbonize.'"

[COMMENTARY] As much as I believe that it's right for pension funds to go fossil-fuel-free, I think it inappropriate for governments to mandate them.
Is Mandatory Fossil-Fuel Divestment Coming For Your 401(k) And IRA? And How Much Will It Cost You? By Elizabeth Bauer, October 24, 2021, Forbes, USA.

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Analysis: Investors face myriad green investing rules. "More than 30 taxonomies outlining what is and isn't a green investment are being compiled by governments across Asia, Europe and Latin America, each one reflecting national economic idiosyncrasies that can jar with a global capital market which has seen trillions pour into sustainable funds."

[COMMENTARY] Let's hope there's a lot of commonality between them or it'll get mighty messy for everyone!
Analysis: Investors face myriad green investing rules, by Huw Jones and Kate Abnett, Simon Jessop, October 19, 2021, Reuters, UK.

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Are Stranded Assets an Unexploded Bomb? "Many assets will be uneconomic in a low carbon world, but sectors as diverse as commercial property and tobacco may be seriously unprepared for the financial impact."

[COMMENTARY] Stranded assets aren't just fossil fuels as this article makes clear.
Are Stranded Assets an Unexploded Bomb? By Cherry Reynard, October 19, 2021, Morningstar, UK.

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Exotic World Of ESG Derivatives Triggers Warning From Regulator. "The European Securities and Markets Authority (ESMA) says it's hard to verify the positive impact of derivatives sold under environmental, social and governance labels. The watchdog says standardized criteria should be met before firms can add ESG tags to products such as forwards, options and swaps...

ESMA told Bloomberg News in a written response. 'The absence of disclosure requirements or recognized labels with minimum sustainability criteria implies that claims as to the impact of these instruments cannot be substantiated.'"

[COMMENTARY] It seems to be presently a 'wild west' when it comes to ESG derivatives.
Exotic World Of ESG Derivatives Triggers Warning From Regulator, by John Ainger and Greg Ritchie, October 18, 2021, FA-Magazine, USA.

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Transition Finance Week, Canada, November 29 - December 3, 2021. "Industry Dialogues on Financing Canada's Transition to Net-Zero... Join 10+ key sessions on Transition Finance in live webcast format. Learn from thought leaders in ESG and sustainable finance. Interact with panelists through live-polling and in-session chat features. Network with fellow attendees and speakers via peer-to-peer chat options. Earn CE credits and PDUs from several accreditors."

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ESG 2.0 Is in the Making. "While some may expect the repudiation of ESG as an investment fad, our view is that the current debate on the validity of ESG heralds not the end of ESG investing but instead a transition toward major improvement."

[COMMENTARY] Some interesting insights into the future of ESG based investing by two highly reputable individuals with significant ESG backgrounds.
ESG 2.0 Is in the Making, by Georg Kell and Todd Cort, October 11, 2021, Barron's, USA.

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Dumping stocks to punish bad corporate behavior has tiny impact. "Even as billions of dollars diverts toward firms scoring higher on environmental, social and governance measures, the funding costs for bad actors has hardly budged, a study has found."

[COMMENTARY] The better way according to this study is for asset owners to directly engage with the companies.
Dumping stocks to punish bad corporate behavior has tiny impact, by Tasneem Hanfi Brögger and Sam Potter, October 9, 2021, Bloomberg on Business Standard, India.

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BlackRock's Landmark Move on Proxy Votes Fuels a Big ESG Debate. "The world's largest asset manager revealed on Thursday that from next year, some institutional clients will be able to play a bigger role in shareholder votes. The move will apply to about 40% of $4.8 trillion in index equity assets that BlackRock manages."

[COMMENTARY] This freedom is long overdue. Each institutional client needs to decide what its objectives are regarding its holdings and consequent relationship with them. Then, their assets may perform even better!
BlackRock's Landmark Move on Proxy Votes Fuels a Big ESG Debate, by Tasneem Hanfi Brögger and Sam Potter, October 8, 2021, Bloomberg on Yahoo! Finance, USA.

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Sovereign bonds are not exempt from ESG consideration. "Just as bondholders engage around fiscal and monetary policies, they should broaden conversations around ESG topics."

[COMMENTARY] This article has great information on how ESG impacts stock, corporate and sovereign bond prices and other related data.
Sovereign bonds are not exempt from ESG consideration, by Carmen Nuzzo, October 6, 2021, ETFStream.com, UK.

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What can corporate actors learn from climate change litigation? "In May of this year, climate change litigation made global headlines in the wake of an unprecedented judgment issued by the Hague District Court in the case of Milieudefensie v Shell. The court ordered Shell to enhance the ambition of its greenhouse gas emissions reduction efforts, requiring the company to set -- and meet -- companywide emissions reduction targets of 45% below 1990 levels by 2030.

While this case was the first of its kind, it is also part of a growing global body of climate change litigation, which is playing an increasingly critical role in the domestic implementation and enforcement of the Paris Agreement."

[COMMENTARY] Many companies could be faced with this type of court challenge in the years ahead. Naturally, stock valuations could be affected too. So it's something to become familiar with. This is an excellent article from the London School of Economics on the subject.
What can corporate actors learn from climate change litigation? By Catherine Higham and Joana Setzer, October 4, 2021, London School of Economics, UK.

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Harvard cracks on fossil fuels and a dam breaks. "Academic endowments are entering a new normal after the richest school in the world followed the lead of other colleges and universities to divest from fossil fuels.

Now a cascade of similar announcements has followed, with Boston University, the University of Minnesota and the $8 billion MacArthur Foundation pulling the plug on fossil fuels."

[COMMENTARY] Most of their faculty is in some way connected academically to some facet of global warming and/or climate change. Hence, it's unsurprising that these institutions give up on fossil fuel investments.
Harvard cracks on fossil fuels and a dam breaks, by Jordan Wolman, September 28, 2021, Politico, USA.

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Deep Dive: Do not neglect the G in ESG. "Likewise, according to a 2016 study from Barclays, a divergence in priority appears between some asset managers and their clients regarding the relative importance of the three ESG components. Clients regard environmental factors as the most important, while governance is top of the list for bond managers.

Moreover, the same study showed that bonds with higher governance scores tended to have fewer downgrades and better outperformance, during the period from August 2009 until April 2016, than those with lower scores, validating the emphasis bond managers have historically placed upon effective governance."

