News & Commentaries by Ron Robins
Sustainable and ethical standards are in vogue, but only governance is affecting ratings, Fitch finds. “The credit rating agency, however, found that less than one per cent of financial institutions have ESG factors that have actually driven a ratings change, with governance risk being the biggest issue. Governance includes such things as executive pay, audits and efforts to weed out money laundering.”
[COMMENTARY]Two key points stand out in Fitch’s findings. Firstly, how small an impact ESG is having on credit ratings! It makes me wonder how much credit rating agencies utilize ESG criteria. Secondly, Fitch doesn’t say if the analysis was only from their company or if other ratings’ agencies were involved. For instance, it would be interesting to know what differences there are in the use of ESG criteria between agencies. Ethical investors, particularly, might find that useful.
Sustainable and ethical standards are in vogue, but only governance is affecting ratings, Fitch finds, by Chad Bray, February 26, 2019, South China Morning Post courtesy of Yahoo!, Hong Kong.
Impact Investment Continues to Grow Rapidly in Canada. “Impact assets under management (AUM) in Canada now total $14.75 billion, up from $8.15 billion reported two years prior. This represents 81% growth over a two-year period, which is nearly double the growth rate of all responsible investment (RI) AUM, which grew by 41.6% over the same period.”
[COMMENTARY]Impact investments are quickly becoming an investment class in their own right — different from socially responsible and ethical investing. Impact investing’s priority is the social, environmental good, while making a reasonable return. Whereas, traditional socially responsible-ethical investing still has the social, environmental good, but also has a greater emphasis on returns.
Impact Investment Continues to Grow Rapidly in Canada, report, February 21, 2019, RIA Canada.
Sustainable Investing Goes Mainstream: Morgan Stanley and Bloomberg Survey Finds Sustainable Investing a Business Imperative Among U.S. Asset Managers. “New survey shows that 75% of U.S. asset managers say their firms now offer sustainable investing strategies, up from 65% in 2016. Most asset managers are embracing sustainable investing as a business building approach and believe that financial returns and impact outcomes can go hand in hand.
… Respondents cited several key drivers of success in sustainable investing, including increased investment stability, high client satisfaction, product popularity and possible high financial returns. Despite the recognition of the strategy as a business imperative, almost all asset managers highlighted the need for increased expertise, better data and impact reporting to drive future success in the space.”
[COMMENTARY]The good news keeps rolling along. Nothing to add, really.
Sustainable Investing Goes Mainstream: Morgan Stanley and Bloomberg Survey Finds Sustainable Investing a Business Imperative Among U.S. Asset Managers, press release, February 21, 2019, The Morgan Stanley Institute for Sustainable Investing/Bloomberg, USA.
ESG investing does not cost more, research shows. “Pension funds performing well on environmental, social and corporate governance (ESG) factors don′t incur higher asset management costs, according to research. Research by Dutch consultant Gaston Siegelaer indicated that improvements to investors′ ESG policies did not increase costs either.”
[COMMENTARY]These were Dutch pension funds that were studied. I think most of us would agree that at the retail level ESG investing in some cases does cost more. However, the big differential that once existed is significantly reduced.
ESG investing does not cost more, research shows, by Frank van Alphen, February 19, 2019, IPE, UK.
’Increasing maturity’: PwC poll highlights growth of ESG and sustainable investing. “the consultancy giant’s fourth annual Private Equity Responsible Investment Survey published today draws on the views of 162 respondents from 35 countries and territories, including 145 private equity houses. It found almost 81 per cent of respondents are currently reporting ESG matters to their boards at least once a year, while just over a third are reporting on ESG even more frequently.”
[COMMENTARY]This reputable survey provides insight as to what is happening at the board level with regard to ESG matters. And it’s promising — despite some other recent reports of boards largely disinterested in ESG concerns.
’Increasing maturity’: PwC poll highlights growth of ESG and sustainable investing, by Michael Holder, February 19, 2019, Business Green, UK.
How socially conscious young investors are putting their money where their ideals are. “An influx of young investors are leading a charge of socially responsible and sustainable investing, experts say, funneling their money into investments and projects that serve the greater good. According to a 2018 Harvard Kennedy School study, socially responsible investing now accounts for $26 trillion.”
