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Latest Podcast:
The Top Climate Change ETFs and Stocks.
"'Top Climate Change ETFs and Stocks. Reviews the
iShares MSCI Global Impact ETF, KraneShares MSCI China
Environment Index ETF, iShares Global Clean Energy ETF,
Vanguard FTSE Social Index Fund, iShares MSCI USA ESG
Select ETF, Parnassus Core Equity Investor, JinkoSolar
Holding Co., Ltd., SolarEdge Technologies, Inc.,
Ameresco, Ormat Technologies, and VanEck Vectors Green
Bond ETF."
-- By Ron
Robins
-------------------------------------------------------------
Sustainability Initiative: Bank for International
Settlemen
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
Op-Ed: Europe's New ESG
Rules Create an Opportunity for US Investors.
"The
regulations will have a tremendous
impact on asset managers and firms operating outside the
bloc. The EU might be the first to move on sustainable
finance regulations, but its objectives are a harbinger
of things to come around the globe."
[COMMENTARY]
This partly answers the issue raised concerning
greenwashing by funds claiming ESG and sustainability
credentials. Regulators -- and with President Biden's
enthusiasm for ESG -- greenwashing and fund integrity
concerning their legitimate ESG claims will come under
greater scrutiny.
Op-Ed: Europe's New ESG Rules Create an Opportunity for
US Investors, by Hari Bhambra, March 31, 2021, Chief
Investment Officer, USA.
-------------------------------------------------------------
Why all funds becoming
ESG may not be a good thing. "The trouble
is that as things stand, it is easy for managers to pay
lip service to a sustainable investment approach in
their marketing material and fund name, while in reality
adopting a pretty light touch in that regard - a
practice known as greenwashing."
[COMMENTARY]
The warnings about greenwashing are valid. However, it
appears that governments and investment industry
regulators are increasingly taking steps to ward off the
problem.
Why all funds becoming ESG may not be a good thing,
by Haydon Waldek, March 30, 2021, Interactive Investor,
UK.
-------------------------------------------------------------
Is harmonization of
reporting standards possible or even desirable?
"If harmonization means consensus on a single
standard, then the answer is most likely no. Why? Let's
consider four major components of the context in which
this ecosystem operates."
[COMMENTARY]
I agree with the writer. For instance, how can you
quantify, as the writer says, "culture; values;
processes; strategies; product responsibility; quality
of management, among others." However, metrics that
can be quantifiable and uniformerly used across and
within industries-- should be. Thus scores by ESG rating
agencies will still differ even with many uniform
metrics.
Is harmonization of reporting standards possible or even
desirable? By
Antonio Vives, March 24, GreenBiz, USA.
-------------------------------------------------------------
Sustainable agriculture
is the next way ESG investors can fight climate change.
"7 ways for ESG investors to profit from sustainable
agriculture."
[COMMENTARY]
There are huge possibilities for sustainable practices
and ESG among agricultural companies. This area is only
now beginning to be addressed in the public markets.
Sustainable agriculture is the next way ESG investors
can fight climate change, by Debbie Carlson, March
24, 2021, MarketWatch, USA.
-------------------------------------------------------------
Financial world
greenwashing the public with deadly distraction in
sustainable investing practices. "The
financial services industry is duping the American
public with its pro-environment, sustainable investing
practices. This multitrillion dollar arena of socially
conscious investing is being presented as something it's
not. In essence, Wall Street is greenwashing the
economic system and, in the process, creating a deadly
distraction. I should know; I was at the heart of it.
As the former chief
investment officer of Sustainable Investing at
BlackRock, the largest asset manager in the world with
$8.7 trillion in assets, I led the charge to incorporate
environmental, social and governance (ESG) into our
global investments."
[COMMENTARY]
This is quite an indictment. However, there's more
detail in the article which expands on the fact that ESG
itself is needed!
Financial world greenwashing the public with deadly
distraction in sustainable investing practices, by
Tariq Fancy, March 16, 2021, USA Today, USA.
-------------------------------------------------------------
CFA Institute Launches
Global Certificate in ESG Investing. "The
CFA Institute has announced that it will market a
certificate in environmental, social and governance
(ESG) investing, created by the CFA Society of the
United Kingdom, in financial hubs across the globe."
[COMMENTARY]
They've been a long time in getting around to this! It's
a great step forward though for the financial
profession.
CFA Institute Launches Global Certificate in ESG
Investing, by Amanda Umpierrez, March 17, 2021,
planadvisor, USA.
-------------------------------------------------------------
Ratings Agencies Punish
Companies That Try To Do Good. "In their
study, Lioui and his co-authors compared the data of
several ratings agencies: Asset4 (Refinitiv), MSCI KLD,
MSCI IVA, Bloomberg, Sustainalytics (Morningstar) and
RobecoSam. Fitch, Moody' MCO +0.2% and S&P also provide
thousands of ESG data scores...
How do the ratings agencies
decide how good or bad a company is at ESG? Mostly their
assessment is based on a company's own reporting with
some other metrics thrown in from trade journals, news
articles or other sources."
[COMMENTARY]
This situation continues to describe the need for
standardized ESG reporting formats AND formal
independent auditing of those reports by qualified
professionals akin to chartered accountants or CPAs.
Ratings Agencies Punish Companies That Try To Do Good,
by Ollie Williams, March 7, 2021, Forbes, USA.
-------------------------------------------------------------
Bank of England given
new mandate to buy 'green' bonds. "The Bank
of England will change its approach to buying corporate
bonds after the government said environmental and
climate goals should now be explicitly considered part
of monetary policy. In Wednesday's Budget, Rishi Sunak,
the chancellor, said the BoE should support the
government's efforts to make the UK economy greener and
achieve zero greenhouse gas emissions by 2050, and
updated its mandate."
[COMMENTARY]
Will US Treasury Secretary Janet Yellen issue the same
order to the US Fed? It's possible. Though the Fed says
it's 'independent.' Nonetheless, in recent statements,
the chair of the US Federal Reserve Jerome Powell has
said that central banks need to take a much more active
role in assisting green financing! And what about the
ECB?
Should such things happen, it could give a massive
impetus to green bond issuance and the green bond market
generally!
Bank of England given new mandate to buy 'green' bonds,
by Camilla Hodgson and Valentina Romei in London and
Nathalie Thomas in Edinburgh, March 3, 2021, Financial Times, UK.
-------------------------------------------------------------
ESG investment favours
tax-avoiding tech companies. "The huge rise
in environmental, social and governance-based investing
is funnelling money into companies that pay less tax and
provide fewer jobs than many counterparts with lower ESG
ratings, analysis shows."
[COMMENTARY]
ironically, a high percentage of most ESG portfolios
consist of companies who pay the least in taxes and are
the most expert in tax avoidance. Most ESG investors are
likely ignorant of this situation as well. Will it
change their portfolio holdings if they knew the true
tax situation of the companies they invest in? Probably
not for most of them.
ESG investment favours tax-avoiding tech companies,
by Steve Johnson, February 22, 2021, Financial Times,
UK.
-------------------------------------------------------------
Global Survey Finds
Businesses Increasing ESG Commitments, Spending.
"ESG has become a hot topic in recent
years, but despite increased investment, fewer than half
of employees believe their own companies' ESG
performance is effective. The majority of respondents
(81%) said their company has
a formal ESG program in place. But
there is
not a high level of confidence that
companies are effectively performing against all of
their stated ESG metrics."
[COMMENTARY]
It seems that companies still have a difficult time
meeting their ESG goals. Does this mean that there's
still a great deal of 'greenwashing' in corporate ESG
reports?
Global Survey Finds Businesses Increasing ESG
Commitments, Spending, February 23, 2021, JDSupra,
USA.
-------------------------------------------------------------
Introducing the 2021
Carbon Clean200: Investing in a Clean Energy Future.
"Corporate Knights and As You Sow have
released the annual Clean200 list of publicly traded
companies that are leading the way with solutions for
the transition to a clean-energy future."
[COMMENTARY]
Always an eagerly sought-after list by a very competent
team.