[COMMENTARY] I think it's fair to say that most individual investors regard the 'E'--environment -- as the most important of ESG investing. However, among investment managers, the 'G' -- governance -- is the most important. And for good reason, since I've seen studies that demonstrate that the governance characteristics and activities of companies positively influence profits more than any other factor.
Deep Dive: Do not neglect the G in ESG, by Chris Bowie, Investment Week, UK.

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Blog: How do companies address governance issues for corporate political activity? "Deloitte and the Society for Corporate Governance report on a survey they conducted in July 2021 about companies' approaches to publicly addressing controversial social and political issues."

[COMMENTARY] This is an area that could have significant effects on a company's image and therefore, stock price.
Blog: How do companies address governance issues for corporate political activity? By PubCo@Cooley, September 22, 2021, JD Supra, USA.

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NYSE working with IEG to develop new asset class, Natural Asset Companies. "'This new asset class on the NYSE will create a virtuous cycle of investment in nature that will help finance sustainable development for communities, companies and countries,' Douglas Eger, CEO of IEG, said. 'Together, IEG and the NYSE will enable investors to access nature'' store of wealth and transform our industrial economy into one that is more equitable.'"

[COMMENTARY] This could be either the most exciting new development in finance this century -- or its biggest disaster. The idea is terrific. Only time will tell if the environmental community and the public at large view it as an important step to dealing with today's climate crises.
NYSE working with IEG to develop new asset class, Natural Asset Companies, by Dave Kovaleski, September 16, 2021, Financial Regulation News, USA. 

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Sustainable investments could make up majority of global private wealth portfolios in coming years, finds report. "The world's wealthiest individuals, family offices, and foundations, are preparing to plough billions of dollars into sustainable investments over the coming years, as they increasingly view addressing climate change as both a social responsibility and an attractive investment opportunity."

[COMMENTARY] I suspect that with companies realizing that going sustainable has great payback, the number of sustainable companies could grow to a point that the majority of one's portfolio would naturally be sustainable! No effort is needed! Wow--what a dream--or is it?
Sustainable investments could make up majority of global private wealth portfolios in coming years, finds report, by staff, September 15, 2021, Institutional Asset Manager, USA.

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Sustainable or sellout? Four revealing questions in a company's environmental disclosure. "How can we sift through greenwashing to spot genuine climate action?"

[COMMENTARY] This article is written by Simon Fischweicher, head of corporations and supply chains, CDP North America. So he's an expert on this subject. I'm sure that many ethical and sustainable investors will benefit from Mr. Fischweicher's insights.
Sustainable or sellout? Four revealing questions in a company's environmental disclosure, Simon Fischweicher, September 9, 2021, Corporate Knights, Canada.

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China to create first green stock index in fresh push to curb carbon emission. "China will set up a green stock index and develop futures trading for carbon emission rights -- both of which will be the first such instruments, according to a new sweeping guideline issued on Sunday, marking an important step in expanding China's market-oriented securitization and financing mechanisms to accelerate the country's long-term carbon trading and achieve its carbon neutrality goal."

[COMMENTARY] We'll have to see whether this amounts to anything or is mainly a 'PR' exercise. After all, China is still building and planning to build a huge number of coal power plants.
China to create first green stock index in fresh push to curb carbon emission, by GT staff reporters, September 12, 2021, Global Times, China.

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Why Sustainable Investment Means Investing in Advocacy. "Combining traditional impact investment approaches with investment in advocacy is the only way businesses and investors can fuel meaningful social and environmental progress."

[COMMENTARY] These knowledgeable authors make a compelling case that without advocacy the sustainable and ESG causes will be limited.
Why Sustainable Investment Means Investing in Advocacy, by Alan Schwartz and Reuben Finighan, September 9, 2021, Stanford Social Innovation Review, USA.
 

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Ten ways to be sure your 'green' fund really does help save the planet... and can make you money at the same time. "Green investing is more popular than ever with inflows into ethical, sustainable or responsible-badged investment funds running at record levels. But how do you know that the fund you are buying -- for an Isa or a pension -- is really green and in line with your ethics? Not easily, according to Mary Stevens, innovation manager at environmental pressure group Friends of the Earth."

[COMMENTARY] Here's some good advice for the new ethical and sustainable investor.
Ten ways to be sure your 'green' fund really does help save the planet... and can make you money at the same time, by Jasmine Birtles, September 11, 2021, This is Money, UK.

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US SIF Releases Tips to Implement Sustainable Funds. "As more participants express an interest in ESG investing, US SIF recommends steps plan sponsors can take to add the investments to retirement plans."

[COMMENTARY] Some useful information for all pension plan sponsors.
US SIF Releases Tips to Implement Sustainable Funds, by Amanda Umpierrez, September 7, 2021,
PLANSPONSOR, USA.

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Deutsche Bank's ESG Probe Triggers Review at Asset Managers. "Anxiety around greenwashing -- mis-stating how climate friendly assets are -- is palpable across the industry as fund managers react to German and U.S. investigations of DWS Group.

Though the Deutsche Bank unit says it did nothing wrong, the development has led to a moment of reckoning as fund managers wake up to a new regulatory era in which once fluffy environmental, social and governance definitions are no longer tolerated."

[COMMENTARY] It's about time that funds proclaiming their green credentials were duly evaluated for them. Such investigations, and perhaps prosecutions, will create greater confidence for investors that they're getting what's advertised.
Deutsche Bank's ESG Probe Triggers Review at Asset Managers, by Christine Watkins, September 5, 2021, Bloomberg via Sports Grind Entertainment, USA.

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Investors care more about fair wages for workers than environmental issues, ESG survey shows. "When broken down by topic, preference for investing in a company that pays workers fair wages edged out a preference for environmentally friendly companies, with 65% of total respondents flagging wages and 53% citing environment."

[COMMENTARY] The predominant thinking has been that it's the 'E' in ESG that attracts investors. Do we see evidence that the 'S' side is gaining momentum? Or is this survey skewed in some way? I'm not convinced that many professional investors in this space would agree with this survey's findings.
Investors care more about fair wages for workers than environmental issues, ESG survey shows, by Debbie Carlson, September 4, 2021, MarketWatch, USA.

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Most Green Investment Funds Missing Paris Goals. "The report from InfluenceMap -- 'Climate Funds: Are they Paris Aligned?' -- analysed 723 listed-equity funds with total assets under management of over US$330 billion, dividing funds which used one of 30 descriptions into two categories: broad ESG and climate-themed.

In the broad ESG category, Influence Map identified 593 equity funds with over US$265 billion in total net assets of which 71%, had a negative Portfolio Paris Alignment score.

