June 2021 Newsletter
News & Commentaries by Ron Robins
Latest Podcast: Best Infrastructure and LGBTQ Friendly Stocks, Plus… “Best Infrastructure and LGBTQ Friendly Stocks, Plus… Green Bonds, Renewable Energy and ESG ETFs. Covered entities include: Vulcan Materials, Caterpillar, AECOM, Nucor, ChargePoint Technologies, iShares Global Green Bond ETF, VanEck Vectors Green Bond ETF, Alphabet Inc., Visa Inc., The Charles Schwab Corporation, PayPal Holdings, Inc., Microsoft Corporation, Starbucks Corporation, Apple Inc., and LGBTQ100 ESG ETF.”
— By Ron Robins
Low-quality assurance of ESG reports pose stability risk: IFAC. “Only 51% of companies back up their reports on sustainability with assurance, a study of 1,400 companies by the International Federation of Accountants (IFAC) found, warning that low-quality assurance is an ’emerging investor protection and financial stability risk.'”
[COMMENTARY] I’ve had a big concern for over four decades. It’s that when ethical investing finally gets its day in the sun that there will be not only be agreed reporting standards but also a regulated independent class of specialized auditors to audit and assure the numbers and facts.
Low-quality assurance of ESG reports pose stability risk: IFAC, by Jim Tyson, June 24, 2021, CFO Dive, USA.
Is ESG harmonization and convergence finally coming? “Last week, the U.S. House of Representatives passed legislation that would require public companies to report environmental, social and governance (ESG) metrics…
The bill, simply titled the ESG Disclosure Simplification Act of 2021, comes on the heels of the U.S. Securities and Exchange Commission’s (SEC) decision to open public comments on climate change disclosures to inform its impending guidance — and gets us one more step closer to mandatory ESG disclosure.”
[COMMENTARY] Finally, the U.S. government and regulatory authorities look like they’re getting the message from the markets.
Is ESG harmonization and convergence finally coming, by Aman Singh, June 24, 2021, GreenBiz, USA.
Professionals see evolving ESG links to executive compensation. “Boards and investors may not always see eye to eye on metrics and weights.”
[COMMENTARY] This is all part of the evolution of corporate ESG. It will certainly be messy for a while.
Professionals see evolving ESG links to executive compensation, by Ben Maiden, June 24, 2021, Corporate Secretary, USA.
House (US) Passes ESG Disclosure Simplification Act of 2021. “By a razor thin vote of 215 to 214, the House of Representatives passed the ESG Disclosure Simplification Act of 2021. The Act would require public companies to disclose in any proxy or consent solicitation material for an annual meeting of the shareholders… “
[COMMENTARY] This is good news, though I believe it still has to pass the US Senate. Many think it might not make it through there. Let’s hope it will.
House (US) Passes ESG Disclosure Simplification Act of 2021, by Dodd-Frank, June 21, 2021, Lexology, USA.
The Dark Side of Solar Power. “Solar energy is a rapidly growing market, which should be good news for the environment. Unfortunately there’s a catch. The replacement rate of solar panels is faster than expected and given the current very high recycling costs, there’s a real danger that all used panels will go straight to landfill (along with equally hard-to-recycle…”
[COMMENTARY] Recycling solar panels has long been a major concern of mine regarding solar power. The firms in the business have to get behind solutions or see their business potentially ‘dwindle.’
The Dark Side of Solar Power, by Atalay Atasu, Serasu Duran, and Luk N. Van Wassenhove, June 18, 2021, Harvard Business Review, USA.
Green Bonds Were a Better Safe Haven Than Gold During the Pandemic. “Climate-friendly debt served as a better protection against large market fluctuations than gold, as well as performing better than other environmental, social, and governance investments, according to new research from Imran Yousaf of Pakistan’s Air University, Muhammed Tahir Suleman of the University of Otago in New Zealand, and Riza Demirer of Southern Illinois University Edwardsville.”
[COMMENTARY] This is not a surprising finding. Green bonds have become the new investment favourite. How many people want gold today?
Green Bonds Were a Better Safe Haven Than Gold During the Pandemic, by Jessica Hamlin, June 8, 2021, Institutional Investor, USA.