Introducing the 2021 Carbon Clean200: Investing in a
Clean Energy Future, by Andy Behar and Toby A.A.
Heaps, February 18, 2021, Corporate Knights and As You
Sow, Canada.
-------------------------------------------------------------
Meta-study underlines
ties between ESG and corporate success.
"Researchers from the NYU Stern Center for Sustainable
Business and Rockefeller Asset Management looked at
1,141 peer-reviewed papers and 27 meta-reviews --
themselves based on roughly 1,400 studies -- published
between 2015 and 2020...
The meta-study finds a
positive link between ESG and financial performance in
58 percent of the corporate studies, with 13 percent
showing a neutral impact, 21 percent mixed results and
only 8 percent showing a negative relationship. Among
investment studies, 59 percent find similar or better
performance relative to conventional investment
approaches while only 14 percent show negative results."
[COMMENTARY]
More clear research on why companies adopt ESG and why ESG
is gradually gaining dominance in the investment
industry.
Meta-study underlines ties between ESG and corporate
success, by Ben Maiden, February 19, 2021, Corporate
Secretary, USA.
-------------------------------------------------------------
S&P Global makes over
9,000 ESG Scores publicly available to help increase
transparency of corporate sustainability performance.
"S&P Global (NYSE:
SPGI) launched a
new public webpage highlighting S&P
Global's full suite of environment, social and
governance (ESG) solutions, and for the very first time,
access to S&P Global ESG Scores on 9,200 companies. S&P
Global ESG Scores are the key factor for selecting
companies for the
Dow Jones Sustainability Indices (DJSI)."
[COMMENTARY]
The range of research options for individual ethical and
sustainable investors continues to expand. This is a
welcome addition to those options.
S&P Global makes over 9,000 ESG Scores publicly
available to help increase transparency of corporate
sustainability performance, press release, February
16, 2021, S&P Global.
-------------------------------------------------------------
A Little-Known Green
Fund Soared 114% in 2020. We Caught Up With Its Manager.
"Thanks to its investments in disruptive
technologies, the little-known Shelton Green Alpha Fund
(ticker: NEXTX) soared 114% in 2020, winning a coveted
five-star Morningstar rating."
[COMMENTARY]
Of course the real test is how the fund performs
long-term! Now, was the fund into a few lucky segments
and companies? Time will tell.
A Little-Known Green Fund Soared 114% in 2020. We Caught
Up With Its Manager, by Leslie P. Norton, February
14, 2021, Barron's, USA.
-------------------------------------------------------------
S&P Global annual report
finds record ESG disclosure. "The
yearbook, published since 2004, covers
a record 7,032 companies, compared with 4,700 in 2020,
across 40 countries and 61 industries, and is now
publicly available."
[COMMENTARY]
These numbers confirm the rapid adoption of ESG and
sustainability reporting by the world's largest
corporations. I've waited over forty years for these
days!
S&P Global annual report finds record ESG disclosure,
by Hazel Bradford, Pensions&Investments, USA.
-------------------------------------------------------------
$1 trillion in oil and
gas pipelines worldwide could become stranded assets,
new report warns. "The pipeline industry
faces growing questions about whether it’s wise to build
a massive network of pipelines that could become
obsolete well within their projected 50-year-plus
lifespans."
[COMMENTARY]
I suspect most of those connected with the
development of new pipelines are concerned for the next
5-15 years. Beyond that is too far into the future to
consider. They want their incomes and returns 'now'.
$1 trillion in oil and gas pipelines worldwide could
become stranded assets, new report warns, by
Sharon Kelly, February 8, 2021, Nation of Change, USA.
-------------------------------------------------------------
What Happens When a
Company Gets an A From One ESG Rater and an F From
Another? "With the explosion of ESG data
and ratings, there's little agreement on what makes a
company good or bad."
[COMMENTARY]
I agree that ESG reporting metrics and information
should be standardized. However, what particular metrics
and information are favored by raters should be up to
them. Hence, there should still be lots of room for
independent opinions concerning ESG 'grading.'
What Happens When a Company Gets an A From One ESG Rater
and an F From Another? By Judy Segal, February 2,
2021, Institutional Investor, USA.
-------------------------------------------------------------
Advisers expect half
recommended assets will be ESG within five years.
"Financial advisers expect demand to rise sharply for
ESG assets according to new research from the lang cat.
They estimate that the proportion of ESG investments
recommended in five years will be 48%, compared to just
19% today.
The findings form part of Crossing
the ESG Event Horizon--an adviser's guide, a new
report from the lang cat, supported by Schroders, which
seeks to understand the issues around considering
environmental, social and governance factors alongside
financial factors in the investment decision-making
process."
[COMMENTARY]
I don't think there's anything to add to this story.
It's obvious to all in the investment industry that this
is the way it's going to work out.
Advisers expect half recommended assets will be ESG
within five years, by Peter Wilson, January 28,
2021, IFA Magazine, UK.
-------------------------------------------------------------
2021 Global 100 ranking
by Corporate Knights. "The 17th annual
cohort of the world's most sustainable corporations
continue to soar above their peers."
[COMMENTARY]
This is one of the best lists of its kind for ethical
and sustainable investors.
2021 Global 100 ranking by Corporate Knights,
January 25, 2021, Canada.
-------------------------------------------------------------
IIRC revises integrated
reporting framework. "The International
Integrated Reporting Council has published its
revised Integrated Reporting Framework,
incorporating some major changes since the IR Framework
was first published in 2013."
[COMMENTARY]
Some form of standardization of corporate ESG and
sustainability reporting continues to gain momentum.
We'll soon see even the US SEC on board!
IIRC revises integrated reporting framework, by
Michael Cohn, January 21, 2021, Accounting Today, USA.
-------------------------------------------------------------
Why ESG Funds Fail to
Scale. "Many investment professionals might
read these and believe that launching a new ESG
investment firm or ESG offering will be an automatic
success. Our analysis of the data shows that this is far
from the truth: Most of these efforts fail."
[COMMENTARY]
This analysis suggests that starting a fund small, not
quickly gaining significant assets, and an intensely
competitive environment, are the main reasons why ESG
funds remain small.
Why ESG Funds Fail to Scale, by Gabriel Karageorgiou
and George Serafeim, January 11, 20121, Institutional
Investor, USA.
-------------------------------------------------------------
The ESG investment
industry is broken. "Yet over time, I've
come to realize that the ESG investment industry is by
and large little more than a marketing mechanism, and
will not lead to productive change...
In 2015-16, for instance, I
noticed that one of the largest positions held by
Generation Investment Management - co-founded by former
U.S. vice-president Al Gore and Goldman Sachs' Asset
Management head David Blood - was in Facebook. This is a
company whose business is to collect every possible byte
of their users' data and resell the information to the
highest bidder, regardless of the privacy violations
that crop up along the way, which is a systematic
(though legal?) violation of their users' privacy."
[COMMENTARY]
I can see the point being made here. Nonetheless, a turn
has been made in the financial markets that does promise
change for the better concerning ethics and the
sustainability of our world.
The ESG investment industry is broken, by James
Rastehm January 1, 2021, The Globe & Mail, Canada.
-------------------------------------------------------------
During Biden
Administration, SEC will require Climate Change Risk and
ESG Disclosure. "Public companies will be
required to disclose climate risks and greenhouse gas
emissions under President-elect Biden's administration.
The Securities and Exchange Commission (SEC) will
institute rulemaking and guidance on the federal
monitoring of environmental, social and governance (ESG)
issues."
[COMMENTARY]
What a 180-degree turn this will be for the SEC and many
public companies! See that DOL ruling restricting
pensions investing according to ESG principles also
eliminated soon!
During Biden Administration, SEC will require Climate
Change Risk and ESG Disclosure, by Benjamin D.
Stone, December 29, 2020, The National Law Review, USA.
-------------------------------------------------------------
Doing Good: Where
Sustainable Investing Gets It Wrong. "But
does a higher ESG score for an investment product
necessarily translate into doing more good?"