Of the 130 climate-themed funds, with titles such as 'low carbon', 'fossil fuel free' and 'green energy', and over US$67 billion in total net assets, 55% had a negative Paris Agreement alignment score. The lowest score was -- 42% with the best scoring fund hitting +90%."

[COMMENTARY] Big players such as State Street, UBS, and even Blackrock, did particularly badly. I think that the report's researchers are also somewhat off-base by not accounting for the highly differentiated objectives of these funds by exclusively focusing on whether or not they specifically align with the Paris Agreement.

For instance, if a fund's objective is to purposely buy stocks in fossil fuel-related companies to encourage engagement with them to promote greater carbon reduction through new reduction methodologies or renewables, that would seem to put such funds at the low end of this analysis.
Most Green Investment Funds Missing Paris Goals, by ESG Investor, September 2, 2021, Regulation Asia, Singapore/Hong Kong.

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Yale climate professor: 'Divestment is a waste of time and energy.' "PODCAST: Cary Krosinsky explains why the divestment movement doesn't help solve climate change and what fund managers can do instead."

[COMMENTARY] I haven't had a chance to listen to this podcast yet. but Cary Krosinsky is someone with terrific credentials and whom I greatly respect. From my perspective, there's an argument that can be made that divestment affects secondary financial markets and has little direct influence on new issuers of say, funding new coal projects.

Also, note that starving funding for new fossil fuel-related projects can make their stocks more profitable than they might otherwise be. The reason is that continuing or rising high prices for their products (note oil!) with dwindling supply enables much higher margins and profits. Thus benefiting shareholder returns.

Furthermore, it possibly detracts from the possibility of funding fossil fuel-related projects to reduce carbon emissions.
Yale climate professor: 'Divestment is a waste of time and energy,' by Loukta Gyftoppoulou, September 2, 2021, Wealth Manager, USA.

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SEC Wants Sustainable Funds to Disclose More About Their Criteria. "In a videoconference, Chairman Gary Gensler told members of the European Parliament that the SEC is considering whether to require fund managers to disclose more information about the labeling of their environmental, social and governance, or ESG, investing products. Gensler said he has asked SEC employees to make recommendations for disclosure requirements.

Calls for public comment are expected to start by year's end or early 2022."

[COMMENTARY] There's little doubt that some 'sustainable' funds are barely that at all, hardly differing in their stock components to 'conventional' counterparts. They can argue that their aim is to 1) engage with climate 'laggards' to encourage them to do better. And, or, 2) purposely invest in climate laggards that propose to do much better on ESG as these companies have often shown to have greater stock price appreciation than established high-performance ESG companies.
SEC Wants Sustainable Funds to Disclose More About Their Criteria, by Evie Liu, September 1, 2021, Barron's, USA.

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Exchange for ethical investments gets off the ground with two listings. "A stock exchange hatched out of Silicon Valley that's taking on established rivals in New York and Chicago is listing its first two companies."

[COMMENTARY] This new exchange will be fascinating to watch! Will it attract listings? Will it attract investors? I hope that it receives rapid success.
Exchange for ethical investments gets off the ground with two listings, by Katherine Doherty, August 27, 2021, Independent.ie, Ireland.

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Investor Familiarity With Sustainable Investing Remains Low. "Despite its growing importance in the capital markets, news about sustainable investing or ESG funds has not trickled down to average U.S. investors. And with the pandemic perhaps shifting investors' economic priorities, they are expressing less interest in such funds for themselves.

Still, the future of sustainable investing looks promising, with younger investors paying closer attention to it and expressing greater interest than older working-age investors and retirees."

[COMMENTARY] I find it amazing that the investment industry's interest in ESG and sustainability has gained tremendous momentum. Yet, interest in this space by individual US investors has not changed since before the pandemic.

Though this survey does indicate, as numerous others show, that younger investors are much more interested in ESG and sustainable investing.
Investor Familiarity With Sustainable Investing Remains Low, by Lydia Saad, August 23, 2021, Gallup, USA.

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There's $35 Trillion Invested in Sustainability, but $25 Trillion of That Isn't Doing Much. "Since ESG lacks definitions, it can often mean different things to different people, said Lisa Sachs, who heads Columbia University's Center on Sustainable Investment.

And because ESG integration is often conflated with other responsible investment strategies such as impact investing and negative and positive screening, it's helping to create a false impression that the world of money management is directing capital towards helping solve societal ills."

[COMMENTARY] As I've said previously both ESG reporting standards and funds touting ESG credentials need to have more stringent standards. However, there is a caveat to this. Funds that explicitly invest in companies beginning their ESG journeys. Studies have shown that such companies can see more rapid stock appreciation than companies with established ESG credentials.

I believe that the Global Sustainable Investment Alliance who collates the data needs to have categories varying from 'deep' green to 'light' green in terms of assets under management!
There's $35 Trillion Invested in Sustainability, but $25 Trillion of That Isn't Doing Much, by Saijel Kishan, August 18, 2021, Bloomberg Green, Australia.

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'More emissions than Exxon': Is meat the next target for divestment? "The finance sector is increasingly reluctant to finance fossil fuel expansion, and 'Big Ag' could be next in the divestment campaign firing line, argues Charlotte Moore from SIGWATCH."

[COMMENTARY] On an individual basis, it's happening already. I know many individual investors who won't touch meat stocks. Look at the success of Beyond Meat. Only institutions are holding back. It's just a matter of time before many of them join the numerous individual investors in this endeavor.
'More emissions than Exxon': Is meat the next target for divestment? By Charlotte Moore, August 17, 2021, Investment Week, USA.

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ESG Investing: Does It Distort the Market? "Bottom line on ESG: Overall, it must be a force for good to measure company externalities and hold investors accountable in some way. It just seems we got into a weird phase of its evolution with the concentration in mega-cap tech stocks. I look forward to reading about the movement at the end of this decade and if created the changes we wanted, or more unintended consequences."

[COMMENTARY] It can be argued that ESG investing does distort the markets. However, isn't that the point! Now, one could argue that passive index investing means possible carelessness with ESG criteria of companies in the index which over time lowers ESG standards... and returns!
ESG Investing: Does It Distort the Market? By Kevin Cook of Zacks, August 13, 2021, Nasdaq.com, USA.

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US issuers still split on ESG standards, study finds. "As the SEC considers imposing climate-related reporting rules, US companies are divided on what they should look like."

