May 2023 Newsletter
News & Commentaries by Ron Robins
News & Commentaries by Ron Robins————————————————————-
New Podcasts:
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Latest Podcast: Socially Responsible Stocks To Buy. Articles include: “13 Best Ethical Companies to Invest in According to Reddit”; “Four Sustainable Investments That Could Have a Positive Impact”; “5 Best Homebuilder Stocks Sorted By Hedge Fund Sentiment”; “The 9 Best Wind Energy Stocks To Buy Now”; and “The 9 Best Wind Energy Stocks To Buy Now”
— By Ron Robins
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Mining for EVs viewed as positive environmental impact. “Institutional investors are increasingly viewing mining investments as impact investing if the firms are developing metals essential to crucial technology supply chains.
This is among the findings of a new study by Tresor Gold, a junior mining company focused on exploration and development projects in West Africa.”
[COMMENTARY] I’m in the camp that believes without a massive re-engagement of institutional funds into the mining sector and much greater support for it among indigenous communities and governments globally, we will come nowhere near the net-zero goal for 2050. Incidentally, we also know that investors below 50 years of age usually have comparatively negligible investments in the mining space. They have grown up with a deep aversion to mining. Yet, it must be noted that modern mining is making huge leaps in ESG and sustainability.
Mining for EVs viewed as positive environmental impact, by Staff, May 26, 2023, Freight News, South Africa.
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1.5 Percent of Corporate Profits Can Transform the Fight Against Climate Change. “Fortune Global 500 companies made more than $2.2 trillion in annual profits over the last three years, according to a recent report by Climate Impact Partners. Investing only 1.5 percent of that — about $33.5 billion — to fund carbon reduction projects like forest conservation, reforestation and micro-renewables would be a massive step toward achieving the transformational change required to hit global climate action targets.”
[COMMENTARY] Superficially, this sounds good. However, the funds here would go to carbon offsets which have come under increasing concern among those in the climate change community. Even if this 1.5% of profits became a goal, I believe one of the most important actions yet to be undertaken is discussing directly with the numerous corporate leaders who disbelieve in the very idea of carbon-induced climate change! Look at the US Republican Party’s anti-ESG stance. Their party members control many of the world’s largest companies.
1.5 Percent of Corporate Profits Can Transform the Fight Against Climate Change, by Abha Malpani Naismith, May 26, 2023, TRIPLE PUNDIT, USA.
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Insurance giants exit net-zero pact. “Some reinsurance companies have pledged to stop insuring new oil and gas projects. So why are they quitting the UN Net-Zero Insurance Alliance?”
[COMMENTARY] It’s not entirely clear why these insurance companies are exiting However, some observers speculate that for competitive reasons, the insurance industry is looking for better international insurance regulations directed at climate change. This would place insurance companies on a more even playing field.
Insurance giants exit net-zero pact, by Alex Robinson, May 23, 2023, Corporate Knights, Canada.
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World Economic Forum. “In a recent global survey, 82% of respondents said they want business leaders to do more on climate change. Yet, a global study of more than 1,000 executives found that 76% do not trust the data of their competitors’ sustainability reports. Worse, only 47% report a willingness to share their environmental, social and corporate governance (ESG) data with third parties. A backlash from investors is also brewing: one survey found that nearly three out of four institutional investors do not trust companies to achieve their stated ESG commitments.”
[COMMENTARY] The thrust of this article is for government regulation. I’ve said for decades that corporate ESG reporting standards should be codified and that they are professionally audited by regulated, professional ‘ESG auditors.’ These auditors should create suitable standards for auditing and sign off on corporate reports. All of this is happening with many of the major accounting firms engaged. The writer of the article seems largely unaware of this and the terrific private/public groups already engaged in this process. All stakeholders will soon have much more confidence in corporate ESG reports.
World Economic Forum, May 23, 2023, Switzerland.
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Unlocking the Investment Potential of “S” in ESG. “Social issues are perhaps the most difficult to research and least understood by investors with an environmental, social and governance (ESG) focus. But the risks and opportunities they represent are growing, and investors need a way to step up to the challenge.”
[COMMENTARY] Companies are dealing with increasingly restless employees, customers, and other stakeholders. Hence, managing the ‘S’ factor is coming to the fore! This is a great paper describing the issue in the corporate world.
Unlocking the Investment Potential of “S” in ESG, by Saskia Kort-Chick, May 22, 2023, Harvard Law School Forum on Corporate Governance, USA.
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Why Europe’s new reporting standards could be a game-changer for nature. “This could be a year of singular importance in the history of international accounting. A new directive from Brussels provides a basis on which natural capital funding undertaken by corporations could ultimately be reflected as an asset on balance sheets.”
[COMMENTARY] This development would be a dream come true for many of us who’ve been following this concept for decades. Somehow, natural capital must be accommodated in corporate financial accounting and statements.
Why Europe’s new reporting standards could be a game-changer for nature, by Stefan Grabs and Sonia Stuchtey, May 18, 2023, Reuters, UK.
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Green Investing Could Push Polluters to Emit More Greenhouse Gases. “One common approach to sustainable investing is to provide capital for companies with low carbon emissions and withhold it for high-emissions firms. But rather than incentivizing polluters to cut back, research co-authored by Yale SOM’s Kelly Shue shows, such an approach may actually cause them to pollute more.”
