The European Commission (EC) asked 650 individuals and organisations last year for their views on the concentration of providers in the ESG ratings market and on the quality of the ESG ratings’ analyses. 74% of respondents called for action. The European Securities and Markets Authority (ESMA), noting that ‘climate and environmental risks constitute a key…

“‘As about 10% of the market can be classified as sin, this would imply an additional 0.10% return loss if sin stocks are excluded. Combined with the 0.27% estimated loss due to the adverse effect on factor exposures … this brings the total loss in expected return to 0.37% per annum. Although this might seem…

“What was once a narrow purview around clean tech recently has morphed into the all-encompassing term of climate tech, and unlike the boom and bust cycle that accompanied the clean energy frenzy of the late 2000s, climate tech appears to have a sustainable presence in the minds of long-term investors.” [COMMENTARY] I thought it was…

“As companies decarbonize, align with the Sustainable Development Goals and rebuild an equitable economy post-pandemic, they must be open about their efforts. Each year, 3BL Media evaluates the largest public U.S. companies on ESG transparency and performance.” [COMMENTARY] This is always a good list to review, particularly for ethical and sustainable investors.The 100 Best Corporate…

“There’s a growing number of money managers in green finance turning to markets not usually associated with sustainability. Fund bosses in Europe’s North, where climate-friendly investing has gone mainstream, have started looking much further afield to find cheap assets they say will eventually meet their environmental, social and governance goals.” [COMMENTARY] I remember seeing research…

“Investing according to theological beliefs ‘is much easier to do now,’ a wealth adviser said. It’s also as profitable as investing without a religious screen, and no more risky.” [COMMENTARY] This is a simple overview of US faith-based investing.Faith-Based Investing Makes Up Ground in Gains and Convenience, by Paul Sullivan, May 14, 2021, The New…

“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…

“‘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…

“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…

“‘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…

“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.

“Indeed, fund managers are sensitive to disclosures only in the presence of binding commitments to environment sustainability. Sustainable funds lower their CR score by reducing exposure to fossil fuels, not by increasing exposure to renewables.” [COMMENTARY] This is a highly insightful paper that illuminates the carbon risk of conventional and sustainable US mutual funds.Keeping Promises?…

“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.

“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,…

“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.

“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…

“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…

“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…

“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…

Ethical Investing News/Commentaries