[COMMENTARY] It's to be expected that issuers will have differing opinions on ESG standards. I expect that there'll be many common standards but others will be industry-specific.
US issuers still split on ESG standards, study finds, by Maria Ward Brennan, August 11, 2021, Corporate Secretary, USA.

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Bond investors need to step up on human rights. "Too many fund firms use strong rhetoric on abuses while lending money to oppressive regimes."

[COMMENTARY] With many ESG rating firms providing sovereign ESG ratings, it seems not much of a step to incorporate more scrutiny of human rights issues. I believe some rating organizations already do this.
Bond investors need to step up on human rights, by Laurence Fletcher, August 7, 2021, Financial Times, UK.

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ESG: EU Green Bond Standard. "The European Green Bond Standard proposal will create a high-quality voluntary standard for bonds financing sustainable investment. Issuers will have a recognised way of demonstrating that they are funding green projects aligned with the EU Taxonomy. Investors will be better able to ascertain that their investments are sustainable, thereby reducing the risk of greenwashing."

[COMMENTARY] This new standard sounds great. We'll have to see in practice how it works out. If successful, it could, in short order, become the global standard for green bonds.
ESG: EU Green Bond Standard, by Richard Kelly, July 27, 2021, Ireland.

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Amory Lovins: Decarbonizing industry isn't just about costs, it's about profits. "This week Amory Lovins, co-founder of RMI and clean energy BAMF, released a paper, 'Decarbonizing our toughest sectors -- profitably,' encouraging a fresh perspective on the costs of decarbonizing heavy transport and industrial heating. The paper makes the case that deep decarbonization isn't a cost: It's an investment that will make communities and companies money."

[COMMENTARY] Amory Lovins is one of the great pioneers of ethical and sustainable investing. In his new article, he makes a great case demonstrating that de-carbonizing the biggest polluters can be profitable for all stakeholders. It pays to listen to him.
Amory Lovins: Decarbonizing industry isn't just about costs, it's about profits, by Sarah Golden, August 6, 2021, GreenBiz, USA.

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5 ways to separate real ESG leadership from greenwashing. "How can people better identify greenwashing and help reinforce the growing sense of accountability for ESG standards? Look for these factors."

[COMMENTARY] Some good points in how to identify 'greenwashing' in companies are made in this article.
5 ways to separate real ESG leadership from greenwashing, by Marjella Lecourt-Alma, August 4, 2021, Fast Company, USA.

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Where's All That Green Bond Money Really Going? "Overall issuance is skyrocketing, but transparency is hard to come by."

[COMMENTARY] There's a clear need for a universal mechanism for tracing the flow of funds raised via green bonds. Otherwise, confidence in this market could falter, and dealing with climate change negatively affected. This is beside the potential detrimental impact on the stock and bond prices of the corporation for misbehavior. That alone might be a sufficient deterrent. Who knows?
Where's All That Green Bond Money Really Going? By Tim Quinson, August 4, 2021, Bloomberg Green, USA.

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More than $3T of companies outside the EU could be on the hook for SFDR. "Until recently, European legislation may not have been at the top of the agenda for financial services firms in the U.S., or anywhere outside the European Union.

But two factors might have you suddenly realizing that it's worth paying attention to EU sustainable investment regulation, regardless of where you’re based. This is, especially true since some of this regulation is already in effect.

First, in order to market investment funds in the EU, firms often set up a local legal entity that could potentially expose the parent company to EU regulation. Second, the EU put new regulation in place mandating sustainability disclosure from certain types of financial firms."

[COMMENTARY] For those readers engaged in financial services with European operations this is something you must investigate!
More than $3T of companies outside the EU could be on the hook for SFDR, by Divya Mankikar, July 30, S&P Global, UK.

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Regulators to unlock 'black box' of ESG corporate ratings. "Global regulators took a first step on Monday to unlock the 'black box' of corporate environmental, social and governance (ESG) ratings, suggesting formal oversight of a sector which helps channel trillions of dollars into climate-friendly investment funds.

Despite growing influence, ESG raters and data providers are largely unregulated, lack transparency in their methods, offer uneven coverage and harbour potential conflicts of interest, said the International Organization of Securities Commissions (IOSCO), which groups market regulators from the United States, Europe and Asia."

[COMMENTARY] I just hope that should the ESG raters be regulated that there is room for differences of opinions between them on any given stock. I do agree, however, that the structure of the ESG data needs more uniformity. That would provide for better cross-rater comparisons on companies.
Regulators to unlock 'black box' of ESG corporate ratings, by Kim Kyung-Hoon, July 26, 2021, Reuters, UK.

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Blog: Acting Enforcement Director warns of ESG enforcement actions. "According to Law 360 reporting on a webcast panel last week, Acting Director of Enforcement Melissa Hodgman, warned that, in addition to 'increased scrutiny' of 'funds touting green investments,' we may well see more ESG disclosure-related enforcement actions in general."

[COMMENTARY] I believe it's a good idea that funds and fund managers, etc., live up to what they profess. If not, there should be penalties.
Blog: Acting Enforcement Director warns of ESG enforcement actions, by Cooley LLP, July 21, 2021, JD Supra, USA.

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ESG Assets in Europe Shrink after Regulatory Consolidation Efforts. "While assets in sustainable investments declined to $12 trillion in Europe over 2020 from $14 trillion in 2018, the falling assets in attributed to falling investment demand for the ESG theme, Bloomberg reports. The drop in ESG assets in Europe is a result of policy changes that tightened the requirements for what can be considered a responsible investment, according to Simon O'Connor, chair of the Global Sustainable Investment Alliance."

[COMMENTARY] With 36% of assets under management globally now termed 'responsible' by the GSIA, I wonder if there's been a weakening as to what are considered ethical-ESG-sustainable investments? I think these numbers from Europe provide the answer. Probably 'yes'.
ESG Assets in Europe Shrink after Regulatory Consolidation Efforts, July 21, 2021, ETF Trends, USA.

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What you should know about potential new international reporting standards. "The International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB) have merged into the Value Reporting Foundation. They and three other sustainability reporting bodies -- CDP, Climate Disclosure Standards Board (CDSB) and Global Reporting Initiative (GRI), known as the Group of Five -- have called for closer coordination and launched a prototype climate-related financial disclosure standard."

[COMMENTARY] It's great to see this finally coming together. When it does, analyzing ESG performance between companies should be easier.
What you should know about potential new international reporting standards, by Adam Fishman, July 19, 2021, GreenBiz, USA.