[COMMENTARY]
Though not specifically addressed in this article --
though I concur with its thesis -- is that the services
or products of a company are often left out of ESG
sustainable performance ratings. So a few tobacco
companies can still score highly on ESG according to
some raters!
Doing Good: Where Sustainable Investing Gets It Wrong,
by Lucie Teplá, December 16, 2020, INSEAD, Singapore.
-------------------------------------------------------------
ESG Standards
Convergence Could Happen in Next 12 to 24 Months,
Accounting Body Chief Says. "Reporting
standards in the world of environmental, social and
governance investing, long a thicket of competing
frameworks, could converge within 12 to 24 months, said
Janine Guillot, head of the Sustainability Accounting
Standards Board."
[COMMENTARY]
I believe such news of convergence in standards would be
almost universally welcomed.
ESG Standards Convergence Could Happen in Next 12 to 24
Months, Accounting Body Chief Says, by Leslie P.
Norton, December 14, 2020, Barron's, USA.
-------------------------------------------------------------
Dramatic increase in
sustainability reporting due to generational attitudes,
ESG investing. "Eighty percent of companies
now report on sustainability, compared with only 12
percent in 1993."
[COMMENTARY]
This read provides a good appreciation of reasons for
the growth and acceptance of sustainability reporting.
Dramatic increase in sustainability reporting due to
generational attitudes, ESG investing, by Kristen
Beckman, December 9, 2020, Benefits Pro, USA.
-------------------------------------------------------------
5 Drivers Behind the
Sustainable Investing Shift. "What is
driving the shift to sustainable investing? This visual
dashboard from Raconteur explains five key drivers, from
generational shifts to investors' preferred strategies."
[COMMENTARY]
This is a useful read for advisors and brokers to
understand and grow their client base.
5 Drivers Behind the Sustainable Investing Shift, by
Iman Ghosh, December 9, 2020, Visual Capitalist, Canada.
-------------------------------------------------------------
The Future of ESG Is ...
Accounting? "That revolution is being led
by the IFRS Foundation, the body that oversees the work
of the International Accounting Standards Board (IASB)
in setting financial reporting requirements for most
companies in the world, across more than 140
jurisdictions. (In the U.S., these requirements are set
by the Financial Accounting Standards Board, or FASB).
This past September, the
IFRS Foundation proposed the creation of a parallel
Sustainability Standards Board (SSB)."
[COMMENTARY]
Now that ESG is mainstream, it's about time that the
accountancy organizations got involved in creating
universal accounting standards for companies' ESG
reporting.
The Future of ESG Is ... Accounting? By Richard
Barker, University of Oxford,
December 3, 2020, Harvard Business Review, USA.
-------------------------------------------------------------
Asset managers complain
over CFA's proposed ESG standards. "CFA
Institute' plan to create a global ESG standard has
triggered concern among some US and European asset
managers already juggling overlapping regulations and
rising costs in a crowded space."
[COMMENTARY]
These concerns are valid. It seems to me that perhaps
the UN's PRI should get involved with all the
standards-setting organizations to coordinate the
standards. A UN body just might be the best vehicle for
doing that.
Asset managers complain over CFA's proposed ESG
standards, by Caroline Byrne, December 2, 2020,
Corporate Secretary, USA.
Canadian ESG Assets
Surge to $3.2 Trillion. "According to the
latest available data, RI assets grew from $2.1 trillion
at the end of 2017 to $3.2 trillion as at December 31st,
2019. This represents a 48% increase in RI assets under
management (AUM) over two years. These figures reflect
assets that fall into seven different RI strategies or
categories including ESG integration, shareholder
engagement, negative screening, norms-based screening,
positive screening, thematic ESG investing, and impact
investing."
[COMMENTARY]
In Canada, as in the US and around the world, ESG assets
are surging! ESG is mainstream now.
Canadian ESG Assets Surge to $3.2 Trillion, press
release, November 25, 2020, Responsible Investment
Association (RIA), Canada.
-------------------------------------------------------------
Brave new world of ESG
bonds can sometimes leave investors cold.
"A new type of bond that penalizes issuers for failing
to meet social and environmental goals is raising
concern among some investors that buying the debt may
not be all that ethical."
[COMMENTARY]
These are early days for green bonds. No doubt there'll
be a lot of marketplace learning to be had. However,
their future, in general, is assured.
Brave new world of ESG bonds can sometimes leave
investors cold, by Ayai Tomisawa, November 26, 2020,
The Japan Times, Japan,
-------------------------------------------------------------
Fidelity, Vanguard Rank
Lowest in Morningstar's New ESG Rating.
"Some of the country's largest asset managers, including
Vanguard, Fidelity and American Century, received low
marks in Morningstar's first assessment of asset
managers' commitment to incorporating ESG factors in
their investment processes and strategies.
Others, like BlackRock,
which has stressed sustainability as its 'new standard
for investing,' and Pimco, received the second-to-lowest
rating of 'Basic.'"
[COMMENTARY]
This analysis demonstrates that the big conventional
firms may say a lot about their ESG prowess but still
lag the real ESG asset managers!
Fidelity, Vanguard Rank Lowest in Morningstar's New ESG
Rating, by Bernice Napach, November 19, 2020,
ThinkAdvisor, USA.
-------------------------------------------------------------
Companies that pay fair
wages weather downturn better. "Just
Capital's researchers found that the top 20% of firms
enjoyed a 6.5% higher average annual return versus their
industry peers. Companies whose miserly pay packets
landed them in the bottom quintile were found to earn 3%
less than their industry peers."
[COMMENTARY]
The data looks convincing. Questions I have and not sure
they're answered are: 1) Were the firms paying the
higher wages in an oligopoly/monopoly type situation
where barriers to entry to their markets were almost
impossibly high, and 2) Which comes first? Do high
profits allow for higher wages or higher wages create
greater productivity and profits?
Companies that pay fair wages weather downturn better,
by Rick Spence, November 18, 2020, Corporate Knights,
Canada.
-------------------------------------------------------------
The US SIF Foundation's
Biennial "Trends Report" Finds That Sustainable
Investing Assets Reach $17.1 Trillion. "The
total US-domiciled assets under management using
sustainable investing strategies grew from $12.0
trillion at the start of 2018 to $17.1 trillion at the
start of 2020, an increase of 42 percent. This is 33
percent - or 1 in 3 dollars - of the total US assets
under professional management."
[COMMENTARY]
The value of sustainable investing assets in the US has
reached levels unimaginable just a few years ago. It's
difficult to believe that they will grow yet more in the
years ahead. But they will!
The US SIF Foundation's Biennial "Trends Report" Finds
That Sustainable Investing Assets Reach $17.1 Trillion,
press release, November 16, 2020, US SIF, USA.
-------------------------------------------------------------
Why ESG Investors Are
Happy to Settle for Lower Returns.
"However, they do outperform the rest of the market when
there are unexpected shifts in customers' tastes for
green products and investors' tastes for green holdings,
the authors added."
[COMMENTARY]
I'm unsure with the conclusion that ESG investors
settle for lower returns. That might've been the case --
until fairly recently. I suspect that many new ESG
investors are seeing the outperformance of ESG stocks and
are buying them for that reason only.
Why ESG Investors Are Happy to Settle for Lower Returns,
by Wharton Business School,
November 9, 2020, University of Pennsylvania,
USA.
-------------------------------------------------------------
A Paris Exit Creates
Climate Liability for U.S. Businesses. "If
the U.S. stays out of the Paris agreement, there will be
consequences for American businesses with a global
footprint, and even for some without... The lack of a
plan to substantially (or entirely) eliminate net carbon
emissions creates an unfunded liability for companies...
[and] access to global capital, which might be choked
off if investors go beyond merely encouraging companies
to stick to environmental commitments and start
demanding it."
[COMMENTARY]
I suspect the above issues were never considered by
the Trump administration. Yet, they could be severe and
negatively affect US corporate profits.
A Paris Exit Creates Climate Liability for U.S.
