January 2023 Newsletter
News & Commentaries by Ron Robins
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New Podcasts:
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Latest Podcast: The World…s Most Sustainable Companies. Plus… Includes these articles: …Corporate Knights… 100 most sustainable companies…; …How a one-man scrap metal recycler became the world…s most sustainable corporation,… by Mike Scott; …5 Renewable Energy Companies To Support In 2023,… by Lei Nguyen; and …4 Solar Stocks Seeing Explosive Growth,… by Sejuti Banerjea. Plus, links to more.
— By Ron Robins
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On virtue, wars, and ESG values. “In a recent opinion piece in theFinancial Times, Toby Nangle argues that asset managers, in particular those who pride themselves on upholding environmental, social, and governance (ESG) values, should stop bidding for work with authoritarian states that have a poor human rights track record.
The list of such states is not only long, but also encompasses well over half of the wealth under sovereign funds management worldwide. No doubt such a decision would have considerable consequences on asset managers and countries alike.”
[COMMENTARY] To me, this is similar to the question of whether to invest only in companies with good ethical values. That could be a worthwhile strategy as companies with the best ethics generally do better than those with poor ethics over the long term.
On virtue, wars, and ESG values, by Sergio Scandizzo, January 27, 2023, London School of Economics, UK.
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4 ways to store renewable energy that don’t involve batteries. “Giant bricks are not what most people think of when they hear the words ‘energy storage’, but they are a key element of a gravity-based system that could help the world manage an increasing dependence on renewable electricity generation.”
[COMMENTARY] I believe that the energy storage problem for wind and solar is in the process of being solved. Here are four examples leading in that direction.
4 ways to store renewable energy that don’t involve batteries, by Ian Shine, January 26, 2023, World Economic Forum, Switzerland.
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Integrated ESG Reporting: Three Reasons Why Integrated Thinking, Risk Management, and Reporting Adds Value to ESG. “Reporting ESG information is now omnipresent among companies worldwide, reaching all-time highs in 2021 with96% of the S&P 500and81% of the Russell 1000publishing a sustainability report. However, this information’s reliability, meaningfulness, and use are suspect.”
[COMMENTARY] This is a valuable article for company management and investors to read and understand. Integrated reporting, particularly, has to be the way of the future for all public companies.
Integrated ESG Reporting: Three Reasons Why Integrated Thinking, Risk Management, and Reporting Adds Value to ESG, by John Wheeler, January 26, 2023, Auditboard, USA.
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Everything You Need To Know About the New Nature-Related Risk Disclosures. “The United Nations Environment Program (UNEP) and S&P Global announced the Nature Risk Profile,a methodologyto analyze companies’ impacts and dependencies on nature, at the World Economic Forum annual meeting in Davos, Switzerland, on Tuesday. It comes on the heels ofthe agreementmade in December at the U.N. Biodiversity Conference (COP15) held in Montreal.”
[COMMENTARY] Hooray, hooray! I’ve been waiting decades for this to come about. It’s about time that society, consumers, companies, and governments began understanding the costs of environmental use and degradation. Beginning by applying the understanding to companies will bring awareness of such costs to everyone.
Everything You Need To Know About the New Nature-Related Risk Disclosures, by Andrew Kaminsky, January 20, 2023, Triple Pundit, USA.
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The 100 most sustainable companies of 2023 by Corporate Knights. “Meet the latest Global 100 companies driving the transition to a low-carbon, circular economy.”
[COMMENTARY] This is my favorite annual listing of the top global sustainable companies!
The 100 most sustainable companies of 2023 by Corporate Knights, by Corporate Knights, January 2023, Canada.
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Time to place ESG ‘underperformance’ in context. “But looking at a three-year time horizon is different. Seventy-four percent of ESG products outperformed the benchmark, with a median return of 5.9%. While environmentally focused products account for 30% of the global ESG universe — they accounted for 40% of the products that outperformed — again driven by clean energy/energy transition.”
[COMMENTARY] Recently ESG critics have enjoyed pointing to ESG investment underperformance. This article rightly points out that its long-term performance that ultimately matters, and that’s where ESG-favored investments have generally flourished.
