July 2023 Newsletter
News & Commentaries by Ron Robins
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New Podcasts:
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Latest Podcast: The Sustainable Stocks The Rich Invest In! Includes the following articles: “10 Sustainable Investing Stocks Billionaires Are Loading Up On”; “The 2023 Humankind 100 Rankings”; “4 ESG Stocks With Net-Zero Emissions Target in the Spotlight”; “What is Renewable Energy? Benefits, Sources, and Top Companies”; “’America is going to lead again’: Biden says wind and solar are already ‘significantly cheaper’ than coal and oil — 3 top US clean energy stocks to watch”; and “The Importance Of Sustainable And Impact Investing And 3 Companies That Shine!” — By Ron Robins
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How ISSB standards boost corporate ESG strategies. “These new standards provide industry-specific factors and disclosure standards that are going to help companies as they adopt these standards. I think it’s going to help improve benchmarking across sectors and industries and help accelerate performance. If a new company is just starting to implement a sustainability programme, these standards are going to help them see who the leaders are in their industry. Then, as they hit milestones and targets, it’s going to help them see how they’re doing, such as, if they are on the trajectory they want to be on.”
[COMMENTARY] Companies that so far have avoided significantly engaging ESG will likely see meaningful organizational and financial benefits in incorporating ISSB standards. How ISSB standards boost corporate ESG strategies, by Lucy Buchholz, July 29, 2023, Sustainability, USA.
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Hypocrisy penalty: Investors especially hate companies that say they’re good then behave badly – unless the money is good. “Stock investors punish companies caught doing something unethical a lot more when these businesses also have a record of portraying themselves as virtuous. This hypocrisy penalty is the main finding of a study we recently published in the Journal of Management.”
[COMMENTARY] The results of this study make sense. Hypocrisy penalty: Investors especially hate companies that say they’re good then behave badly – unless the money is good, by Brian L. Connelly and Lori Trudell, July 27, 2023, The Conversation, Canada.
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2023 Sustainable Investment Survey. “Since the release of our last Sustainable Investment Survey report in October 2022, we have been busy with our sustainable investment research efforts. Using our proprietary Impact fund data set utilizing the Global Impact Investing Network’s (GIIN) IRIS+ taxonomy, we updated our reporting on fundraising trends in private Impact fund investing.[1] As a follow-up to 2022’s survey, we took some of the open-ended responses and wrote a report addressing the concerns and criticisms of ESG. In January, we published a piece on sustainable and digital infrastructure in the private markets, noting that infrastructure has not only been expanding as an area of investment, but it is increasingly looking to contribute sustainable solutions to areas like climate change and socioeconomic equality. Finally, we have brought on an emerging technology analyst focused on producing carbon & emissions tech and clean energy work for PitchBook clients.”
[COMMENTARY] The numbers provide great insight into the industry. 2023 Sustainable Investment Survey, by Hilary Wiek and Anikka Villegas, July 26, 2023, Harvard Law School Forum on Corporate Governance, USA.
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ESG Funds: Do They Walk the Talk? “Sustainable investors are causing companies to focus on improving their ESG scores to either gain a competitive advantage or avoid being disadvantaged—there is greater corporate awareness of these issues, and awareness is followed by action. That’s good news for sustainable investors, who are not only able to express their values through their investments, but now have evidence that they are causing companies to become better citizens and capitalism to evolve to address sustainability.”
[COMMENTARY] Contrary to the results of this study, which applies to the relative ‘non-influence’ of ESG funds on companies, there is now evidence that C-suite executives are increasingly applying ESG frameworks and methods to their operations! ESG Funds: Do They Walk the Talk? By Larry Swedroe, July 25, 2023, Wealth Management, USA.
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2023 Humankind 100 List Announced Today. “Announced today the release of 2023’s ‘Humankind 100,’ its annual ranking of the top U.S. companies offering the greatest benefit to humanity, based on Humankind Investments’ proprietary Humankind Value methodology.”
[COMMENTARY] Humankind’s companies’ ranking is derived using a methodology that will appeal to many ethical and sustainable investors. 2023 Humankind 100 List Announced Today, press release, July 24, 2023, Humankind Investments, USA.
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ESG investing is bigger than BlackRock and will continue to drive the mining sector – portfolio managers. “Along with a social license to operate, some funds see mining companies with strong ESG principles trading at a premium in the market.”