Businesses, by Nathaniel Bullard, November 5, 2020,
Bloomberg, USA.
-------------------------------------------------------------
The World's Courtrooms
Could Unleash the Next Wave of Green Investing.
"The legal risk for pension funds that fail to
account for climate change in portfolio investments is
about to become a little clearer."
[COMMENTARY]
In light of the US DOL's ruling (see below) a successful
similar case in the US would be a great challenge to
that ruling!
The World's Courtrooms Could Unleash the Next Wave of
Green Investing, Bloomberg, November 1, 2020, USA.
-------------------------------------------------------------
DOL's Final ESG Rule
Appears Slightly Softer Than Proposal. "The
final version of the regulation emphasizes the
importance of using only 'pecuniary' factors in the
assessment of investment options within tax-qualified
retirement plans, rather than expressly limiting the use
of environmental, social and governance themed
investments."
[COMMENTARY]
It's unfortunate for US retirement account investors
that the current US administration is so centered on
19th century thinking concerning energy. Even with the
slight weakening of the language the regulation is still
a significant impediment for many asset managers to deal
with. Will there be a new administration and a changed
ruling?
DOL's Final ESG Rule Appears Slightly Softer Than
Proposal, John Manganaro, October 30, 2020,
Planadvisor, USA.
-------------------------------------------------------------
Does selling 'stranded
assets' lower global carbon levels? "The
likely outcome is that less climate-conscious firms will
buy these carbon-intensive assets at cheap prices,
motivated by the ability to secure above-average
returns. So while offloading assets reduces an
individual company's carbon footprint and potentially
enables it to reach net-zero by 2050, it is likely that
this will not provide a net benefit to global
emissions."
[COMMENTARY]
The article also says that the acquirer of the assets
might have higher costs of capital and other factors
that in the end make the acquired asset much less
valuable. It'll be fascinating to see how this plays
out. Now, what does this mean for valuing companies with
significant potential stranded assets?
Does selling 'stranded assets' lower global carbon
levels? by Stephanie Baxter, October 30, 2020,
Petroleum Economist, UK.
-------------------------------------------------------------
How gold can be a major
player for socially responsible investing.
"It is both possible and practical to own gold that is
responsibly sourced: science, technology, and public and
regulatory focus are improving the industry and
standards of sourcing and production are recognised as
paramount when buying any form of gold asset in seeking
to ensure adherence to socially and environmentally
responsible values."
[COMMENTARY]
Investing in gold is an absolute 'no' for many ethical
and sustainable investors. However, this article might
give them something to think about...
How gold can be a major player for socially responsible
investing, by Rumi Mahmood, October 28, 2020,
Goldhub.
-------------------------------------------------------------
Sustainability
Initiative: Bank for International Settlements.
"Worldwide, central banks and regulators have slowly
implemented new policies and initiatives to reduce their
exposure to climate risk. Leading the way is the Bank
for International Settlements (BIS), which, in 2017,
took up the challenge of introducing a corporate bond
investment pool that screens investments according to
environmental, social and governance (ESG) principles."
[COMMENTARY]
If the BIS is fully behind ESG investing, how far behind
can the whole investment world be?
Sustainability Initiative: Bank for International
Settlements, by Rachael King, October 28, 2020,
Central Banking, UK.
-------------------------------------------------------------
It's time we added a
letter to ESG. Here's why. "While the
recognition of all things ESG is finally happening,
there is no time to waste to add a 'T' for technology --
making ESGT -- to include the vast and growing array of
technology and digital issues, risks and opportunities."
[COMMENTARY]
The case is compelling when you see the list of reasons
for this in the article. I guess 'governance' could
cover the 'T'. But that doesn't cover the scope
of the issues mentioned.
It's time we added a letter to ESG. Here's why,
Andrea Bonime-Blanc, October 14, 2020, World Economic
Forum, Switzerland.
-------------------------------------------------------------
ESG Investing Will Not
Grow Successfully Without Global Data Standards And
Regulations, Says OECD. "Last week, the
OECD released its 2020 business and finance outlook
report, Sustainable and Resilient Finance. The reports
delivers a consequential and timely conclusion: ESG
scoring and reporting has the potential to unlock a
significant amount of information on the management and
resilience of companies, but will require agreed global
data standards and regulations."
[COMMENTARY]
I agree with the OECD that global ESG data standards
would be good. However, even if standards aren't reached
the case for ESG has been made.
ESG Investing Will Not Grow Successfully Without Global
Data Standards And Regulations, Says OECD, by
Lawrence Wintermeyer, October 8, 2020, Forbes, USA.
-------------------------------------------------------------
ESG Investing Looks Like
Just Another Stock Bubble. "In recent
years, ESG-related investments have consistently
outperformed their counterparts. That, however, could be
an accident -- many ESG funds invest heavily in tech
companies, and tech most likely is rallying for reasons
that have nothing to do with ESG. Many ESG funds exclude
fossil fuel investments, but fossil fuel investments
could also be doing poorly for reasons that have nothing
to do with ESG. Look closely, and it appears that ESG is
just another old-fashioned stock market bubble."
[COMMENTARY]
The writer makes a few valid points--though
overemphasized in my view. Yes, tech is doing well --
partly because of the lock-downs. And fossil fuels doing
badly as a result of them. However, one can't escape the
fact that many industries are simply preferred by the
50%-80% of investors who want to invest ethically and
sustainably!
ESG Investing Looks Like Just Another Stock Bubble,
by Jared Dillian, October 5, 2020, Financial Advisor,
USA.
-------------------------------------------------------------
Report: Asset managers
must explain how sustainability measures benefit
stakeholders. "Asset managers need to do
more to explain how sustainability measures actually
benefit stakeholders, according to the Thinking Ahead
Institute. In its new report, Sustainability:
Understanding impact and value creation, the institute
warns that investment organisations need to be wary of
the gap between their positive intentions for a more
sustainable economy and their ability to deliver it."
[COMMENTARY]
This report is a reminder of how important it is for
companies and the investment community to understand
what is material and relevant for a company's
sustainability and profitability.
Report: Asset managers must explain how sustainability
measures benefit stakeholders, by Stephen Little,
October 6, 2020, Investment Week, UK.
-------------------------------------------------------------
Americans believe
sustainable funds can offer higher returns.
"The Schroders survey found only 4% of respondents
wouldn't invest because they fear worse performance."
[COMMENTARY]
What a turnaround! When Americans were asked in all
previous years a similar question the answers would've
been completely the reverse! It was the widespread
belief among investors that ethical-sustainable--ESG
investing would underperform. This change of
understanding among investors is terrific news!
Americans believe sustainable funds can offer higher
returns, by staff, September 28, 2020, Investment
News, USA.
-------------------------------------------------------------
Canada's Responsible
Investment Week October 26-30. Theme: Diversity and
Inclusion in the Investment Industry. "D&I
Week is a week of education and insights for investment
professionals to advance diversity and inclusion in
their organizations and their portfolios. Join us for 10
live, interactive webcasts with industry leaders and
virtual networking."
[COMMENTARY]
Canada has a week every year devoted to the promotion of
ethical, sustainable, and responsible investing. This
year's theme is logical given what is happening in
society. In particular,
on a proportional basis, Canada is home to
probably the world's most diverse population. I
encourage everyone in Canada's investment industry to
participate if at all possible.
Canada's Responsible
Investment Week October 26-30. Responsible
Investment Association, Canada.
-------------------------------------------------------------
The Performance of
Stocks with the Worst ESG Scores.
"Investors underestimate the negative consequences of
high environmental, social and governance (ESG) risks,
and underreact to prior negative ESG events. High ESG
risks destroy shareholder value."
[COMMENTARY]
The research described in this article is worth
reviewing and understanding for all investors.
The Performance of Stocks with the Worst ESG Scores,
by Larry Swedroe, September 21, 2020, Advisor
Perspectives, USA.