Time to place ESG ‘underperformance’ in context, by Brendan Cooper, January 17, 2023, ESGClarity, UK.
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Does Good Governance Mean Better Returns? “We take a look at the returns of companies that score well for governance risk.”
[COMMENTARY] This is an interesting analysis of governance in relation to market returns, in the London market. Generally, good governance is the key to corporate success. It’s illogical it could be otherwise.
Does Good Governance Mean Better Returns? By Sunniva Kolostyak, January 16, 2023, Morningstar, UK.
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Paul Tudor Jones, hedge fund billionaire, wants to do away with ‘ESG’. “Paul Tudor Jones, billionaire hedge fund manager and the co-founder of nonprofit Just Capital, says workers should be the focus of ESG discussions, not the environment.”
[COMMENTARY] His main point is that ESG is mischaracterized by many critics. I completely agree with him. When I first became aware of the term, I believed it to be all about a company’s operational and financial performance. The environmental aspect, though important, was secondary, and that’s how ESG should be presented to ESG naysayers.
Paul Tudor Jones, hedge fund billionaire, wants to do away with ‘ESG‘, by Ian Thomas, January 11, 2023, CNBC, USA.
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(New research paper) Shifting the Focus to Measurement: A Review of Socially Responsible Investing and Sustainability Indicators. “We (1) outline the history of the concept, (2) concisely define SRI and related terms, (3) propose a trinomial sustainability indicator framework (the Cambridge SRI indicator framework) for conceptualisation, and (4) use this framework to provide a structured overview of sustainability indicators for SRIs.”
[COMMENTARY] In this paper, the researchers attempt to define socially responsible and sustainable investing by investigating a wide range of studies on the subject. Furthermore, they try to ascertain what are the best measurement indicators. The authors argue that without such definitions research into performance, etc., is non-comparable.
Shifting the Focus to Measurement: A Review of Socially Responsible Investing and Sustainability Indicators, by Markus Koenigsmarck, Universitat Darmstadt, Germany, and Martin Geissdoerfer, University of Cambridge, Cambridge, UK, Sustainability, 2023, vol. 15.
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Need more clarity on sustainable investing (even with DOL’s final ESG rule)?“While the latest DOL ruling on ESG implementation in retirement plans is an enormous step forward, more guidance is needed. However, there are several approaches and options that are essential for plan sponsors to keep in mind.”
[COMMENTARY] A good overview of what US plan sponsors need to understand and decide upon concerning the adoption of sustainable investing in their plans.
Need more clarity on sustainable investing (even with DOL’s final ESG rule)? By Lazaro Tiant, January 3, 2023, Benefits Pro, USA.
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The end of ESG. “There is not really such a thing as ESG investing, only ESG analysis.”
[COMMENTARY] This is a sound argument about the nature of ESG by a London Business School professor.
The end of ESG, by Alex Edmans, January 3, 2023, ETFstream.com, UK.
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5 Threats to Sustainable Investing in 2023. “Sustainable investing is in the mainstream now but navigating ESG will remain a challenge in the New Year.”
[COMMENTARY] This is a good review of the situation surrounding ESG investing.
5 Threats to Sustainable Investing in 2023. by Sara Silano, December 30, 2022, Morningstar, UK.
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ESG Is Not About Ethical Standards And Ethical Values. “It’s (ESG) simply about companies and investors managing material risk factors to ensure long-term value creation.”
[COMMENTARY] Harvard Business School and Oxford University professor Robert Eccles elaborates on why the criticism of ESG is misplaced.
ESG Is Not About Ethical Standards And Ethical Values, by Robert G. Eccles, December 29, 2022, Forbes, USA.
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Featured Book
Global Handbook of Impact Investing Solving Global Problems Via Smarter Capital Markets Towards A More Sustainable Society, by Elsa De Morais Sarmento and R. Paul Herman, Wiley 2020.
“If we truly want a more sustainable, more inclusive world, we must change the way we invest our money. This book helps move us toward a future in which every investment decision considers impact alongside profit. Money can do so much more than just make more money, and the problems of our world are far too urgent for our capital to underperform.” — Amit Bouri, MBA, MPA, Co-founder and CEO, Global Impact Investing Network.