[COMMENTARY]The Harvard study is a terrific review of how sustainable-ESG investing has evolved and what it is today. Brandon Gomez, writing for CNBC, has also done a good job in describing and promoting SRI-sustainable investing.
How socially conscious young investors are putting their money where their ideals are, by Brandon Gomez, February 17, 2019, CNBC, USA.
Investors getting a taste for lucrative sustainable stocks, says BlackRock report. “ESG funds in emerging markets recorded a total annualised return of 5.7% from 2012 to 2018, compared to the 4.3% traditional equity index funds delivered over the same period.”
[COMMENTARY]This is new data from BlackRock. The article doesn’t specify what funds were included in the research though.
Investors getting a taste for lucrative sustainable stocks, says BlackRock report, by Londiwe Buthelez, February 11, 2019, Business Day, South Africa.
The 100 Most Sustainable U.S. Companies. “How much of a company′s journey toward sustainability is driven by the personal passions of its CEO? Based on the conversations Barron′s had recently with several corporate chieftains, quite a lot. That′s one of the insights from our second annual sustainability ranking of public companies.”
[COMMENTARY]Barron’s list is compiled by the well-known and respected SRI fund company, Calvert Research and Management. Hence, it’s to be respected.
The 100 Most Sustainable U.S. Companies, by Leslie P. Norton, February 8, 2019, Barron’s, USA.
Major funds launch toolkit to help investors measure SDG impact. “Cambridge University′s Investment Leaders Group has developed a framework that allows investors to measure the impact of their investments against the Sustainable Development Goals.”
[COMMENTARY]Companies associated with this effort include the likes of PIMCO and Zurich Insurance. This toolkit could be a gamechanger for many investors interested in sustainability. It’ll be fascinating to see how widespread its adoption becomes.
Major funds launch toolkit to help investors measure SDG impact, by Terry Slavin, February 6, 2019, Ethical Corp, UK.
Change the Conversation: Redefining How Companies Engage Investors on Sustainability. “Drawing from our interviews with Ceres investor partners, Change the Conversation highlights key trends in investors′ evolving expectations for corporate sustainability. It presents nine recommendations to guide companies toward more meaningful and effective investor engagement on ESG issues, helping them to not only meet investor expectations, but also capture competitive advantage.” Download report here
New Report Makes Case for Tobacco Divestment. “Genus Capital Management, Canada’s leader in fossil free and impact investing, today released a report on tobacco divesting, showing that divesting from tobacco stocks would not have negatively affected returns over 20 years.”
[COMMENTARY]I haven’t read the full report, but I’m wondering how dividends from tobacco companies were treated in the study. Their yields are often around 5-7% p.a. and that’s why many investors like them.
New Report Makes Case for Tobacco Divestment, press release, February 5, 2019, Genus Capital Management, Canada.
Triple A Scores Became Tougher in Latest CDP [Carbon] Rankings. “For companies vying for the highly prized CDP recognition, ’triple A’ scores became much tougher to attain in 2018. While 140 companies were named to the 2018 list, only two, Firmenich and L′Oreal, received triple A scores in performance against all three areas surveyed: climate change, water security and forests.
CDP, formerly the Carbon Disclosure Project, is widely recognized as one of the world′s leading sustainability reporting frameworks. It represents the interests of over 650 investors with assets of $87 trillion.”
[COMMENTARY]Any investor interested in how companies engage with carbon needs to see CDP’s data.
Triple A Scores Became Tougher in Latest CDP [Carbon] Rankings, by Amy Brown, January 30, 2019, TriplePundit, USA.
Investing for Good: Increasing your personal well-being while changing the world, by Mark Mobius, Carlos von Hardenberg, and Greg Konieczny. Bloomsbury Business 2019.
“But how do individuals–rather than institutional investors–invest using ESG criteria? And just how complex are the procedures? This new book, written by investment guru Mark Mobius and his expert team, is full of entertaining and informative anecdotes from the authors’ day-to-day experiences in the world of sustainable investment.”