July 2020 Newsletter
News & Commentaries by Ron Robins
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Latest Podcast:
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ESG Stock and Fund Picks for July. “ESG stock and fund picks for July include blue-chip names, alternative and renewable energy companies, yieldcos, a money market fund, and more. Top analysts from InvestorPlace, The Motley Fool, Forbes, and wallst.com, offer their recommendations. With stock market optimism near new highs, ESG and sustainable investing analysts are increasingly focused on finding tomorrow…s winners today.”
— By Ron Robins
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Featured Book
The Ethical Investor…s Handbook: How to Grow Your Money Without Wrecking the Earth, by Morten Strange, Marshall Cavendish International (Asia) Pte Ltd., 2019.
…Strange is articulate, has a great sense of understanding of the subject and a good turn of phrase, combined with the financial rigour, to tackle one of the key challenges facing investors who are not convinced by climate change … I would thoroughly recommend this book!…… Lawrence Gosling Editor-in-chief, WhatInvestment (UK).”