-------------------------------------------------------------
BlackRock Reaffirms
Commitment to ESG Investment Standards. "At
the annual Morningstar Investment Conference in Chicago,
BlackRock CEO Larry Fink said that by the end of this
year, 100% of its portfolios will integrate ESG metrics,
up from 70% at the end of April,
Financial Planning reports."
[COMMENTARY]
As the world's largest asset manager with $7.4 trillion
in assets, BlackRock is setting the example for all fund
managers.
BlackRock Reaffirms Commitment to ESG Investment
Standards, by Max Chen, September 18, 2020, ETF
Trends, USA.
-------------------------------------------------------------
European ESG Disclosure
Requirements for Asset Managers. "A new
European regime on sustainability-related disclosures in
the financial sector will come into force from March
2021, after first being announced in 2018 during the
European Commission's Action Plan on Sustainable
Finance."
[COMMENTARY]
As covered previously, these new requirements will make
it easier for investors to understand individual fund
strategies and goals.
European ESG Disclosure Requirements for Asset Managers,
by Kirsten Lapham, John Verwey, Amar Unadkat, and
Michael Singh, September 18, 2020, The National Law
Review, USA.
-------------------------------------------------------------
Morgan Stanley
Sustainable Reality Report Reveals Sustainable Funds
Outperformed Traditional Funds and Reduced Investment
Risk Despite Global Pandemic. "In
January-June 2020: U.S.-based sustainable equity funds
outperformed their traditional peers by a median of
3.9%. U.S.-based sustainable taxable bond funds
outperformed their traditional peers by a median of
2.3%."
[COMMENTARY]
This is the first such data I've seen on green bond
funds for the first half of 2020. It's good to know that
they too outperformed their benchmarks.
Morgan Stanley Sustainable Reality Report Reveals
Sustainable Funds Outperformed Traditional Funds and
Reduced Investment Risk Despite Global Pandemic,
press release,
Morgan Stanley Institute for Sustainable Investing,
September 17, 2020, USA.
-------------------------------------------------------------
New Journal On Impact
And ESG Investing. "At a pivotal time of
increasing client interest and adoption of social
investing that is still confronting ongoing
misconceptions and push back from some corners of
government oversight and advisor skepticism, the
Institute is happy to announce a new, much needed,
professional research and thought leadership based
resource covering the full social landscape of ESG,
impact, and sustainable investing.
The first issue of
The Journal
of Impact and ESG Investing has just been
launched this month by
Portfolio Management Research, which is a
leading provider of independent financial research
within the investment sector."
[COMMENTARY]
The launch of this journal is terrific news for ethical
and sustainable investors.
New Journal On Impact And ESG Investing, by Bill
Hortz, September 17, 2020, Financial Advisor Magazine,
USA.
-------------------------------------------------------------
Sustainability Leaders
to Work on Common Corporate Reporting Standard.
"A group of five global sustainability leaders that
set environmental, social, and governance (ESG)
standards will work together to develop a common
framework for corporate reporting, the firms
said Friday.
The lack of consistent
sustainability disclosures has made assessing companies
confusing and difficult, according to a
joint report released Friday from the
environmental nonprofit CDP (formerly the Carbon
Disclosure Project), the Climate Disclosure Standards
Board (CDSB), the Global Reporting Initiative (GRI), the
International Integrated Reporting Council (IIRC), and
the Sustainability Accounting Standards Board (SASB).
Together, the organizations set the majority of ESG
reporting in the industry."
[COMMENTARY]
This is great news for ethical and sustainable
investors. Such common standards have been sought for
decades! I hope it also includes the independent
auditing of what company's report.
Sustainability Leaders to Work on Common Corporate
Reporting Standard, by Sarah Min, September 14,
2020, Chief Investment Officer, USA.
-------------------------------------------------------------
BIS Sees No Proof Green
Bonds Improved Firms' Carbon Footprints.
"Companies that issue green debt aren't necessarily
reducing their carbon emissions, underscoring the need
for firms to have an environmental rating, according to
a report from the Bank for International Settlements."
[COMMENTARY]
The reasoning behind green bonds is that the proceeds
are used for green projects. Thus, by definition, a
company's green-sustainable activities should be
improved. It's fascinating that the BIS research found
the carbon intensity of companies issuing green bonds
not to be much changed.
BIS Sees No Proof Green Bonds Improved Firms' Carbon
Footprints, by Jill Ward, September 14, 2020,
Bloomberg Green, USA.
-------------------------------------------------------------
Where ESG Ratings Fail:
The Case for New Metrics. "One agency's A+
is another's 'laggard' -- and neither links to financial
performance. Hybrid metrics will change everything,
argue Harvard Business School's Mark Kramer and leaders
in the shared-value movement."
[COMMENTARY]
It'll be interesting to see if this concept proves
itself. It's an appealing idea. I suspect the
mathematics involved could be considerable.
Where ESG Ratings Fail: The Case for New Metrics, by
Mark Kramer, Nina Jais, Erin Sullivan, Carina Wendel,
Kerry Rodriguez, Carlo Papa, Carlo Napoli, and Filippo
Forti, September 7, 2020, Institutional Investor, USA.
-------------------------------------------------------------
ESG Bond Funds Fear
Becoming Too Political. "The development of
'sustainable' government bond funds may be hitting a
road bump as fund managers fear being overly critical of
western government policies, notably those of the United
States."
[COMMENTARY]
This reminds me of the US DOL's missive about trying to
restrict the application of ESG in pension funds. It's
so backward-looking!
ESG Bond Funds Fear Becoming Too Political, by Max
Chen, September 3, 2020, ETF Trends, USA.
-------------------------------------------------------------
New Challenges to the
Merits of ESG Investing. "The data used to
measure a company's compliance with environmental,
social and governance (ESG) guidelines is inconsistent
and leads to misleading results. Moreover, when teams at
the same company manage comparable ESG and non-ESG
funds, the former more often underperforms the latter."
[COMMENTARY]
Do all analysts come to the same conclusions when
reviewing a company's financial statements in light of
the company's prospects? No. I think the diversity of
opinion is what makes financial markets. However, I do
believe that audited common metrics need to be used in
ESG measurements across companies and industries.
New Challenges to the Merits of ESG Investing, Larry
Swedroe, August 31, 2020, Advisor Perspectives, USA.
-------------------------------------------------------------
US Stocks With Higher
ESG Scores Have Lower Returns. "EU stocks
with higher ESG scores significant enhanced returns. "We
observe that, for EU firms, there is a significant
negative relationship between the market value and the
excess return, suggesting that smaller EU companies
generate higher returns on average," added the
study.
In contrast, for US and
other Asian firms there was a significant negative
relationship between the ESG scores and excess returns.
The authors said this could arguably be a result of less
focus on sustainability in the US, leading to lower
demand by investors than in the EU."
[COMMENTARY]
This is fascinating, though unsurprising research. I
would like to see such studies peer-reviewed and
published in reputable journals.
US Stocks With Higher ESG Scores Have Lower Returns,
by Shanny Basar, August 27, 2020, Traders Magazine, USA.
-------------------------------------------------------------
Academics Attack ESG for
Failure to Outperform During Crisis.
"'These results suggest that innovation-related assets
rather that social capital investments offer the greater
immunity to sudden, unanticipated market declines,' the
authors wrote."
(COMMENTARY]
I believe I understand the study's main contention.
However, ESG funds generally are full of
'innovation-related assets.' Such assets frequently have
high ESG ratings too! That's why the ESG funds
outperformed.
Academics Attack ESG for Failure to Outperform During
Crisis, by Amy Whyte, August 20, 2020, Institutional
Investor, USA.
-------------------------------------------------------------
Vast majority of
comments oppose ESG proposal - analysis.
"More than 95% of the firms, groups and individuals who
submitted comment letters or signed petitions in
response to the Department of Labor's proposal on
environmental, social and governance investments in
ERISA plans opposed the initiative, an
analysis published Thursday from
several investor organizations and financial industry
firms found."
[COMMENTARY]
I suspect that despite the overwhelming opposition to
this rule the Department of Labor will not back down.
Trump's base is likely highly supportive of it.
