March 2024 Newsletter
News & Commentaries by Ron Robins
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New Podcasts:
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Morningstar Low Carbon Transition Leaders Indexes. “Providing diversified, broad market exposure to companies leading their sector peers in their readiness for—and action towards—climate transition.”
[COMMENTARY] How these indices perform to other similar indices will be useful to watch. These indices will use data from Sustainalytics, a top provider of ESG corporate data.
Morningstar Low Carbon Transition Leaders Indexes, March 30, 2024, Morningstar, USA.
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ESG has long been part of the DNA of faith-based pension funds. “A number of church-based pension funds have asserted that ESG forms a core part of their strategies and raison d’etre.”
[COMMENTARY] From a spiritual and ethical perspective utilizing ESG parameters in investing is essential. How about you?
ESG has long been part of the DNA of faith-based pension funds, by Palash Ghosh, March 29, 2024, Pensions & Investments, USA.
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Disentangling the value of ESG scores and classification of sustainable investment products. “Confusion surrounding ESG data and mislabeling of sustainable investment products complicates adoption and regulation… Recently, the Chartered Financial Analyst Institute (CFAI), the Global Sustainable Investment Alliance (GSIA), and the Principles for Responsible Investing (PRI) collaborated to synchronize common terminology.“
[COMMENTARY] This paper makes good recommendations on how to resolve common issues concerning ESG scores and related definitions. Disentangling the value of ESG scores and classification of sustainable investment products, by Andrew Siwo, New York University and Cornell University, March 22, 2024, Harvard Law School Forum on Corporate Governance, USA.
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The most innovative corporate social responsibility companies in 2024. “Why Verizon, United Airlines, Gilead Sciences, and Ikea are among Fast Company’s Most Innovative Companies in corporate social responsibility for 2024.”
[COMMENTARY] Some investors might want to review the list of the ten chosen companies as CSR leaders for 2024 by the business magazine Fast Company. The most innovative corporate social responsibility companies in 2024, by Ben Schiller, March 19, 2024, Fast Company, USA.
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Why asset managers need to explode these five ESG myths. “Asset managers ignoring ESG factors are taking on increased risk and missing out on opportunities to improve long-term performance.”
[COMMENTARY] This article coming from EY — one of the world’s largest accounting and auditing firms — adds weight to the fact that the anti-ESG crowd is totally disingenuous and misinformed if they care about corporate profitability! Why asset managers need to explode these five ESG myths, by Aloysius Fua, March 19, 2024, EY, Global.
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U.S. SEC waters down its climate reporting rule under legal threats. “The sustainable investment industry in the United States has grudgingly endorsed a watered-down regulation on climate disclosure, acknowledging a barrage of lobbying and legal threats that thwarted tougher carbon-reporting requirements.”
[COMMENTARY] This outcome is unsurprising considering the widespread anti-ESG sentiment among the right. U.S. SEC waters down its climate reporting rule under legal threats, by Eugene Ellmen, March 13, 2024, Corporate Knights, Canada.
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The SEC’s Climate Disclosure Rule: A Step in the Right Direction. “Material climate-related disclosures will be required for SEC registrants (which comprise approximately 10,000 companies) as part of their annual filing, allowing investors to look at audited, temporally aligned financial and climate disclosures for the same period, at the same time.”
[COMMENTARY] These are the type of regulations I’ve been advocating for — for about fifty years! I particularly like the audited aspect of the regulations. The SEC’s Climate Disclosure Rule: A Step in the Right Direction, by Arthur Carabia, Alicia White, and Thomas Kuh, March 8, 2024, Sustainalytics, USA.
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Investor Hot-Buttons This Proxy Season. “Boards should prepare for increasing scrutiny of board effectiveness and director qualifications and potentially an increasing willingness to vote against directors.”
[COMMENTARY] In my view, shareholders need to be more engaged with company boards and management than they have been in recent years! Shareholders advocating ESG or sustainability issues have also been sidelined. This needs to change. Investor Hot-Buttons This Proxy Season, by Bill Hayes, March 7, 2024, Directors & Boards, USA.
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Ethisphere Announces the 2024 World’s Most Ethical Companies. “Ethisphere, a global leader in defining and advancing the standards of ethical business practices, today announced the 136 companies that have earned the coveted designation of the World’s Most Ethical Companies in 2024. This year’s honorees span 20 countries and 44 industries.”
[COMMENTARY] Not only do the Ethisphere rankings provide great insight into a company’s ethical conduct, but their highest-rated companies outperform in stock price performance too! Ethisphere Announces the 2024 World’s Most Ethical Companies, press release, March 4, 2024, Ethisphere, USA.
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Business Leaders Fear Legal Action Over ESG Targets. “Concerns loom large among business leaders as the specter of litigation threatens companies falling short of their environmental, social, and governance (ESG) targets.”
[COMMENTARY] ExxonMobil is being sued for knowing about the detrimental environmental effects of fossil fuels as far back as the 1970s. Yet saying for many years there was no significant problem. So, in this survey two-thirds of companies are worried about the legal implications of what they say and do! This means environmental commitments, such as attaining net-zero by 2050, could disappear soon. Business Leaders Fear Legal Action Over ESG Targets, February 29, 2024, Business Matters, UK.
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Why Buying Into Silver Makes Sense For Renewables Investors. “Silver is one of the most important investments we can make within the renewable energy sector. Renewable energy groups now see silver being used in many different ways within the industry. This is because silver is among the best electrical conductors that we have out there in terms of metals.”
[COMMENTARY] I have advocated for many years that if ethical and sustainable investors truly want a fully electrified environment that silver is going to have to be mined at likely multiples of what comes out of the ground today. Why Buying Into Silver Makes Sense For Renewables Investors, by
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Sustainable Funds Outperformed Peers in 2023. “Overall, sustainable funds generated median returns of 12.6%, almost 50% ahead of the 8.6% returns of traditional funds, with outperformance coming mostly in the first half of the year. Investor demand also remained strong with assets under management up 15% from 2022 levels, reaching $3.4 trillion; sustainable funds now account for 7.2% of total global AUM.”
[COMMENTARY] Many ethical and sustainable investors have come to believe that sustainable portfolios are not doing very well. Here comes Morgan Stanley to inform these investors that that just isn’t so. Sustainable Funds Outperformed Peers in 2023, March 1, 2024, Morgan Stanley Institute for Sustainable Investing, USA.
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2023 Canadian Responsible Investors Opinion Survey. “Two thirds of respondents (65%) are interested in responsible investment (RI), with younger respondents generally expressing greater interest than older respondents, and female respondents more interested than their male counterparts. Unchanged from last year, 70% of respondents know little or nothing about RI, including 21% that have never heard of it.”
[COMMENTARY] The anti-ESG crowd seems to have had little effect on the percentage of investors still interested in RI in Canada! It’s just that RI makes dollars and sense! 2023 Canadian Responsible Investors Opinion Survey, by Responsible Investment Association (Canada), February 29, 2024, Canada.
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Does ESG performance indicate corporate economic sustainability? Evidence based on the sustainable growth rate. “Based on a sample of Chinese listed companies from 2009 to 2021, this study finds that environmental, social, and governance (ESG) performance has a positive impact on having a sustainable growth rate (SGR).”
[COMMENTARY] This study adds to a large body of studies indicating that ESG usually has a positive relationship with a company’s financial and sustainable performance. Does ESG performance indicate corporate economic sustainability? Evidence based on the sustainable growth rate. February 24, 2024. By Zihao Lin, Institute of Guangdong, Hong Kong and Macao Development Studies, Sun Yat-sen University, China.
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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.