Mandatory ESG disclosures are a political inevitability. “The SEC is gathering public input about corporate climate reporting. The comment request is one of several actions the agency has taken over the past several months to elevate ESG oversight, includingestablishing a climate and ESG enforcement task force…
In a June 3 speech, Roisman said the thrust of climate disclosure seems to be on assessing the damage a company does to the environment, not the havoc climate change can wreak on a company. That led him to question the SEC’s role.”
[COMMENTARY] It seems to me that investors need to know both sides: the effects of climate change on the company and how the company contributes to climate change.
Mandatory ESG disclosures are a political inevitability, by Mark Schoeff Jr., June 9, 2021, Investment News, USA.
Banning Investment Managers Who Shun Fossil Fuels Is a Bad Idea. “Texas has joined a group of states proposing legislation that would ban private investment management companies that focus on sustainable investing, to the ire of the oil and gas industry. Attorney J. Carl Cecere argues politicizing state-pension investment strategy is bad for pensioners and violates the First Amendment.”
[COMMENTARY] I agree with the writer. Not only because I’m biased towards renewable energy, but also on the basis that asset managers need to have the freedom to invest according to their client’s wishes, and so forth.
Banning Investment Managers Who Shun Fossil Fuels Is a Bad Idea, by J. Carl Cecere, June 4, 2021, Bloomberg Law, USA.
Rating the ESG raters: Why Sustainable Investing Needs More Independent Verifiers. “With an array of data providers and indices to choose from, third party ESG verifiers have stepped into the market to help screen information available and offer some clarity. In Switzerland, one such company is Geneva-based sustainable investment advisory firm Conser. Founded by Angela de Wolff (also one of the co-founders of Sustainable Finance Geneva), the firm has developed its own proprietary methodology to capture a variety of different ESG opinions.”
[COMMENTARY] I guess this type of service had to happen. And I think it’s good. It’ll be a while to see if it takes off.
Rating the ESG raters: Why Sustainable Investing Needs More Independent Verifiers, by Kasmira Jefford,June 2, 2021, Geneva Solutions, Switzerland.
Auditors may see increased demand for ESG attestation. “During a virtual session Monday, Kristen Sullivan, CPA, CGMA, a partner with Deloitte & Touche LLP and the firm’s Americas region sustainability services leader, gave an overview of the concerns public companies, directors, and auditors have about the new regulatory focus on ESG disclosures.
To date, ESG disclosures have tended to be separate from regulatory filings. But the CAQ’s road map is meant to help guide capital market participants through the frequency and consistency of the disclosures and whether the information is comparable from company to company, Sullivan said.”
[COMMENTARY] I’ve long believed that CSR/ESG disclosures need to be audited and attested to by a regulated and licensed auditing entity. Only in this way can investors and stakeholders have confidence in the facts, data, and material being presented. Furthermore, there must be, as is now occurring, some standardization of such facts, data, and material. It should also be shown in what way it might be material to the activities and financial performance of a company.
Auditors may see increased demand for ESG attestation, by Joseph Radigan, May 28, 2021, Journal of Accountancy, USA.
The Theory at the Heart of Modern Portfolios Is Leading Investors Astray. “These activities (ESG, SRI, and impact investing) form a coherent challenge to the limitations of modern portfolio theory. MPT, the dominant investment paradigm in the world, focuses on diversification to minimize risk.”
[COMMENTARY] Yes, MPT is upended by our emphasis on ESG, sustainability, and ethics!
The Theory at the Heart of Modern Portfolios Is Leading Investors Astray, by Jon Lukomnik and James P. Hawley, May 28, 2021, Barron’s, USA.
Activate Your Money: Invest to Grow Your Wealth and Build a Better World, by Janine Firpo, Wiley 2021.
“As women, we care deeply about our families, our communities, and the world we will leave our children and grandchildren. Our money is too often an afterthought. Activate Your Money brings these worlds together. It offers a completely different way of thinking about our money, our power, and our potential.”–Marci Shimoff, #1 NY Times best selling author, Happy for No Reason and Chicken Soup for the Woman’s Soul.