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The GSIA Releases its Global Sustainable Investment Review 2020. "Responsible investment assets under management make up a total of 36% of total assets under management."

[COMMENTARY] This is a staggering amount! I can't help but feel as per the article below ("This World May Be Better Off Without ESG Investing") that the guidelines of what is sustainable, responsible, etc., are becoming ever weaker. This is not to say that numerous companies are now being encouraged to be more sustainable though!
The GSIA Releases its Global Sustainable Investment Review 2020, by Responsible Investment Association Canada, July 18, 2021, Canada.

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The World May Be Better Off Without ESG Investing. "The bar for what constitutes a good corporate citizen is abysmally low... This could explain why Exxon and BP, which pose existential threats to the planet, get an average ('BBB') aggregate score from MSCI..."

[COMMENTARY] In some quarters ethical and sustainable investors invest in companies they consider 'light,' 'medium' or 'deep' green. I think the ESG rating companies need to do a similar thing!
The World May Be Better Off Without ESG Investing, by Hans Taparia, July 14, 2021, Stanford Social Innovation Review, USA.

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Can ESG disclosures get you sued? "Everyone expects the SEC to make climate change and other ESG reporting mandatory, and those tech giants -- Amazon, Alphabet, Autodesk, eBay, Facebook, Intel and Salesforce  --  said in a joint letter they support this. What they don't support is including the information in filings such as annual 10-Ks and quarterly 10-Qs because, they say, it could open them up to costly lawsuits."

[COMMENTARY] I think it's right that the SEC should make ESG reporting mandatory in company filings. Furthermore, that interested parties should have the ability to challenge such reporting. And in the courts if necessary. However, clearly, limits of some kind would have to be placed on legal challenges.
Can ESG disclosures get you sued? By CJ Clouse, July 15, 2021, GreenBiz, USA.

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CFA Institute's draft ESG standards could facilitate 'greenwashing,' IFIC says. "Without establishing standards for labelling environmental, social and governance (ESG) products, the CFA Institute's proposed disclosure standards could lead to more 'greenwashing' of investment funds, Canada's fund industry lobby group says."

[COMMENTARY] I wonder if other affected organizations, funds, etc., have come to the same conclusion?
CFA Institute's draft ESG standards could facilitate 'greenwashing,' IFIC says, by Mark Burgess, July 14, 2021, Investment Executive, Canada.

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What you need to know about the European Green Deal - and what comes next. "The European Green Deal has the potential to play a key role not only in ensuring this recovery in the short term but also in addressing long-term climate change threats. The launch of the 'Fit for 55' package this week is expected to mark an important step in overhauling climate policies and enabling the EU to deliver on its commitment to reduce emissions by 55% by 2030."

[COMMENTARY] This is a big deal. It will influence and affect numerous industries, governments, and probably billions of consumers, globally. Everyone needs to pay attention to this!
What you need to know about the European Green Deal -  and what comes next, by Teresa Belardo, July 13, 2021, World Economic Forum, Switzerland.

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Study: Financial Markets Ignore Environmental Damage. "Credit-rating agencies say they can discipline companies that behave badly, and they have in some cases, but research reveals negligible progress."

[COMMENTARY] Although most investors profess a concern for the environment while investing, this study might suggest they really don't. I'd like to see other studies of this kind to see if the findings from the study are true.
Study: Financial Markets Ignore Environmental Damage, by Lilah Burke, July 12, 2021, The  Revelator, USA.

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AMG Acquires Control of Parnassus, the Last Big ESG Firm. What This Means for ESG Investors. "Sustainable investing is red-hot. For the most recent evidence, look at last week's acquisition news: Affiliated Managers Group paid $600 million for a majority stake in privately held Parnassus Investments, which sent Affiliated's stock (ticker: AMG) up as much as 7% on the day the deal was announced."

[COMMENTARY] Many of the ethical and SRI pioneer firms are falling into the hands of huge establishment players. I suppose it was inevitable that this happens. However, there are some nimble and niche players also entering the space!
AMG Acquires Control of Parnassus, the Last Big ESG Firm. What This Means for ESG Investors, by Leslie P. Norton, July 9, 2021, Barron's, USA.

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Schroders Institutional Investor Study 2021: On ESG, US Investors Focus on Data, Social Impact. "US institutional investors focus more on ESG data and social factors than their global counterparts, according to a new study by global asset manager Schroders."

[COMMENTARY] The survey results support the findings of other similar studies.
Schroders Institutional Investor Study 2021: On ESG, US Investors Focus on Data, Social Impact, press release, July 6, 2021, Schroders/Business Wire, USA.

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Will Mandated ESG Disclosures Lead to Increased Litigation Risk? "With the Securities and Exchange Commission resolute in its efforts to establish new disclosure requirements related to environmental, social and governance (ESG) risks, companies appear increasingly resigned to some measure of mandatory reporting.

But these companies haven't yet given up: in an effort to contain litigation risk, they continue to press the SEC to show some flexibility in the means by which ESG risks are reported.

The distinction between furnishing and filing climate change disclosures is not purely semantic, as filed disclosures are held to a higher regulatory standard than those that are merely furnished."

[COMMENTARY] One can see why companies are concerned -- as should their shareholders. Such a distinction 'between furnishing and filing climate change disclosures' might well be the case in many other jurisdictions too.
Will Mandated ESG Disclosures Lead to Increased Litigation Risk? By Bracewell LLP, July 2, 2021, JD Supra, USA.

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2021's Best 50 Canadian corporate citizens. "Every year since 2002, Corporate Knights has evaluated Canadian companies with annual revenue of over $1 billion on a growing number of key performance indicators. This year's Best 50 Corporate Citizens were evaluated against 24 key performance indicators, including the clean revenue result for each company, which is percentile-ranked against industry peers and weighted at 50% toward the overall score."

[COMMENTARY] Many of the companies on this list will be of interest to ethical and sustainable investors from around the world.
2021's Best 50 Canadian corporate citizens, by staff, June 30, 2021, Corporate Knights, Canada.

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Why Green Assets May Not Continue to Outperform. "Many investors are attracted to ESG securities on promises of high returns, but they are 'misguided, Wharton finance professor Luke Taylor said on the Wharton Business Daily radio show on SiriusXM. (Listen to the podcast here.)

The past performance of ESG securities is not a reliable indicator of returns in the future, especially when past returns were largely driven by 'shocks' such as bad news about climate change, he noted. 'Absent more unexpected shocks in the future, we don't see those green stocks outperforming ['brown' or environmentally unfriendly stocks] in the future.'"