Vast majority of comments oppose ESG proposal -
analysis, by Brian Croce, August 20, 2020, Pensions
& Investments, USA.
-------------------------------------------------------------
Investors continue to
align with SDGs. "Five years on since the
SDGs were launched, an increasing number of investors
are putting capital to work to earn returns alongside
helping solve global scourges like the climate crisis,
poverty and inequality."
[COMMENTARY]
Investments that align with the UN's SDGs that make good
returns are the ideal of ethical and sustainable
investing!
Investors continue to align with SDGs, by Sarah
Rundell, August 18, 2020, Top 1000 Funds, USA.
-------------------------------------------------------------
Barclays Launches
Systematic Study of ESG-Focused US Equity Funds.
"Barclays' Quantitative Portfolio Strategy
('QPS') team finds that ESG-labelled funds do not
necessarily provide more ESG exposure than conventional
funds."
[COMMENTARY]
This is interesting research. Of course, everything is
in the details and I'd love to get some expert ESG
opinion on Barclays' findings.
Barclays Launches Systematic Study of ESG-Focussed US
Equity Funds, August 13, 2020, BusinessWire on
Yahoo! Finance, USA.
-------------------------------------------------------------
Why ESG ratings need an
overhaul. "Under certain ESG standards, the
ratings of fossil-fuel giant Exxon Mobil and electric
car maker Tesla could well be the same."
[COMMENTARY]
Such an anomaly as cited above has to do with ESG
company raters not rating the ESG characteristics of a
company's products or services and issues with
cross-industry scoring. ESG raters typically rate only
the ESG performance of a company's 'operations'.
Why ESG ratings need an overhaul, by Jim McClelland,
August 9, 2020, Raconteur, UK.
-------------------------------------------------------------
Ethical CSR focus
triggers hostile investor activism, study finds.
"This is because some activist investors
view CSR as a sign that a company is wasting money
rather than focusing on shareholder returns, according
to research conducted by Pennsylvania State University's
Mark DesJardine, Erasmus University's Emilio Marti and
HEC Paris business school's Rodolphe Durand."
[COMMENTARY]
Note this study included years as far back as 2000.
Attitudes have changed recently and I wonder if the
propensity for investor activism of this type is still
occurring at the same rate?
Ethical CSR focus triggers hostile investor activism,
study finds, by Laurence Fletcher, August 3, 2020,
Financial Times, UK.
-------------------------------------------------------------
Racial Injustice Will
Have Greater Weight in ESG Scores, S&P Global Says.
"About 217 businesses in the S&P 500 have
publicly supported the Black Lives Matter movement to
show solidarity and protect their reputations. Question:
How sincere are they?"
[COMMENTARY]
Rather than only saying that black lives matter,
companies need to consider their internal functions and
activities to determine how they can address internally
such issues. Afterall, ESG scores are going to
increasingly include corporate diversity issues!
Racial Injustice Will Have Greater Weight in ESG Scores,
S&P Global Says, by Sarah Min, July 24, 2020, Chief
Investment Officer, USA.
-------------------------------------------------------------
Morningstar: DOL's ESG
Proposal 'Out Of Step' With Best Advisor Practices.
"If the DOL passes the rule as proposed 'it
would lead to worse outcomes for plan participants as
plan sponsors shy away from assessing ESG risks in
selecting investments. Indeed, since most participants
use qualified default investment options--and ESG
considerations would be barred in these options--most
participants would not get the benefits that ESG risk
analysis can deliver,' Brock Johnson, president of
Morningstar Retirement Services, said."
[COMMENTARY]
I believe the DOL's proposed rule is about hindering
ESG. It's saying US employee default pension plans
should not exclude fossil fuel companies as most ESG
plans would. So, it's simply an attempt to boost fund
holdings of fossil fuel companies!
Morningstar: DOL's ESG Proposal 'Out Of Step' With Best
Advisor Practices, by Tracy Longo, July 24, 2020,
Financial Advisor, USA.
-------------------------------------------------------------
US SIF Foundation
Launches Sustainable Investing Course for Individual
Investors. "The course, which takes
approximately 30 minutes to complete, provides a brief
overview of the development of sustainable investing and
summarizes the investment options and strategies
available. It also links to additional resources and
offers next steps for interested investors."
[COMMENTARY]
This is a great idea. It could also be a good
adjunct to my
DIY Ethical-Sustainable Investing pays Tutorial!
US SIF Foundation Launches Sustainable Investing Course
for Individual Investors, press release, July 23,
2020, US SIF, USA.
-------------------------------------------------------------
Canada's CPP Investments
[C$409.6 billion pension fund] Sustainable Investing
Policy: Update Reinforces ESG Role in Long-Term Value
Creation. "Integrating ESG factors,
including climate change, into investment analysis and
asset management activities supports the organization's
clear legislative objective: to maximize long-term
investment returns without undue risk of loss."
[COMMENTARY]
I've included this item to contrast this highly
successful -- and one of the world's largest -- pension
funds, with the recent US Department of Labor's ruling
endeavoring to limit the use of ESG in US pension funds!
CPP Investments Sustainable Investing Policy: Update
Reinforces ESG Role in Long-Term Value Creation,
press release, July 23, 2020,
Canada Pension Plan Investment Board, Canada.
-------------------------------------------------------------
BlackRock Heats Up
Climate Change Pressure On Boards.
"BlackRock announced that it voted against management at
53 companies worldwide (primarily in the energy sector)
for 'lack of progress' on climate concerns during the
2020 proxy season, and directed another 191 companies to
take faster action."
[COMMENTARY]
Blackrock, at last, appears to be serious about
getting companies on board with climate change! It's a
great example for all other fund managers.
BlackRock Heats Up Climate Change Pressure On Boards,
by Michael Peregrine, July 19, 2020, Forbes, USA.
-------------------------------------------------------------
ESG Investing Is About
Long-Term Risk Management. "Sustainable
investing isn't just about values, it's about managing
risks that affect all investors."
[COMMENTARY]
Some interesting data about ESG ratings and returns in
this article. Important for all ethical and sustainable
investors to understand.
ESG Investing Is About Long-Term Risk Management, by
Alex Bryan, July 14, 2020, Morningstar, USA.
-------------------------------------------------------------
Most ESG Investing Makes
A Charade Of Fighting Climate Change. "Thus
far, ESG funds have merely divested capital from the
fossil fuel industry. They have put hardly any capital
into new cleantech companies that could help with the
energy transition. Energy efficiency technologies,
hydrogen power, carbon capture and nuclear fusion remain
severely underfunded."
[COMMENTARY]
The writer makes one particularly good point about ESG
funds. That is, only moving around funds between highly
rated ESG companies just doesn't cut it. Could some ESG
funds create venture capital arms?
Most ESG Investing Makes A Charade Of Fighting Climate
Change, by Wal van Lierop, July 14, 2020, Forbes,
USA.
-------------------------------------------------------------
GRI and SASB are
collaborating. Is that good news for companies?
"For years, corporate reporters -- those inside
companies responsible for creating sustainability
reports and reporting environmental, social and
governance data to various other organizations -- have
been frustrated by what many refer to as an alphabet
soup of standards and frameworks: CDP, GRI, IIRC, PRI,
SASB, TCFD, UNGC and more.
And while they grumbled at
how those various organizations' requests weren't
harmonized, they dutifully complied with their requests
and mandates. Finally, help may be on the way."
[COMMENTARY]
It's great to see these groups collaborating. Should
they succeed, it'll be a real boost to ethical and
sustainable investors everywhere in understanding and
comparing corporate CSR/ESG reporting.
GRI and SASB are collaborating. Is that good news for
companies? Bu Joel Makower, July 13, 2020, GreenBiz,
USA.
-------------------------------------------------------------
ESG Scoring Is Failing:
Time For Improvement. "While companies are
developing more comprehensive criteria, the standards
are far from consistent. The
reasons for the inconsistencies are
numerous, but of greatest concern is the bias of ratings
and the lack of public disclosure about the criteria and
standards used in making those ratings."