[COMMENTARY] We are in a new era in mining. Electrification of the world requires massive new investment in mining — and mining needs ESG to get its permitting and social license. Ethical and sustainable investors might be surprised that they can invest in mining and still satisfy their ESG concerns while possibly making good financial returns too. ESG investing is bigger than BlackRock and will continue to drive the mining sector – portfolio managers, by Neils Christensen, July 20, 2023, Kitco, Canada.
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Research: The ESG Issues That Matter Most to People. “Research conducted by nonprofit organization JUST Capital highlights the importance of public opinion in determining corporate behaviors. The study reveals that when evaluating American firms, the public places a significant emphasis on the treatment of workers.”
[COMMENTARY] The JUST Capital study provides great insight into the views and weights of various corporate stakeholders. It has implications for the current debate around ESG and shareholder value. Research: The ESG Issues That Matter Most to People, by Daniel J. Benjamin, Ori Heffetz, and Michael M. Weinstein, July 18, 2023, Harvard Business Review, USA.
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Unveiling Saudi Aramco’s Shocking Capitalization on Sustainable Investments. “According to a report by Bloomberg, Saudi Aramco, the world’s biggest oil company, successfully secured funds from sustainable investors through a complex financial arrangement. Although Aramco did not initially intend to tap into funds designated for ESG goals, the involvement of ESG investors in financing a fossil fuel company raises concerns about the strategies used in the Gulf region.”
[COMMENTARY] The article demonstrates that you can’t trust even the largest investment firms to do proper diligence when it comes to sustainable investing! One message from this, concerning green bonds at least, is where possible to invest in securities directly where you know for certain where the funds are going. Unveiling Saudi Aramco’s Shocking Capitalization on Sustainable Investments, by Hannah Fischer-Lauder, July 11, 2023, Impakter, UK.
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Why investors should integrate green revenues into portfolio construction. “In a recent paper researchers from Singapore’s GIC, FTSE Russell and asset management group GMO explain why investors should integrate green revenues into their portfolio construction, arguing that the sustainability metric Weighted Average Green Revenue (WAGR) is a useful tool for investors looking to assess and integrate green opportunities.”
[COMMENTARY] The biggest failure of the standard ESG raters is not including green revenues as part of their corporate assessments! Note the recent controversy as to why a tobacco company was rated higher than Tesla by ESG raters. Why investors should integrate green revenues into portfolio construction, by Sarah Rundell, July 11, 2023, Top 1000 Funds, USA.
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Committed to Sustainable Investing? Three Questions to Ask Your Adviser. “As sustainable, responsible and impact investing (SRI) continues to gain popularity, more investors have questions and are curious to see if it’s right for them.”
[COMMENTARY] They are good questions to ask. To find a suitable advisor this link Who should invest my money? might be helpful. Committed to Sustainable Investing? Three Questions to Ask Your Adviser, by info@earthequityadvisors.com (Peter Krull, CSRIC®), July 10, Yahoo Finance, USA.
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(US) Supreme Court Rules against University Affirmative Action Policies: Implications for ESG Investing and Engagement. “Although the decision applies directly only to educational institutions, it may have significant collateral impact on ESG investing and engagement in both the public and private markets. In this Alert, we provide a summary of the decision as well as a discussion of potential implications for ESG investing practices.”
[COMMENTARY] This article indicates that there are possible implications for corporate diversity initiatives and ESG investing in this US Supreme Court ruling. (US) Supreme Court Rules against University Affirmative Action Policies: Implications for ESG Investing and Engagement, July 6, 2023, Ropes & Gray, USA.
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Who decides what ESG is and how to make investments greener – new research. “Our recently published research explores this question by looking at the actual sustainability impact that these funds have. Although financial industry groups claim that one-third of all investment assets are already sustainable, our research shows most ESG investing actually does not create any meaningful sustainability impact.”
[COMMENTARY] It seems true that most ‘light’ ESG funds would have any obvious, meaningful, ESG/sustainability impacts. However, companies with high ESG ratings frequently have relatively higher stock prices and thus can act as an impetus to lower ranking ESG companies to improve their ESG status. Who decides what ESG is and how to make investments greener – new research, by Robin Jaspert, July 4, 2023, The Conversation, Canada.
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These 50 Canadian corporate citizens are a cut above. “50% of each company’s score tied to the percentage of their revenue and investments that qualify as sustainable.”
[COMMENTARY] I picked out the above quote to demonstrate that the Corporate Knights list is one of the few rankings where the revenue from what you produce matters! This ESG/sustainability list is worthwhile for all investors to review. Even for non-Canadians. These 50 Canadian corporate citizens are a cut above, by Rick Spence, June 28, 2023, Corporate Knights, 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. “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.
For more information, visit 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.