[COMMENTARY] The research paper appears to rest on a common thesis: that high-priced stocks usually provide lower future returns. Time will tell.
Why Green Assets May Not Continue to Outperform, June 29, 2021, Wharton Business Daily, USA.

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Low-quality assurance of ESG reports pose stability risk: IFAC. "Only 51% of companies back up their reports on sustainability with assurance, a study of 1,400 companies by the International Federation of Accountants (IFAC) found, warning that low-quality assurance is an 'emerging investor protection and financial stability risk.'"

[COMMENTARY] I've had a big concern for over four decades. It's that when ethical investing finally gets its day in the sun that there will be not only be agreed reporting standards but also a regulated independent class of specialized auditors to audit and assure the numbers and facts.
Low-quality assurance of ESG reports pose stability risk: IFAC, by Jim Tyson, June 24, 2021, CFO Dive, USA.

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Is ESG harmonization and convergence finally coming? "Last week, the U.S. House of Representatives passed legislation that would require public companies to report environmental, social and governance (ESG) metrics...

The bill, simply titled the ESG Disclosure Simplification Act of 2021, comes on the heels of the U.S. Securities and Exchange Commission's (SEC) decision to open public comments on climate change disclosures to inform its impending guidance -- and gets us one more step closer to mandatory ESG disclosure."

[COMMENTARY] Finally, the U.S. government and regulatory authorities look like they're getting the message from the markets.
Is ESG harmonization and convergence finally coming, by Aman Singh, June 24, 2021, GreenBiz, USA.

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Professionals see evolving ESG links to executive compensation. "Boards and investors may not always see eye to eye on metrics and weights."

[COMMENTARY] This is all part of the evolution of corporate ESG. It will certainly be messy for a while.
Professionals see evolving ESG links to executive compensation, by Ben Maiden, June 24, 2021, Corporate Secretary, USA.

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House (US) Passes ESG Disclosure Simplification Act of 2021. "By a razor thin vote of 215 to 214, the House of Representatives passed the ESG Disclosure Simplification Act of 2021. The Act would require public companies to disclose in any proxy or consent solicitation material for an annual meeting of the shareholders... "

[COMMENTARY] This is good news, though I believe it still has to pass the US Senate. Many think it might not make it through there. Let's hope it will.
House (US) Passes ESG Disclosure Simplification Act of 2021, by Dodd-Frank, June 21, 2021, Lexology, USA.

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The Dark Side of Solar Power. "Solar energy is a rapidly growing market, which should be good news for the environment.  Unfortunately there's a catch.  The replacement rate of solar panels is faster than expected and given the current very high recycling costs, there's a real danger that all used panels will go straight to landfill (along with equally hard-to-recycle..."

[COMMENTARY] Recycling solar panels has long been a major concern of mine regarding solar power. The firms in the business have to get behind solutions or see their business potentially 'dwindle.'

The Dark Side of Solar Power, by Atalay Atasu, Serasu Duran, and Luk N. Van Wassenhove, June 18, 2021, Harvard Business Review, USA.

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Green Bonds Were a Better Safe Haven Than Gold During the Pandemic. "Climate-friendly debt served as a better protection against large market fluctuations than gold, as well as performing better than other environmental, social, and governance investments, according to new research from Imran Yousaf of Pakistan's Air University, Muhammed Tahir Suleman of the University of Otago in New Zealand, and Riza Demirer of Southern Illinois University Edwardsville."

[COMMENTARY] This is not a surprising finding. Green bonds have become the new investment favourite. How many people want gold today?
Green Bonds Were a Better Safe Haven Than Gold During the Pandemic, by Jessica Hamlin, June 8, 2021, Institutional Investor, USA.

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Mandatory ESG disclosures are a political inevitability. "The SEC is gathering public input about corporate climate reporting. The comment request is one of several actions the agency has taken over the past several months to elevate ESG oversight, including establishing a climate and ESG enforcement task force...

In a June 3 speech, Roisman said the thrust of climate disclosure seems to be on assessing the damage a company does to the environment, not the havoc climate change can wreak on a company. That led him to question the SEC's role."

[COMMENTARY] It seems to me that investors need to know both sides: the effects of climate change on the company and how the company contributes to climate change.
Mandatory ESG disclosures are a political inevitability, by Mark Schoeff Jr., June 9, 2021, Investment News, USA.

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Banning Investment Managers Who Shun Fossil Fuels Is a Bad Idea. "Texas has joined a group of states proposing legislation that would ban private investment management companies that focus on sustainable investing, to the ire of the oil and gas industry. Attorney J. Carl Cecere argues politicizing state-pension investment strategy is bad for pensioners and violates the First Amendment."

[COMMENTARY] I agree with the writer. Not only because I'm biased towards renewable energy, but also on the basis that asset managers need to have the freedom to invest according to their client's wishes, and so forth.
Banning Investment Managers Who Shun Fossil Fuels Is a Bad Idea, by J. Carl Cecere, June 4, 2021, Bloomberg Law, USA.

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Rating the ESG raters: Why Sustainable Investing Needs More Independent Verifiers. "With an array of data providers and indices to choose from, third party ESG verifiers have stepped into the market to help screen information available and offer some clarity. In Switzerland, one such company is Geneva-based sustainable investment advisory firm Conser. Founded by Angela de Wolff (also one of the co-founders of Sustainable Finance Geneva), the firm has developed its own proprietary methodology to capture a variety of different ESG opinions."

[COMMENTARY] I guess this type of service had to happen. And I think it's good. It'll be a while to see if it takes off.
Rating the ESG raters: Why Sustainable Investing Needs More Independent Verifiers, by Kasmira Jefford, June 2, 2021, Geneva solutions, Switzerland.

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Auditors may see increased demand for ESG attestation. "During a virtual session Monday, Kristen Sullivan, CPA, CGMA, a partner with Deloitte & Touche LLP and the firm's Americas region sustainability services leader, gave an overview of the concerns public companies, directors, and auditors have about the new regulatory focus on ESG disclosures.

To date, ESG disclosures have tended to be separate from regulatory filings. But the CAQ's road map is meant to help guide capital market participants through the frequency and consistency of the disclosures and whether the information is comparable from company to company, Sullivan said."

[COMMENTARY] I've long believed that CSR/ESG disclosures need to be audited and attested to by a regulated and licensed auditing entity. Only in this way can investors and stakeholders have confidence in the facts, data, and material being presented. Furthermore, there must be, as is now occurring, some standardization of such facts, data, and material. It should also be shown in what way it might be material to the activities and financial performance of a company.
Auditors may see increased demand for ESG attestation, by Joseph Radigan, May 28, 2021, Journal of Accountancy, USA.

