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-------------------------------------------------------------
Latest Podcast:
Jim Cramer's Hydrogen Stocks. And Much More...
"Jim Cramer's hydrogen stocks: Linde and Plug Power.
Other ESG, sustainable, and infrastructure stocks
covered are Apple, Brookfield Renewable Partners, Steel
Dynamics, Edison International, Duke Energy, Algonquin
Power and Utilities, AES Corp., JinkoSolar, SolarEdge
Technologies, NextEra Energy, Bloom Energy, United
Rentals, Brookfield Infrastructure Partners, Nucor,
Halma, and Croder. Analysts from The Motley Fool and
MoneyShow."
-- By Ron
Robins
-------------------------------------------------------------
Sustainability Initiative: Bank for International
Settlemen
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 Finextra
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.
-------------------------------------------------------------
ESG Stock Resilience Is
Paving the Way for a Surge in Popularity.
"Most exchange-traded funds focused on companies with
above-average marks for environmental, social and
governance practices have outperformed this year,
according to research from Bloomberg Intelligence. So
far in 2020, 59% of U.S. ESG ETFs are doing better than
the S&P 500 Index while 60% of European ESG ETFs have
beat the MSCI Europe Index."
[COMMENTARY] More evidence of ESG
outperfromance! This will likely mean that when the
markets recover, ESG, ethical and sustainable companies,
may well outperform on the upside.
ESG Stock Resilience Is Paving the Way for a Surge in
Popularity, by Claire Ballentine, March 31, 2020,
Bloomberg, USA.
-------------------------------------------------------------
BIS: Reserve Management
and Sustainability: The case for Green Bonds?
"Central banks are playing an increasingly active
role in promoting the move towards a sustainable global
economy. One area in which they are thus involved is in
guiding attempts to mobilise funds to contribute to the
large-scale public sector investment required to achieve
the goals of the Paris Agreement.
A key tool in this context
is foreign exchange reserves, with green bonds being an
increasingly popular investment choice among reserve
managers."
[COMMENTARY] Central banks buying
green bonds! This could be a major extra push for the
growth of green bonds. It's another reason for ethical
and sustainable investors to consider them. However, my
only caution is that the debt markets in general, are
already 'priced for perfection.' Can they really only go
higher?
BIS: Reserve Management and Sustainability: The case for
Green Bonds? by Ingo Fender, Mike McMorrow, Vahe
Sahakyan and Omar Zulaica, March 30, 2020, BIS Working
Papers #849, Switzerland.
-------------------------------------------------------------
UBS Says Investors
Should Prefer Green Bonds Over Regular Debt.
"Sustainable bonds are a 'defensive opportunity'
that credit investors should favor over non-green,
investment-grade corporate notes, said UBS Global
Wealth's head of credit, Thomas Wacker."
[COMMENTARY] For similar reasons as
to why ESG equity funds are outperforming conventional
funds, UBS says favour green bonds over their
conventional counterparts.
https://www.bloomberg.com/news/articles/2020-03-30/ubs-says-investors-should-prefer-green-bonds-over-regular-debt,
by David Caleb Mutua, March 30, 2020, Bloomberg Green,
USA.
-------------------------------------------------------------
The ESG Fund Universe Is
Rapidly Expanding. "Record flows, strong
performance, and other takeaways from the 2019
Sustainable Funds U.S. Landscape Report."
[COMMENTARY] Jon Hale describes the
situation for 2019 and early 2020. With the downdraft in
the markets of the past two weeks, it remains to be seen
how ESG funds perform going forward. However, early
indications are that ESG funds are doing better than
their non-ESG brethren.
The ESG Fund Universe Is Rapidly Expanding, by Jon
Hale, March 19, 2020, Morningstar, USA.
-------------------------------------------------------------
'FTSE companies urgently
need to raise their game on CO2 reporting'.
"Alexia Perversi and Andrew Jones of Mazars say a
recent study by the auditing firm casts huge doubt on
the credibility and utility of carbon disclosures in
year-end reports."
[COMMENTARY] The researchers' main
complaint is the non-standardized way the data is
displayed as well as the data's utility to understanding
how the data might affect a company's operations.
'FTSE companies urgently need to raise their game on CO2
reporting', by Alexia Perversi, March 18, 2020,
Ethical Corporation, UK.
-------------------------------------------------------------
Point of No Returns.
"A ranking of 75 of the world's largest
asset managers' approaches to responsible investment."
[COMMENTARY] Provides an insightful
ranking. The five given an 'A' grade are RobecoSam, BNP
Paribas Asset Management, Legal & General Investment
Management, APG Asset Management, and Aviva Investors.
Point of No Returns, by ShareAction staff, March
2020, UK.
-------------------------------------------------------------
ESG Study: How
Institutional Investors Embrace Responsible Investing.
"Franklin Templeton commissioned a
comprehensive study across 21 markets, to see the extent
of how responsible investing is incorporated into
investment decisions. We highlight four themes to track
the way asset owners are adopting responsible investing
and ESG considerations over time."
[COMMENTARY] It's a really interesting
read for all investors.
ESG Study: How Institutional Investors Embrace
Responsible Investing, by Team of Franklin Templeton
Investments, March 5, 2020, Advisor Perspectives, USA.
-------------------------------------------------------------
Swiss bank report
queries better returns for ESG investments.
"ACCORDING to the latest study from Credit Suisse's
in-house think tank the jury is still out on whether ESG
and sustainable investing really outstrips traditional
investment offerings.
Published by the Credit
Suisse Research Institute, in collaboration with London
Business School and Cambridge University professors, the
2020 edition of the Credit Suisse Global Investment
Returns Yearbook features a dedicated chapter on ESG
investing."
[COMMENTARY] It's hard to argue with the
credibility of the researchers involved. It will take
other prestigious individuals and entities to argue the
case for ESG!
Swiss bank report queries better returns for ESG
investments, by Tom King, March 2, 2020, The Asset
ESG Forum, Asia.
-------------------------------------------------------------
ESG Funds Might Soon
Have to Prove to SEC They're Actually ESG.
"The Securities and Exchange Commission wants to know
whether money managers are engaging in false advertising
by saying funds are devoted to doing good whe the
reality is much murkier."
[COMMENTARY] I think the SEC is just
trying to make ESG funds look bad so as to
support carbon-intensive industries.
ESG Funds Might Soon Have to Prove to SEC They're
Actually ESG, by Benjamin Bain, March 2, 2020,
Bloomberg Green, USA.
-------------------------------------------------------------
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