October 2022 Newsletter
News & Commentaries by Ron Robins
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Latest Podcasts:
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Latest Podcast: Top Geothermal and Medical Stocks includes these articles: “6 Best Geothermal Stocks To Buy”; “12 Best Ethical Stocks To Buy Now”; “The biggest carbon losers”; …Amid Fixed Income Calamity, Green Bonds Look Interesting”; “5 green companies to invest in and why they will multiply your investment by 20x”; plus, UK articles and more.
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IBD’s 100 Best ESG Companies For 2022. “IBD presents its fourth annual Best ESG Companies list. Public companies that made our 2022 list combine high Dow Jones sustainability scores with superior IBD technical and fundamental stock ratings. They are standouts for ESG investing.”
[COMMENTARY]In most lists of this nature you can almost always guess the top names. However, that’s not the case with this IBD list! You might find in it some new suggestions of companies that you might want to review.
IBD’s 100 Best ESG Companies For 2022, by Kathleen Dohler, October 24, 2022, Investor’s Business Daily, USA.
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The Humankind 100 list. “The Humankind 100 companies are ranked based on Humankind Value, a proprietary metric that provides an estimate of the overall dollar amount a company creates for investors, consumers, employees, and society at large, and are therefore among the most ethical companies in the United States, according to our research.”
[COMMENTARY]Though Humankind purports a unique methodology, they arrive at pretty much the same companies as most other ‘best ESG’ lists. Nonetheless, they have an interesting concept that will appeal to many ethical and sustainable investors.
The Humankind 100 list, by Humankind, October 2022.
The Importance of Corporate Political Responsibility. “Engaging on political policy requires courage when it goes against industry dogma.”
[COMMENTARY]The article promotes the concept of corporate political responsibility (CPR). A broader look at how companies should interface with the political environment. This is of interest to ethical and sustainable investors.
The Importance of Corporate Political Responsibility, by Andrew Winston, Elizabeth Doty, and Thomas Lyon, October 24, 2022, MIT Sloan Management Review, USA.
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How Much Do Investors Care About Social Responsibility? “Together these findings suggest that there is no clear consensus among investors that corporations should, or should not, promote social causes at the expense of their financial gains. More than anything, the split in investors’ social preferences that we observe is a reflection of a political divide between individuals who support relatively progressive causes and those who support more conservative causes.”
[COMMENTARY]The article focuses on a new research paper investigating these issues.
How Much Do Investors Care About Social Responsibility? By Scott Hirst, Kobi Kastiel, and Tamar Kricheli-Katz, October 24, 2022, Harvard Law School Forum on Corporate Governance, USA.
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Markets or Regulators: Who Decides on ESG? “The current discourse on environmental, social, and governance investing yields two irresistible conclusions. The first is that fiduciary duty prohibits ESG investing. The second is that fiduciary duty mandates ESG investing. Wait, what? The situation is confusing, to say the least.”
[COMMENTARY]It seems to me that fund fiduciaries must account for ESG effects on the companies they own. Otherwise, they’re not looking out for their stockholders or beneficiaries!
Markets or Regulators: Who Decides on ESG? By Max M. Schanzenbach and Robert H. Sitkoff, October 20, 2022, Barron’s, USA.
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The Relevance and Reliability of ESG Reporting. “This and other non-GAAP reporting is expanding, with virtually no generally accepted guidance and little assurance. The reports are not comparable, are prepared using multiple guiding frameworks, and are generally unaudited. The accounting profession must address the relevance of these reports and the reliability of this new information.”
[COMMENTARY]This article stresses the urgent need for the accounting profession to ‘fix’ the situation regarding the reporting mess that ESG, sustainability reporting, etc., is in. It provides good insight into the real state of such matters.
The Relevance and Reliability of ESG Reporting, by Craig Foltin and Mark Holtzblatt, October 2022, The CPA Journal, USA.
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Sustainability reporting neglects biodiversity and social issues. “There is a need to catch up in reporting on risks related to the diversity of species and ecosystems (biodiversity): Here, only 29 percent of the German ‘Top 100’ see a loss as a business risk (worldwide: 40 percent).”