[COMMENTARY]
I find that many company ESG ratings' firms do provide
considerable information concerning how they score the
companies they rate. I think it's the individual
companies -- and not the ratings' firms -- that need
numerical consistency in their reporting. I see the
ratings' firms more like equity analysts -- who
vary (often greatly) in their analytical methods and
conclusions.
ESG Scoring Is Failing: Time For Improvement, by
George Strobel, July 2, 2020, Forbes, USA.
-------------------------------------------------------------
Corporate Knights 2020
Best 50 Issue. Now out. Always a great source
for ethical and sustainable investing ideas. Cost
Cdn$4.99.
2020 Best 50 Issue, Summer 2020, Co9rporate Knights,
Canada.
-------------------------------------------------------------
How To Read The Proposed New ERISA Rule And What
It Gets Wrong On Sustainable Investing.
"Secretary of Labor Eugene Scalia explained the
rationale for the new rule: 'Private employer-sponsored
retirement plans are not vehicles for furthering social
goals or policy objectives that are not in the financial
interest of the plan. Rather, ERISA plans should be
managed with unwavering focus on a single, very
important social goal: providing for the retirement
security of American workers.'"
[COMMENTARY]
One can sense the US administration's frustration with
the growing importance of ESG by fund managers. How
about the fact that ESG funds are outperforming their
conventional counterparts? Isn't that evidence of
providing the best opportunity of providing for the
retirement security of American workers.?
How To Read The Proposed New ERISA Rule And What It Gets
Wrong On Sustainable Investing, by Bhakti
Mirchandani, June 25, 2020, Forbes, USA.
-------------------------------------------------------------
Regulatory changes see ESG go mainstream.
"A raft of regulatory changes introduced in recent
years are placing environmental social and governance
(ESG) funds at the centre of the advice process,
industry experts have claimed...Ryan Medlock, senior
investment development and technical manager at Royal
London, said: 'There have been a raft of new
regulations, mostly coming from EU level, and they leave
the US and Australia playing catch up.'"
[COMMENTARY]
Despite what's happening in Europe, until there's a
change in the US administration I see little chance of
any new regulatory changes favouring ESG investing
coming anytime soon.
Regulatory changes see ESG go mainstream, by David
Thorpe, June 24, 2020,
FT Advisor, UK.
-------------------------------------------------------------
Canada's Greenest Employers. "This
special designation recognizes the employers that lead
the nation in creating a culture of environmental
awareness in their organizations. These employers have
developed exceptional sustainability initiatives -- and
are attracting people to their organizations because of
their environmental leadership."
[COMMENTARY]
Green employers often correspond to best ESG performers
too. So ethical and sustainable investors might want to
review who's on this list!
Canada's Greenest Employers, June 2020, Canada.
-------------------------------------------------------------
100 Best Corporate Citizens of 2020.
"Now more than ever, corporate leadership on
environmental, social and governance (ESG) issues is
imperative. And so is transparency. 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]
One of the best of the annual ESG corporate rankings!
100 Best
Corporate Citizens of 2020, June 22, 2020, 3BL
Media, USA.
-------------------------------------------------------------
Top investors publish list of companies that
have failed to disclose climate data. "Last
Friday, the UN and the UK
launched the high profile Race to Zero campaign
with the news that around 1,000 corporates around the
world have pledged to deliver net zero emissions by 2050
at the latest.
Today, investor-backed climate disclosure group CDP
takes on the flip-side of corporate engagement with the
climate crisis with the publication of
a list of just over 1,000 companies
that have declined to provide relevant information on
their environmental impacts to investors."
[COMMENTARY]
This is an important read for all ethical and
sustainable investors as it might influence them in
their investment selections.
Top investors publish list of companies that have failed
to disclose climate data, by James S Murray, June 9,
2020, UK.
-------------------------------------------------------------
Has responsible investment lost its soul?
"When investors have to justify decisions
based on financial materiality, is it truly
responsible?"
[COMMENTARY]
This is a fascinating question. Do a company's ESG
activities that are financially material to it reflect
your values? Would you buy a stock based on financial
materiality at the cost of ignoring your values?
Has responsible investment lost its soul? By Rob
Lake, June 10, 2020, UK.
-------------------------------------------------------------
Where to Find Low-Cost ESG Funds.
"Investing in sustainable funds doesn't have to cost
more than traditional funds, thanks to a raft of newer
funds with lower costs."
[COMMENTARY]
There are many great charts in this article including
one showing the over/under annual costs in various fund
categories of ESG funds compared to their conventional
counterparts.
Where to Find Low-Cost ESG Funds, by Katherine
Lynch, June 6, 2020, Morningstar, USA.
-------------------------------------------------------------
From tyranny to salvation: the credibility of
common metrics for ESG reporting.
"Professor Brendan O'Dwyer and Professor Chris Humphrey
from the Accounting and Finance division at Alliance
Manchester Business School critique the growing calls
for standardised ESG metrics in company reporting."
[COMMENTARY]
Standardization of ESG metrics is important so that
companies can be better compared on them. This article
is a useful read for everyone in the investment
industry.
From tyranny to salvation: the credibility of common
metrics for ESG reporting, by Brendan O'Dwyer and
Chris Humphrey, June 1, 2020, Accountancy Age, UK.
-------------------------------------------------------------
What To Make Of The SEC's Warnings And
Recommendations For ESG Investing. "May has
been a busy month for environmental, social, and
governance (ESG) ratings and disclosure at the US asset
management industry's top regulator, the Securities and
Exchange Commission (SEC) between Chairman Jay Clayton's
warning yesterday on ESG ratings and a recommendation
earlier this month for ESG disclosures. This is due in
part to the growth in sustainable investing."
[COMMENTARY]
I thought the Trump administration was about
de-regulation? Is the SEC (whose head is appointed with
Trump's approval) about to impose significant regulation
of ESG funds and investments?
What To Make Of The SEC's Warnings And Recommendations
For ESG Investing, by Bhakti Mirchandani, May 29,
2020, Forbes, USA.
-------------------------------------------------------------
China Crisis Puts Spotlight on Human Rights Risk
for ESG Investors. "'The E and the G (risk)
might not be changing so much, but the S may be changing
with the Hong Kong demonstrations, and the way China has
suppressed them, and the silencing of people during the
Covid-19 crisis,' says Felix Boudreault, co-founder of
Sustainable Market Strategies, which provides ESG
investing advice."
[COMMENTARY]
It's important that this risk is coming to the fore now.
Before this, I was always concerned about the quality of
Chinese accounting/audited statements and the quality
and reliability of their CSR/ESG reporting!
China Crisis Puts Spotlight on Human Rights Risk for ESG
Investors, by Leslie P. Norton, May 29, 2020,
Barron's, USA.
-------------------------------------------------------------
Man vs. machine: A tale of two sustainability
ratings systems. "Two companies,
Morningstar and Truvalue Labs, represent two distinctly
different ways to assess companies on ESG data."
[COMMENTARY]
I say there's a need for both and even more variety of
opinions. What makes a person a buyer of a stock and the
other a seller? More often than not, it's one's
assessment of future returns. Hence, diversity of
opinion is what stock markets -- and thus ratings -- are all about.
Man vs. machine: A tale of two sustainability ratings
systems, by Mark Tulay, May 25, 2020, GreenBiz, USA.
-------------------------------------------------------------
Just How Good An Investment Is Renewable Energy?
New Study Reveals All. "Renewable
energy investments are delivering massively better
returns than fossil fuels in the U.S., the U.K. and
Europe, but despite this the total volume of investment
is still nowhere near that required to mitigate climate
change.
Those are some of the findings of new research
released today by Imperial College London and the
International Energy Agency, which analyzed stock market
data to determine the rate of return on energy
investments over a five- and 10-year period."
[COMMENTARY]
As the prices of renewable energy continue to fall, many
renewable energy producers could continue to outperform
their fossil fuel competitors.
Just How Good An Investment Is Renewable Energy? New
Study Reveals All, by David Vetter, May 28, 2020,
Forbes, USA.
