August 2023 Newsletter
News & Commentaries by Ron Robins
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New Podcasts:
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‘Not just money and math’: Young people are willing to sacrifice returns for ESG, “Nearly two-thirds of Gen Z investors want to allocate their portfolios in a way that supports causes they care about, according to a July survey of some 4,000 current and aspiring investors by U.S. Bank.
That’s compared with 59% of millennials, 45% of Gen X and 30% of boomers.”
[COMMENTARY] School children in recent decades are increasingly learning about environmental and societal issues in the classroom. Hence, they’re concerned about their futures and reflect this in their lives, actions, and investments!
‘Not just money and math’: Young people are willing to sacrifice returns for ESG, by Alex Harring and Hakyung Kim, August 27, 2023, CNBC, USA.
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What if we slapped carbon taxes on shareholders not consumers? “Focusing carbon taxes on shareholder income linked to GHG emissions could help pressure companies to lower their emissions.”
[COMMENTARY] A fascinating idea. However, I’d need to examine it thoroughly before giving it my okay.
What if we slapped carbon taxes on shareholders not consumers? By Jared Starr, August 18, 2023, Corporate Knights, Canada.
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Sustainable investing can help support portfolios during market volatility. “Sustainable investing includes multiple strategies applying distinct approaches and can be applied across asset classes. Here we highlight why diversifying across sustainable investing building blocks can support portfolios over periods of market volatility.”
[COMMENTARY] This is a good overview of sustainable investing as well as making the point that it can add value to a portfolio.
Sustainable investing can help support portfolios during market volatility, UBS Editorial Team, August 24. 2023, UBS Wealth Management Global, USA.
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Republican anti-ESG push complicates faith-based impact investing. “The House hearings and attorneys general letter, as well as hundreds of bills proposed in red-state legislatures, are part of increasingly coordinated campaigns to push back against the growing tide of ESG investing and principles around socially responsible investing — approaches long championed by religious institutions.”
[COMMENTARY] Being anti-ESG does not seem compatible with the tenets of most Christian denominations! It’s about time that Christian and other religious groups said so.
Republican anti-ESG push complicates faith-based impact investing, by Brian Roewe, August 24, 2023, Earthbeat, USA.
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The Climate Pricing Gap. “Why the popularity of passive investing is making it harder for the market to price in climate risk/opportunity.”
[COMMENTARY] Years ago long-term investors bought stocks directly according to what they thought were the stocks’ profit potential. Now they mostly invest in long-term passive funds. That difference means appropriate stock pricing doesn’t happen. Hence, pricing gaps occur. Incidentally, see “How to find stocks and construct a stock portfolio reflecting your values with good potential returns.” It’s a tutorial I created some years ago that’s still relevant today.
The Climate Pricing Gap, by Zach Stein, August/September 2023, GreenMoney, USA.
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SEC hits ESG funds with subpoenas. “The enforcement division of the Securities and Exchange Commission has issued formal requests, including subpoenas, to a number of investment firms over their sustainable investment advertising practices. This escalation shows the SEC’s heightened scrutiny on environmental, social and governance funds. A significant point of concern for the SEC includes mainstream investment funds transitioning into ESG-focused entities. Additionally, there’s interest in funds marketed both in the U.S. and Europe that may possess similar investment strategies, assets or management teams, yet provide varying levels of disclosure depending on the region.”
[COMMENTARY] For many fund managers switching to, and labeling, old or new funds with an ESG or sustainable tag was easy and meant they could charge much higher fees!
SEC hits ESG funds with subpoenas, by Matthew Sellers, August15, 2023, InvestmentNews, USA.
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Using green credit policy to bring down inflation: what central bankers can learn from history. “Central banks can design green credit policy instruments to potentially bring down inflation while also making allocative choices in support of the low-carbon transition. This paper draws on examples of policy made at the German Bundesbank and other central banks which sought to protect some sectors during a tightening cycle in ways that are compatible with market liberalism and central bank independence.”
[COMMENTARY] The idea of central banks engaging in climate finance requires a ‘buy-in’ of the financial, business, and political communities. Until the majority of participants in those communities believe in the urgency of climate change, it’ll be difficult to get central bank financial participation. Often, central bank charters will need legislative approval too.
Using green credit policy to bring down inflation: what central bankers can learn from history, by Jens van ‘t Klooster and Eric Monnet, July 24, 2023, London School of Economics, UK.
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Green and social bonds ‘not more risky’ than conventional bonds. “The credit risk of a GSS bond is identical to that of a conventional bond from the same issuer, and so tends to carry the same credit ratings, according to Sascha Stallberg, who runs a green bond fund at Nordea.”
[COMMENTARY] Though this is one issuer commenting, it’s probably true generally. It augurs well for green bond issuance. Green and social bonds ‘not more risky’ than conventional bonds, by Chloe Cheung, August 8, 2023, FT Advisor, UK.
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The incredible shrinking climate ambitions of the world’s largest asset managers. “InfluenceMap says the number of asset managers carrying out ‘truly ambitious and effective climate stewardship practices’ has shrunk by 45% since 2021.”
[COMMENTARY] This is not hard to understand in light of the massive wave of anti-ESG activity being undertaken. Note that the worst ‘back-trackers’ are huge US asset managers.
The incredible shrinking climate ambitions of the world’s largest asset managers, by Natalie Alcoba, August 2, 2023, Corporate Knights, Canada.
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It’s Not Just Wildfires and Hurricanes: Extreme Heat Is a Silent Killer for Companies. “Extreme heat could account for 65% of North America’s productivity losses by 2030, Sustainalytics says.”
[COMMENTARY] This research provides some fascinating insight into how the worsening climate could impact corporate profits. However, this article also provides some understanding as to how companies can alleviate these climate-related costs to improve their profitability.
It’s Not Just Wildfires and Hurricanes: Extreme Heat Is a Silent Killer for Companies, by Azadeh Sabour, August 1, 2023, Morningstar, USA.
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India to emerge as global renewable energy powerhouse with fastest growing capacity. “India is poised to establish itself as one of the largest solar module manufacturers in the world and is witnessing the fastest growing capacity in renewable energy, said Raj Kumar Singh, Union minister of power and renewable energy.”
[COMMENTARY] Could India replace China as a source of solar cell manufacturing? That would certainly please many in the West! What are the investment opportunities there?
India to emerge as global renewable energy powerhouse with fastest growing capacity, by Saurav Anand, August 1, 2023, Mint, India.
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Featured Book
Making Money Moral: How a New Wave of Visionaries Is Linking Purpose and Profit. “Anyone who wants to understand the link between capital markets and progress towards a more sustainable, peaceful, and prosperous world should put this book at the top of their reading list. Through real-life examples and in-depth conversations with experts, Making Money Moral demonstrates the power of bringing together the world of finance and the world of impact.”–Jeff Skoll, Founder and Chairman, Skoll Foundation, Co-Founder, The Rise Fund.
For more information, visit Making Money Moral: How a New Wave of Visionaries Is Linking Purpose and Profit, by Judith Rodin and Saadia Madsbjerg, Wharton School Press 2021.
