September 2020 Newsletter
News & Commentaries by Ron Robins
Latest Podcast: Vegan Fund Outperforms. And More… Vegan fund outperforms (VEGN). “Since inception, VEGN has returned 27.69%… against the S&P500 Index’s 19.75% through to end August 2020, says Beyond Investing.” Other stocks and funds covered are Beyond Meat, Moderna, Genius Brands International, Nikola, Gevo Inc., Taronis Fuels, Inc., EarthRenew Inc., Tesla, Inc., Plug Power Inc., Workhorse Group, Inc., Algonquin Power. And more…”
— By Ron Robins
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 Investinghas 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.
Faithful Investing: The Power of Decisive Action and Incremental Change, by James W. Murphy, Church Pub Inc., 2020.
“Faithful Investing provides thoughtful insights and practical guidance from experts who daily navigate the multifaceted labyrinth of faith-based investing. The variety of approaches will assure congregations, organizations, and individuals at all levels of expertise and understanding that there are ways to synergize their resources and their heart-felt desires as followers of Jesus in ways that witness to the local, national, and global communities of which we are a part.” — Marcia Shetler, Executive Director/CEO Ecumenical Stewardship Center.