October 2023 Newsletter
News & Commentaries by Ron Robins
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New Podcasts:
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IBD’s 100 Best ESG Companies For 2023. “Public companies that made our 2023 100 best ESG stocks list combine high Dow Jones sustainability scores with superior IBD technical and fundamental stock ratings. They are standouts for ESG investing.”
[COMMENTARY] Another good company ranking for ethical and sustainable investors to review.
IBD’s 100 Best ESG Companies For 2023, by Investor’s Business Daily, October 27, 2023, USA.
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What Would Happen to ESG Proposals If Vanguard, BlackRock and State Street Didn’t Vote? “It’s clear that there would have been many more key resolutions in the 2022 and 2023 proxy years if it weren’t for the damping effect of the Big Three’s voting decisions taken in aggregate.”
[COMMENTARY] It appears the proxy voting decisions of the big three — Vanguard, BlackRock, and State Street — might be damaging to the causes of ESG and sustainability.
What Would Happen to ESG Proposals If Vanguard, BlackRock and State Street Didn’t Vote? By Lindsey Stewart of Morningstar, October 26, 2023, Harvard Law School Forum on Corporate Governance, USA.
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Why biodiversity is next for green bond expansion. “So far, green bond issuers have successfully embraced funding the transition toward carbon neutrality. But far fewer issuers are currently looking at regenerative biodiversity projects or initiatives that seek to protect our ecosystems from loss.”
[COMMENTARY] I wrote in a previous post about biodiversity and nature-themed funds. This article focuses on the fixed-income side of that theme.
Why biodiversity is next for green bond expansion, by Holger Mertens, October 25, 2023, ESG Clarity, UK.
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Comment: Why biodiversity is about to go mainstream in ESG investing. “Biodiversity and nature-themed funds are mushrooming, with assets under management in European funds targeting biodiversity quadrupling in the 12 months to September, according to data from the European Securities and Markets Authority, though admittedly these funds still represent a tiny fraction of the market.”
[COMMENTARY] The creation of biodiversity and nature-themed funds (both equity and fixed-income) is a terrific step forward towards helping to maintain — or even improve upon — our planetary environment and creating a sustainable future for us all. Importantly, they could be profitable too!
Comment: Why biodiversity is about to go mainstream in ESG investing, by William Attwell, October 26, 2023, UK.
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Do Honest Countries Make the Best Investments? “International stock investors don’t talk much about ‘national ethics’ — but perhaps they should. Can you even measure honesty?”
[COMMENTARY] This is an article showing great insight into whether ethical investors should care about the ethics of the countries where they invest. It’s a rare article on the subject.
Do Honest Countries Make the Best Investments? By John Rekenthaler, October 16, 2023, Morningstar, UK.
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Smoke and mirrors: A look inside ESG fund portfolios. “This column reviews novel empirical evidence, which shows that fund managers may game regulatory disclosure to disguise themselves as sustainable, while including higher performing yet controversial assets in their portfolios. The findings highlight the importance of scrutiny and regulation to disentangle true sustainability from greenwashing.”
[COMMENTARY] This article digs deep into greenwashing. Fortunately, regulators such as in the US and EU are cracking down on funds that are misrepresenting their holdings and activities.
Smoke and mirrors: A look inside ESG fund portfolios, by Gianpaolo Parise and Mirco Rubin, October 15, 2023, The Centre for Economic Policy Research (CEPR), EU.
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Is Passive the Answer to ESG Investing? “The number of ESG benchmarks and indices are growing, but with increased diversity comes a broad risk-return profile.”
[COMMMENTARY] For European ESG-oriented investors, passive investing, particularly in ETFs, has gained considerable ground on active investing — where stocks are individually picked. This article in Morningstar competently discuses the pros and cons of the passive versus active approach.
Is Passive the Answer to ESG Investing? By Valerio Baselli, October 10, 2023, Morningstar, UK.
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EU Approves World’s First Green Bond Standards to Combat Greenwashing. “The European Union has introduced pioneering standards for ‘green’ bonds, aiming to combat greenwashing and promote sustainable investments.”
[COMMENTARY] This is a great step forward. It’ll likely be copied by many other jurisdictions.
EU Approves World’s First Green Bond Standards to Combat Greenwashing. Posted by
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Does sustainable investing underperform? “New research finds that when fund manager skill is discounted from the equation, sustainable investing portfolios performed at 0.2% lower than the proxy for the US market… However, recent research from Kroll found that companies with better ESG ratings outperformed their peers with lower ratings from 2013-2021.”
[COMMENTARY] How do you measure ‘fund manager skill’ when funds that outperform in one year fall to the bottom of rankings the next year? That might be an exaggeration — but not by much! Research is complicated. For ethical and sustainable investors, ethics, morality, and other personal or spiritual values must come into play too.
Often lost in this discussion and important to many such investors is the old adage ‘as ye sow, so shall ye reap,’ or from physics ‘every action has a reaction.’ So, if you value your personal or spiritual development, these things need to be taken into account in your investment selections.
Does sustainable investing underperform? By Rose Mary Petrass, October 5, 2023, Sustainability, Australia.
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ESG ratings: whose interests do they serve? “Regulators and politicians are focusing on the accuracy, transparency and potential for conflicts of interest with sustainability scores.”
[COMMENTARY] The question of who the ESG raters serve is important. More needs to be known as to how they’re funded, what affiliations they have, what conflicts of interest they have — particularly concerning board members — and so on.
ESG ratings: whose interests do they serve? By Kenza Bryan, October 3, 2023, Financial Times, UK.
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BIS: The Impact Of Green Investors On Stock Prices. “Contrary to the literature, we find a large fall in the stock prices of the high-emitting firms that are excluded and in turn an increase in stock prices of greener firms when the exclusion strategy is announced and during the transition process.” By Gong Cheng, Eric Jondeau, Benoit Mojon and Dimitri Vayanos, BIS Working Papers, No 1127, 29 September 2023.
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Sustainability stock market league table: which rank best and worst? “Our analysis ranks the world’s biggest stock markets by their sustainability credentials, providing an additional, underappreciated, lens on how to assess their risks and opportunities.”
[COMMENTARY] Schroders, a highly reputable UK investment firm, is behind the analysis.
Sustainability stock market league table: which rank best and worst? By Duncan Lamont and Hettie Mccarthy, September 27, 2023, Schroders, UK.
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Featured Book
Sustainable Investing: An ESG Starter Kit for Everyday Investors. “This book helps each of us to look into the mirror and see an empowered person staring back―ready to use the influence of our wealth to co-create a livable world based on justice and sustainability. — Andrew Behar, CEO of As You Sow
To invest sustainably does not have to be complicated nor should it be detrimental to financial performance: Kylelane Purcell and Ben Vivari provide a straightforward approach for investors with solid advice and acumen. I highly recommend for new investors who are strongly considering sustainable investing strategies. — Jennifer Coombs, Director of Client Services, Ethos ESG
Ties directly in with people’s understanding of finance and how it doesn’t have to be separate from the kind of person you want to be. I really love the relatable examples―it’s a great way to have the reader say, I want to do this and I can do this!” — David Neun, Learning Experience Designer at State Employees Credit Union –This text refers to the paperback edition.
For more information, visit Sustainable Investing: An ESG Starter Kit for Everyday Investors, by