[COMMENTARY] This paper makes clear that investments are needed in polluting industries so they may become more energy-carbon efficient. To exclude them from funding could result increasing carbon emissions.
Green Investing Could Push Polluters to Emit More Greenhouse Gases, by Susie Allen, May 15, 2023, Yale Insights, USA.
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Investors dump mutual funds for equities too, not only ETFs. “Study on discretionary US investing shows trend towards individual stocks in portfolios.”
[COMMENTARY] I think this a good development. I believe it means that investors are paying more attention to their portfolios. That was behind my idea to create the Ethical-Sustainable Investing Pays Tutorial!
Investors dump mutual funds for equities too, not only ETFs, by Emma Boyde, May 15, 2023, ft.com, UK.
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Natural capital is much bigger than people think.” Natural capital is much bigger than people think. In the first paragraph I mentioned biodiversity breakdown as a bigger problem than climate change, but let’s put it into numbers as well: the annual value of ecosystem services is estimated at over $120 trillion, about 50% higher than global GDP. However, as Schroders’ Global Head of Sustainable Investment Andy Howard pointed out, payments for ecosystem services are 40x smaller.”
[COMMENTARY] In the future you’ll be able to invest in stocks and funds of ‘natural capital.’ Earnings will be derived by leasing-out or distributing natural capital. This is arising as natural capital gets scarcer and increasingly more valuable. Think of the re-think that is going on now regarding the water resources in the US west.
Natural capital is much bigger than people think. By Willem Schramade, May 10, 2023, Shroders, UK.
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ESG could have saved Silicon Valley Bank. “One of the nation’s largest banks experienced a series of governance lapses that resulted in the mismanagement of interest-rate risk.”
[COMMENTARY] I tried unsuccessfully to find an ESG rating for Silicon Valley Bank before its collapse. I presume that if it were rated the governance rating would or should’ve been bad. However, it’s rare for ESG raters to assign the same rating to any company. Nonetheless, any competent rater would’ve spotted the governance issue and warned investors about this problem.
ESG could have saved Silicon Valley Bank, by Andrew Siwo, May 5, 2023, Investment News, USA.
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ESG, Non-ESG Investing Returns Differ Minimally, Says Research Affiliates. “But when portfolios are not cap-weighted, green-oriented investments do better, the firm finds…
Part of that may be because the ESG funds and the Russell 1000 all hold the same stocks in their top 10, with Big Tech a common theme: Apple, Microsoft, Alphabet, etc.”
[COMMENTARY] Yes, in reality, most large-cap ESG funds mostly mirror their non-ESG counterparts. That’s why you need to look at the small-cap or sector-specific ESG funds to get better differentiation.
Better still, create your own ESG portfolio. See my DIY Ethical-Sustainable Pays Tutorial for help with that.
ESG, Non-ESG Investing Returns Differ Minimally, Says Research Affiliates, by Larry Light, May 2, 2023, Chief Investment Officer, USA.
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How the new EU directive will rewrite ESG reporting.“The European Union’s Corporate Sustainability Reporting Directive won’t just affect local companies, it will transform sustainability reporting around the globe.”
[COMMENTARY] Companies that take an anti- ESG/sustainability stance in their activities may not be let into European markets. In effect, the US anti-woke crowd investing in anti-ESG/sustainable companies will likely see lower financial returns.
So, what about the returns for those pension funds in US states that are requiring them to not include ESG/sustainability criteria for inclusion in their portfolios? They and their investors aren’t going to be pleased. This whole anti-ESG/sustainability movement is likely to collapse as fast as it has arisen.
How the new EU directive will rewrite ESG reporting, by Matt Orsagh, May 1, 2023, GreenBiz, USA.
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Featured Book
ESG Investing For Dummies. “Even if you’re new to investing, you can use your money to make a difference. This book explains today’s ESG landscape so you can create a socially and environmentally responsible portfolio. You can consider stocks and bonds, and you can get an introduction to derivative and alternative instruments. Let ESG Investing For Dummies be among your advisors as you research investments; craft your portfolio, assess performance, and — most importantly — help make this world a more equitable and sustainable place.”
For more information, visit ESG Investing For Dummies, by Brendan Bradley, For Dummies 2021.
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Note: Articles are linked to the original source. Some sites might require registration, and may, or may not, archive stories. All links were active at the time of publication.
Disclaimer: Neither The Soul Investor nor Ron Robins makes investment recommendations. Nothing in this newsletter should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. The Soul Investor is a source of general information and resources for spiritual investing, ethical investing, and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their professional advisers prior to taking any investment action. The Soul Investor does not necessarily agree with the opinions expressed in articles in its newsletter or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, The Soul Investor does not offer or provide any warranties, representations, guarantees, implied or otherwise, as to the accuracy, legality, copyright compliance, timeliness or usefulness of the information, materials or services in this e-newsletter, or other sites, to which it might be linked. Also, Mr. Ron Robins is not an investment advisor, nor is he licensed with any professional investment related body, and thus is not able to, nor does he make, any investment recommendations.
The Soul Investor is a publication of Investing for the Soul, a registered business name in Ontario, Canada. Copyright © 2023 Ron Robins. All rights reserved.