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The Theory at the Heart of Modern Portfolios Is Leading Investors Astray. "These activities (ESG, SRI, and impact investing) form a coherent challenge to the limitations of modern portfolio theory. MPT, the dominant investment paradigm in the world, focuses on diversification to minimize risk."

[COMMENTARY] Yes, MPT is upended by our emphasis on ESG, sustainability, and ethics!
The Theory at the Heart of Modern Portfolios Is Leading Investors Astray, by Jon Lukomnik and James P. Hawley, May 28, 2021, Barron's, USA.

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Does corporate social responsibility affect shareholder value? Evidence from the COVID-19 crisis. "We observe that firms engaged in more CSR activities outperform other firms. This suggests that CSR plays a positive role in determining shareholder value, particularly for an emerging market where minority shareholder rights are weak. Collaborating with our main finding, we further find that governance metrics play a significant role."

[COMMENTARY] This study was done in India on companies whose main revenues and activities were also in India. It's good to note that CSR was found to be positive for shareholder value.
Does corporate social responsibility affect shareholder value? Evidence from the COVID-19 crisis, by Somya Arora, Jagan Kumar Sur, Yogesh Chauhan, at the Indian Institute of Management Raipur, Raipur, India, May 26, 2021. International Review of Finance.

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Indexing Giants 'Should Prepare for Disruption' Says New Report. "MSCI, FTSE Russell, S&P Dow Jones and Bloomberg could see their dominance of the indexing industry threatened by sustainability specialists, according to a new report."

[COMMENTARY] When a new industry takes shape, there are always new entrants and winners. It'll likely be the same as ESG investing matures. Who will be the winners?
Indexing Giants 'Should Prepare for Disruption' Says New Report, by staff, May 25, 2021, Banking Exchange, USA.

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Keeping Promises? Carbon Risk (CR) Disclosure and Mutual Fund Portfolios. "Indeed, fund managers are sensitive to disclosures only in the presence of binding commitments to environment sustainability. Sustainable funds lower their CR score by reducing exposure to fossil fuels, not by increasing exposure to renewables."

[COMMENTARY] This is a highly insightful paper that illuminates the carbon risk of conventional and sustainable US mutual funds.
Keeping Promises? Carbon Risk (CR) Disclosure and Mutual Fund Portfolios, by John R. Nofsinger, University of Alaska Anchorage and Abhishek Varma, Illinois State University. April 27, 2021.

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Danger of being corrupted? ESG ratings increase risks of greenwashing. "The European Commission (EC) asked 650 individuals and organisations last year for their views on the concentration of providers in the ESG ratings market and on the quality of the ESG ratings' analyses. 74% of respondents called for action.

The European Securities and Markets Authority (ESMA), noting that 'climate and environmental risks constitute a key source of potential financial instability', claimed the 'clear mandate to prevent threats to financial stability and ensure investor protection.'

Consequently, ESMA demands that the regulatory regime should be adapted to tackle not only an increased risk of greenwashing but also risks of 'capital misallocation and product mis-selling'.

Should the EC adopt this proposal, which seems likely, this will not just mean an end to unethical selling practices of ethical ratings, it will also help forward-thinking investors allocate resources and capital to truly eco-friendly projects and to companies that take their ecological and social responsibility seriously. Our children will thank us."

[COMMENTARY] I thought to include the above-extended quote to give importance to the fact that the EU is strongly considering regulating ESG raters.
Danger of being corrupted? ESG ratings increase risks of greenwashing, by Alpay Soyturk. May 19, 2021, Investment Week, USA.

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The Impact Of Sin Stock Exclusion On Portfolio Performance. "'As about 10% of the market can be classified as sin, this would imply an additional 0.10% return loss if sin stocks are excluded. Combined with the 0.27% estimated loss due to the adverse effect on factor exposures ... this brings the total loss in expected return to 0.37% per annum.

Although this might seem small, a pension fund which generates 0.37% lower returns on its equity portfolio than peers may end up providing 5% lower pensions in the long run.' That is not an insignificant loss."

[COMMENTARY] This article reports on a study saying that excluding 11 particular industries in a portfolio results in a 0.37% annual loss in returns. I'm sure many will debate the methodology and conclusions of this study.
The Impact Of Sin Stock Exclusion On Portfolio Performance, by Larry Swedroe, May 19, 2021, Seeking Alpha, USA.

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The rise of the climate economy is upon us. "What was once a narrow purview around clean tech recently has morphed into the all-encompassing term of climate tech, and unlike the boom and bust cycle that accompanied the clean energy frenzy of the late 2000s, climate tech appears to have a sustainable presence in the minds of long-term investors."

[COMMENTARY] I thought it was interesting that the term climate tech appears to be replacing clean tech. Also, what that means for ethical and sustainable investing.
The rise of the climate economy is upon us, by Michael Ferrari, May 17, 2021, GreenBiz, USA.

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The 100 Best Corporate Citizens of 2021. "As companies decarbonize, align with the Sustainable Development Goals and rebuild an equitable economy post-pandemic, they must be open about their efforts. Each year, 3BL Media evaluates the largest public U.S. companies on ESG transparency and performance."

[COMMENTARY] This is always a good list to review, particularly for ethical and sustainable investors.
The 100 Best Corporate Citizens of 2021, May 17, 2021, 3BL Media, USA.

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ESG Investors Turn to Emerging Markets, Defying Skeptics. "There's a growing number of money managers in green finance turning to markets not usually associated with sustainability. Fund bosses in Europe's North, where climate-friendly investing has gone mainstream, have started looking much further afield to find cheap assets they say will eventually meet their environmental, social and governance goals."

[COMMENTARY] I remember seeing research that says that stock outperformance is superior in companies who are just beginning to grow in their ESG performance. That is when compared to companies already mature in their ESG development. This might be something that many ethical and sustainable investors might consider.
ESG Investors Turn to Emerging Markets, Defying Skeptics, by Leo Laikola, Hanna Hoikkala, and assistance from Filipe Pacheco, May 17, 2021, Bloomberg, USA.

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Faith-Based Investing Makes Up Ground in Gains and Convenience. "Investing according to theological beliefs 'is much easier to do now,' a wealth adviser said. It's also as profitable as investing without a religious screen, and no more risky."