[COMMENTARY]Most investors do not demand that companies measure how declining biodiversity, in particular, may affect corporate operations and profits. In the future, this will be a major issue!
Sustainability reporting neglects biodiversity and social issues, press release, October 18, 2022, KPMG, Germany.
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Navigating the ESG landscape: Comparison of the “Big Three” Disclosure Proposals. “After years of increasingly vocal demand for enhanced transparency about ESG matters from investors and other stakeholders, regulators and standard setters in various jurisdictions issued definitive proposals to transform ESG reporting in 2022.
So far this year, proposed ESG disclosures have been released in the European Union (EU) as part of the Corporate Sustainability Reporting Directive (CSRD), internationally by the International Sustainability Standards Board (ISSB), and in the US by the SEC.”
[COMMENTARY]Another great analysis of the new ESG disclosure proposals by regulatory authorities.
Navigating the ESG landscape: Comparison of the “Big Three” Disclosure Proposals, by Heather Horn, Valerie Wieman, and Andreas Ohl, October 10, 2022, Harvard Law School Forum on Corporate Governance, USA.
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Switching to renewable energy could save trillions, new study finds. “Thisstudy, first published on journal Joule on 13thSeptember this year, used a probabilistic modelling technique which predicts how the cost of renewable energy technologies will decrease over time, using the evolution in cost of over 50 other technologies to test the model. This estimate predicts trillions in savings, without accounting for the savings from avoiding further climate disasters.”
[COMMENTARY]Many assumptions are made in this study that may or may not happen. One assumption seems to be that sufficient metals and minerals will be readily available. See my comment below under “What does ESG mean for the mining industry?”
Switching to renewable energy could save trillions, new study finds by Emily Hudson, October 5, 2022, The Oxford Student, UK.
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Comparing ESG disclosure rules for funds in the EU, UK and the US — SFDR, SDR and SEC proposals. “Fund managers marketing products into each of the jurisdictions will be likely be set down a path of differentiated, not harmonised, disclosures.”
[COMMENTARY]A good and detailed analysis and comparison of the different ESG regulations in major global financial jurisdictions.
Comparing ESG disclosure rules for funds in the EU, UK and the US — SFDR, SDR and SEC proposals, by Brent L. Bernel, Rhys Davies, Erin Lachaal, Jesse Medlong, Caroline Pimpaud, Catherine Pogorzelski, Deanna R. Reitman, and Erin Sculthorpe. October 5, 2022, DLA Piper, UK.
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What does ESG mean for the mining industry? “Many mining and minerals businesses are already taking active steps on their ESG agenda, identifying their priorities and measuring their performance. In our experience, the real benefits come when you move beyond measurement and take action to improve.”
[COMMENTARY]Ethical and sustainable investors have few, if any, mining stocks in their portfolios. They generally believe mining is dirty and ruins the environment while destroying Aboriginal communities.
This view is outdated. Most modern mining companies are taking ESG seriously and mining jurisdictions are mandating ESG integration in mining operations. And where new mines are permitted, they can take 7 – 15 years to build.
Because of outdated views about mining, capital investment in new mines is woefully short of what the green-electric revolution requires in terms of copper, zinc, silver, etc. Without huge increases in metals and minerals production, there will be no green economy.
So, read this article, and perhaps more of you will reconsider investing in mining.
What does ESG mean for the mining industry? By David Walker, October 3, 2022, Canadian Mining Journal, Canada.
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Featured Book
Your Essential Guide to Sustainable Investing: How to live your values and achieve your financial goals with ESG, SRI, and Impact Investing, by Larry E. Swedroe and Samuel C. Adams, Harriman House 2022.
“How can you find investments that truly reflect your principles? This excellent book will tell you. You’ll learn the nuances of social investing as well as discover your likely investment returns. Highly recommended!” –Jane Bryant Quinn, Author, How to Make Your Money Last: The Indispensable Retirement Guide.