-------------------------------------------------------------
It's time for our financial statements to reflect the
vital value of nature. "Most companies are
in the dark when it comes to accounting for their
impacts and dependencies on the environment, and
investors struggle to compare what little disclosure
there is in a meaningful way."
[COMMENTARY]
In due course, all companies will have to account for
their use and depletion of natural capital in their
financial statements. How can the costs of natural
capital be agreeably designated if there aren't markets
to determine them?
It's time for our financial statements to reflect the
vital value of nature, May 22, 2020, Corporate
Knights. Canada.
-------------------------------------------------------------
S&P Launches ESG Scores Based on 20 Years of Corporate
Sustainability Data.
"S&P Global has announced the launch of its S&P Global
environmental, social, and governance (ESG) Scores with
coverage of more than 7,300 companies, representing 95%
of global market capitalization."
[COMMENTARY]
The competition in ESG ratings continues to heat up --
thus mirroring the global interest in ESG!
S&P Launches ESG Scores Based on 20 Years of Corporate
Sustainability Data, by Emily Holbrook, May 18,
2020, Environmental Leader, USA.
-------------------------------------------------------------
'Generic
and hugely mismatched': why ESG data remains
insufficient.
"[Peregrine Communications] research, which is
entitled 'Making a Difference, Marketing a Difference',
found a 67% global increase in ESG-related content from
asset managers across top national media in the last 12
months. However, 34% of topics disproportionately focus
on generic topics."
[COMMENTARY]
Company reports need to get to the specifics that are
material to their company when providing investor ESG
information! Too many companies think they can take the
easy route by talking in generalities, which
incidentally, usually adds nothing to their stock
values.
'Generic and hugely mismatched': why ESG data remains
insufficient, by Victoire Barbin Perron, May 12,
2020, Citywire Selector, UK.
-------------------------------------------------------------
Revealed: the top ESG
funds and managers from around the globe.
"Citywire research discovered that ESG mirrors of
existing funds
outperformed their peers during the worst of the
March market downturn and the momentum for
sustainability-minded funds remains strong. Citywire
Selector looked more closely at the strategies of
outperforming funds
considered sustainable by Morningstar last month,
with many offering a tech leaning or an emphasis on
specific sub-sectors of the market."
[COMMENTARY] This is a good review
that most ethical and sustainable investors will want to
read.
Revealed: the top ESG funds and managers from around the
globe, by Citywire, May 12, 2020, UK.
-------------------------------------------------------------
T. Rowe Price Report
Says ESG Disclosure Issues was #1 Topic Among Worldwide
Companies in 2019. "The company said that
the rising risks associated with climate change will
impact virtually its entire universe of portfolio
holdings to varying degrees. Because of this, climate
change alongside other ESG factors is being increasingly
factored into analysts' evaluation of company
fundamentals."
[COMMENTARY] Many analysts also
believe that the COVID-19 pandemic is making companies
even more aware of the climate and environmental issues.
T. Rowe Price Report Says ESG Disclosure Issues was #1
Topic Among Worldwide Companies in 2019, by Emily
Holbrook, May 11, 2020, Environmental Leader, USA.
-------------------------------------------------------------
Few links between ESG
criteria and executive pay -- report. "Few
FTSE All World companies link executive pay to ESG
criteria, according to a report from Sustainalytics. The
report, 'The
State of Pay: Executive Remuneration and ESG Metrics,'
is aimed at helping global equity investors assess how
ESG criteria are factored into executive compensation,
as a topic for corporate engagement."
[COMMENTARY] In an era where the
issue of executive compensation is coming to the fore,
this is a timely report!
Few links between ESG criteria and executive pay --
report, by Hazel Bradford, April 30, 2020,
Pensions&Investments, USA.
-------------------------------------------------------------
SEC Rule Changes Will
Hobble ESG Investors. "The proposed SEC
rule changes would raise proposal resubmission
thresholds from 3%, 6%, and 10% for those voted on once,
twice, or three or more times respectively to 5%, 15%,
and 25%...
back-testing by the Sustainable
Investments Institute contends that under the new rules,
30% of the 614 proposals that went to vote between 2010
and 2019 would not have been eligible for resubmission."
[COMMENTARY] Clearly, this is another
way that the SEC-Trump administration, wants to damp down
rising shareholder advocacy on sustainability and ESG
issues.
SEC Rule Changes Will Hobble ESG Investors, by Mark
Tulay, April 24, 2020, Barron's, USA.
-------------------------------------------------------------
Commentary: Active beats
passive in promoting sustainable development.
"Genuinely active investment managers, with high
active share and more concentrated portfolios, should be
better placed to assess these gray areas and therefore
make more considered and conscious judgments."
[COMMENTARY] This analyst makes a
case for active management for ESG funds.
Commentary: Active beats passive in promoting
sustainable development, by Lorna Logan, April 23,
2020, Pensions&Investments, UK.
-------------------------------------------------------------
Green 50: Top business
moves that helped the planet. "There is a
lot to reflect on from the last 50 years. Amidst the
COVID-19 pandemic, it's worth remembering we have a
pretty good track record of fixing planetary-scale
problems when we set our minds to it."
[COMMENTARY] Corporate Knights have
provided a wonderful offset to our present fears by
compiling this list. It serves to remind us of the
positive developments that businesses can make to
society. Well done Corporate Knights!
Green 50: Top business moves that helped the planet,
by Adria Vasil Laura Väyrynen & Toby Heaps, April 20,
2020, Corporate Knights, Canada.
-------------------------------------------------------------
How Are "Green Bonds"
Coping With COVID-19 Turmoil? "The current
volatile environment does not seem to be impacting the
trend towards sustainable finance -- allocations to green
bonds are not being affected at all... NN IP expects the
sovereign green bond segment to also benefit from the
unprecedented fiscal and monetary policy response."
[COMMENTARY] Enormous amounts of
bonds will be issued by governments coping with the
COVID-19 crises. And green bonds will likely comprise a
major segment of that issuance!
How Are "Green Bonds" Coping With COVID-19 Turmoil?
By editorial staff, April 15, 2020, Wealth Briefing, UK.
-------------------------------------------------------------
Future Returns: Covid-19
Bonds Emerge as a Financing Tool. "'There's
been a flurry of activity in the number of social bond
issues in response to the pandemic,' says Kevin Ranney,
director of sustainable financial solutions at
Sustainalytics, an ESG rating and analytics firm. 'I
expect that we're going to see a surge, based on what
our team is observing and hearing in conversations with
underwriters and prospective issuers. In general, the
market is really looking for innovation in this area.'"
[COMMENTARY] COVID-19 is giving a
tremendous boost to the green bond market and it's
likely to greatly expand interest in them.
Future Returns: Covid-19 Bonds Emerge as a Financing
Tool, by Karen Hube, April 14, 2020, PENTA, USA.
-------------------------------------------------------------
Don't Be Fooled by Most
ESG Rankings. Focus on Materiality Instead.
"The Wall Street Journal recently ran an article
about how big technology stocks dominate ESG funds. Tech
companies are not usually associated with the big ESG
issues like climate change, renewable energy, or
diversity. So, are investors being fooled?"
[COMMENTARY] The writer makes a good
case for materiality. This article is well worth
reading.
Don't Be Fooled by Most ESG Rankings. Focus on
Materiality Instead, by Emily Steinbarth, Advisor
Perspectives, April 8, 2020, USA.
-------------------------------------------------------------
LSE sustainable business
head: ESG is the highest priority for large investors.
"David Harris, group head of sustainable
business of the London Stock Exchange, spoke to Fintra
TV about how he works to integrate sustainable finance
across the capabilities of the group..."
[COMMENTARY] It's good to hear in
these uncertain times that stock exchanges like the
London Stock Exchange believe so confidently that ESG
has the 'highest priority for large investors.'
LSE sustainable business head: ESG is the highest
priority for large investors, by Finextra TV, April
6, 2020, UK.
---------------------------------------------------------------
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