Good news for Canadian ethical and sustainable investors–the new RI Marketplace. “The RI Marketplace makes it easy to find responsible investment products, services, and advice.”
[COMMENTARY] Wonderful new site where — among many options — investors can find Canadian mutual funds, ETFs, etc., that reflect their values.
RI Marketplace, July 25, 2019, Responsible Investment Association, Canada.
Demand for green bonds crimped by lack of supply. “Issuance of green bonds is much exceeded by demand for them. And investors’ growing expectations over how issuers should invest the proceeds has discouraged some companies from issuing green bonds.”
[COMMENTARY] The latter point in the above quote is important. It’s also necessary that there’ some form of external verification of use of proceeds to avoid greenwashing. This is a good article for ethical and sustainable investors to review.
Demand for green bonds crimped by lack of supply, by Paulina Pielichata, July 22, 2019, Pensions & Investments, USA.
Study — Foundations of ESG Investing: How ESG Affects Equity Valuation, Risk, and Performance. “The research suggests that changes in a company’s ESG characteristics may be a useful financial indicator. ESG ratings may also be suitable for integration into policy benchmarks and financial analyses.”
[COMMENTARY] The study shows how certain ESG characteristics matter or don’t matter with respect to financial performance.
Foundations of ESG Investing: How ESG Affects Equity Valuation, Risk, and Performance, by Guido Giese, Linda-Eling Lee, Dimitris Melas, Zoltán Nagy, and Laura Nishikawa, July 2019, The Journal of Portfolio Management, USA.
ESG ETFs Are Beginning to Turn Heads. “According to Morningstar data, U.S. funds that consider ESG factors attracted a net $8.4 billion in net inflows over the first half of the year, the Wall Street Journal reports. The inflows over the first six months already beat out the previous annual record of $5.4 billion.”
[COMMENTARY] It seems that finally, retail investors are buying ESG funds! Only time will tell if this is a blip or represents a serious positive change in investors attitudes.
ESG ETFs Are Beginning to Turn Heads, by Max Chen, July 13, 2019, ETF Trends, USA.
US bonds present ESG problem. “Schroders global head of stewardship Jessica Ground told a media briefing in Sydney recently that US corporate bonds present challenges to responsible investors… Using the example of the opioid epidemic, Ground explained that some of the companies with the worst exposures to these issues were included in US corporate bonds.”
[COMMENTARY] This is a perspective I hadn’t seen before and does make sense for ethical investors.
US bonds present ESG problem, by Elizabeth Mcarthur, July 15, 2019, Financial Standard, Australia.
Climate change lawsuits expand to at least 28 countries around the world. “Joana Setzer, research fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, and co-author of the report, said:
‘Holding government and businesses to account for failing to combat climate change has become a global phenomenon.'”
[COMMENTARY] All investors, not just ethical and sustainable investors, will soon judge companies on their climate change impact and adaptation reports — or lack thereof! No doubt it’ll eventually be reflected in a company’s stock price as well — just as stranded assets are now likely negatively affecting the stock prices of fossil fuel companies.
Climate change lawsuits expand to at least 28 countries around the world, press release, July 4, 2019, London School of Economics, UK.
European individual investors show growing SRI interest but little investment so far – BNPP AM research. “In particular, some 64% of the respondents expressed to be interested in investing part of their savings in SRI funds. Italy emerged as the country where individual investors had the highest interest in SRI (80%). Italy was followed by Germany (65%), Belgium (63%), France (57%) and the Netherlands (52%).
However, despite the survey indicated a 5% year-on-year increase in SRI appetite, it found that just between 5% to 7% had actually invested in this type of investment products.”
[COMMENTARY] This data replicates findings in the US, Canada, and the UK. It’s the institutions that are adopting ESG-ethical-sustainable investing and the general investing public is far behind, though there are promising signs that the retail investor is coming on board.
European individual investors show growing SRI interest but little investment so far – BNPP AM research, by Eugenia Jimenéz, July 5, 2019, Investment Europe, UK.
U.K. Business, Politicians Back Environment-Risk Reporting Push. “U.K. businesses, accountants, and politicians broadly endorsed the government’s plan to require public companies to detail climate-related risks in their financial reports. But the accounting profession also said standard measurement practices for climate risks still need to be developed.”
[COMMENTARY] Will such regulations include foreign companies operating in the UK? Or, those foreign companies interlisted on UK and non-UK stock exchanges? This could get most interesting if US fossil fuel companies are included! What will President Trump say?
U.K. Business, Politicians Back Environment-Risk Reporting Push, July 5, 2019, Bloomberg Tax, UK.
Rating agencies ratchet up pressure on insurers over ESG risk. “Insurers face increasing pressure to address environmental, social and governance risk as Moody’s and other credit rating agencies warn of looming vulnerabilities for the sector. Earlier this week, Moody’s published a report that highlighted multiple ESG problems at insurers, and warned that some companies would struggle to meet their financial obligations without swift action.”
[COMMENTARY] It seems inevitable that insurers would fall behind the curve on this. And that anyone invested in them needs to be very careful.
Rating agencies ratchet up pressure on insurers over ESG risk, by Billy Nauman, July 4, 2019, Financial Times, UK.
Are ESG factors correlated with sovereign spreads? Yes and no… “Separate research from BlueBay Asset Management and Hermes Investment Management has shown that countries with the lowest ESG scores tend to have the widest credit spreads… governance was the best indicator of credit spreads, showing that lower governance scores had a positive correlation with a high credit spread. “
[COMMENTARY] Helpful research in understanding how ESG ratings affect sovereign debt spreads.
Are ESG factors correlated with sovereign spreads? Yes and no… by Sam Benstead, July 2, 2019, CityWire Selector, UK.