[COMMENTARY] This is a simple overview of US faith-based investing.
Faith-Based Investing Makes Up Ground in Gains and Convenience, by Paul Sullivan, May 14, 2021, The New York Times, USA.

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Investors May Turn to Proxy Voting to Convey ESG Preferences. "As ESG becomes increasingly relevant to investing, investors are realizing the power of active ownership as an investing strategy and are turning their attention to how ESG issues are represented on corporate proxy ballots and how funds vote on these issues, Morningstar reports in 'The Power of the Proxy in Retirement Plans: Empowering workers saving for retirement with a voice on ESG issues.'"

[COMMENTARY] Many corporate boards that have shown a reticence to adopting significant ESG adaptations to their activities might well be forced to do so. As ESG funds grow they will likely become ever more active in pushing their shareholder agendas on corporate boards.
Investors May Turn to Proxy Voting to Convey ESG Preferences, by Ted Godbout, May 11, 2021, National Association of Plan Advisors (NAPA), USA.

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Demand for minerals threatens clean energy rollout, IEA warns. "'Looming mismatch' between world's climate ambitions and availability of necessary critical minerals, according to a new report."

[COMMENTARY] Most ethical and sustainable investors avoid mining stocks. Yet, without massive growth in mining, there will be no growth in the green economy! It's high time that sustainable investors considered investing in mining stocks with the best ESG performance.

Not only will they be supporting a green climate change-friendly economy -- but they will find a new sector that'll likely provide potentially good stock returns.
Demand for minerals threatens clean energy rollout, IEA warns, by Nadia Weekes, May 5, 2021, Windpower Monthly, UK.

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See Japan in a different light: How investors get ESG in world's third-largest economy wrong. "Greenwashing is a persistent and growing problem in the ESG landscape. However, many companies in Japan suffer from this issue in reverse and we believe their ESG ratings are often significantly worse than they deserve."

[COMMENTARY] This is important. I've long thought that Japan is underestimated for its ESG corporate contributions. This article explains the how and why of this. Managers of western ESG portfolios need to consider increasing allocations to Japanese companies.
See Japan in a different light: How investors get ESG in world's third-largest economy wrong, by Richard Kaye, May 5, 2021, Investment Week, UK.

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ESG does not generate outperformance, Scientific Beta warns. "'The results show that the quality factors (high profitability and low investment) make pronounced positive return contributions to most types of ESG strategies,' the report added."

[COMMENTARY] The headline is misleading. What it boils down to is that the concentration on tech and financials in ESG portfolios is largely responsible for their outperformance. When these portfolios are adjusted for such concentration, there's no outperformance.

Also, I don't believe this paper is to be published in a peer-reviewed journal. Thus, one always has to be suspect of such study results when they aren't.
ESG does not generate outperformance, Scientific Beta warns, by Tom Eckett, May 5, 2021, ETF Stream, USA.

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ESG metrics rest on sand, not granite. "The challenge of identifying metrics that drive 'better' or 'worse' ESG results."

[COMMENTARY] This is a good article that describes the situation and challenges of creating and obtaining the 'right' ESG metrics for any given company.
ESG metrics rest on sand, not granite, by Ingo Walter, May 4, 2021, MarketWatch, USA.

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Ethical investing encourages consumers to invest more. "Latest research shows ESG finance encourages investors to leave less in cash."

[COMMENTARY] This shows that investors get excited about ethical, ESG, and sustainable investing once they see how to do it--and particularly if it's during a time of gains!
Ethical investing encourages consumers to invest more, by Mark Shoffman, April 27, 2021, Interactive Investor, UK.

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Sixty-eight of 77 industries significantly affected by climate risk, SASB says. "SASB released an updated Climate Risk Technical Bulletin last week to help companies better understand how they can disclose climate risk in a manner that provides investors with helpful information."

[COMMENTARY] This is not just important reading for the affected companies, but for investors too!
Sixty-eight of 77 industries significantly affected by climate risk, SASB says, by Mike Schnitzel, April 27, 2021, CorporateSecretary, USA.

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Wall Street's Trillion-Dollar ESG Club Comes With Huge Tax Perks. "Four banks pledge $6 trillion in sustainable finance, and the billions they'll save in taxes is one of the benefits."

[COMMENTARY] Hopefully, there's some innate desire to do such investments too though!
Wall Street's Trillion-Dollar ESG Club Comes With Huge Tax Perks, by Max Abelson and Lananh Nguyen, April 23, 2021, Bloomberg Green, USA.

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U.S. SEC review of socially responsible funds finds 'potentially misleading' claims. "The U.S. Securities and Exchange Commission on Friday said it has found 'potentially misleading' claims and inadequate controls around investing environmental, social and governance (ESG) issues in a review of investment advisors and funds."

[COMMENTARY] This is good news. The industry needs some cleaning out of the greenwashing that exists.
U.S. SEC review of socially responsible funds finds 'potentially misleading' claims, by Reuters staff, April 12, 2021, Reuters, USA.

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BlackRock Is Pushing to Offer Sustainable Investments to 401k Plans, CEO Says. "With the Biden Administration friendly to sustainable investing, BlackRock is making a push to offer those types of investments to retirement plans, CEO Larry Fink said in an interview."

[COMMENTARY] Employees of most firms will welcome this! As you know the number of such ESG-ethical-sustainable plans has been pathetic relative to the number of people interested.
BlackRock Is Pushing to Offer Sustainable Investments to 401k Plans, CEO Says, by Leslie P. Norton, April 16, 2021, Barron's, USA.

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SEC will not assess merit of ESG investments: Peirce. "The agency's role is not to determine whether any particular strategy is a good one, but to ensure investors know what they are getting, according to Securities and Exchange Commission member Hester Peirce."

[COMMENTARY] This is what I'd expect from the SEC.
SEC will not assess merit of ESG investments: Peirce, by Mark Schoeff Jr., April 13, 2021, InvestmentNews, USA.

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(US) ESG funds beat out S&P 500 in 1st year of COVID-19; how 1 fund shot to the top. "In the first 12 months of the COVID-19 pandemic, many large investment funds with environmental, social and governance criteria outperformed the broader market. One fund went from being among the poorest performers to the top of the list following tweaks to its portfolio."

[COMMENTARY] This is a good review of how US ESG funds performed in 2020.
(US) ESG funds beat out S&P 500 in 1st year of COVID-19; how 1 fund shot to the top, by Esther Whieldon and Robert Clark, April 6, 2021, S&P Global, USA.

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