ESG and Sustainability
The rise of ESG factors in investment decision making will have a dramatic impact on returns and opportunities in the 21st century. A recent survey by LGT Capital Partners and Mercer showed that 57% of respondents believe that incorporating ESG standards into investment decisions will raise returns. Just 9% argued they reduce returns on investment.
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More Stories on ESG and Sustainability
ValueAct founder Jeffrey Ubben expressed his excitement this week that BlackRock chief Larry Fink had sounded an alarm around climate change. The founder of the $17 billion hedge fund has been one of the biggest supporters of ESG factors in corporate governance.
Larry Fink’s emotionally charged plug for ESG ticks all the investment boxes for Tesla.
According to Cramer, electric car maker Tesla could be a beneficiary of BlackRock’s new-found love for everything ESG.
Change is afoot at BlackRock, the world’s largest asset manager. The firm is finally veering around to using its enormous financial and investment clout to push for climate action, according to Reuters.
BlackRock CEO warned in his annual letter to investee CEOs, titled “A fundamental reshaping of finance,” that “climate change has become a defining factor in companies’ long-term prospects,” and that markets have been slow to reflect the growing global concerns on climate change.
There is a mutual cause-and-effect relationship between a firm’s ESG investments and its profitability, says a report by ISS ESG.
ISS ESG is the responsible investing arm of Institutional Shareholder Services (ISS). The ISS study found that those firms which invest in improving their ESG corporate ratings are also more profitable.
Climate Action 100+, an investor network that is pushing for disclosures into carbon emissions, has inked BlackRock to its roster. The three-year-old investor group is pushing for commitments to reduce fossil fuel-related emissions. The world’s largest asset manager joins firms like CalPERS, Allianz, and UBS Asset Management.
The Environmental-Social-Governance (ESG) space commands a lot of investing heft these days. That much is evident from the confidence placed by CVC Growth Partners in EcoVadis, a provider of sustainability ratings for global supply chains. CVC’s investment of approximately $200 million is validation of its view that ESG is extremely important to business success over the long term.
According to the Wall Street Journal, regulators are questioning the methodologies and criteria for the selection of companies by funds that tout ESG portfolios. ESG is an acronym for environmental-social-and governance observances. ESG investing is also known as impact, or socially responsible investing.
The SEC’s move may not be such a bad thing according to advisers, says InvestmentNews.
A group of researchers at Stanford University, led by Mark Jacobson, has prepared detailed roadmaps for 143 countries that account for 99.7 percent of all global greenhouse gas emissions. These roadmaps provide for a 100% transition to wind-water-solar (WWS) energies and storage by 2050, and 80% by 2030.
The global cost? All of about $73 trillion as per the present value of capital cost. The payback is in under seven years, and comes with massive benefits
Bond giant PIMCO has launched RAFE, a smart beta ESG ETF. Here’s another environment-social-governance (ESG) focused ETF from PIMCO, the leading fixed-income fund house. Offered in collaboration with Research Affiliates, the Pimco RAFI ESG US ETF RAFE will track the Research Affiliates RAFI ESG U.S. Index. Research Affiliates RAFI ESG U.S. Index The Pimco RAFI…
The Bank of America analyzed 24 scandals relating to accounting, data breaches, sexual harassment, and other ESG issues concerning companies in the S&P 500 index. It found that over the past five years, these issues, emanating from environmental, social, and governance (ESG) practices, cost the affected companies $534 billion in value.
A slew of high-profile investors backed Ada Ventures with $34 million. Ada Ventures will use the money to venture-finance UK-based tech entrepreneurs from under-represented groups.
Ada Ventures’ backers included TransferWise co-founder Taavet Hinrikus and later stage investment firm Atomico. Also investing were British Business Bank (the cornerstone investor), US-based Blue Sky Capital, Dubai-based Rasmala, and Silicon Valley law firm Wilson Sonsini.
A report by Cerulli Associates says wealthy American investors, as well as their next-gen successors, are considering ESG investing.
High net worth (HNW) investors in the US are increasingly gravitating towards environmental – social – governance (ESG) investment strategies, says Cerulli in their new report.
The A&M Activist Alert is an analysis and predictor of shareholder activism in Europe. A&M used ESG ratings by Refinitiv of 1,300 European companies to segregate them into a ranking of four quartiles. Going back to 2017, A&M looked at each quartile to determine how many of its companies faced an activist attack. A total of 62% of activist targets across Europe since 2017 fall into the bottom two ESG quartiles, observed the study. Companies in these groups are, on average, 24% more likely to face an activist campaign.
Japan’s Government Pension Investment Fund (GPIF) feels a pang of ESG conscience and bans lending its foreign holdings to bears.
The GPIF fund will lose a small but lucrative stream of revenue from stock lending. It said the practice of stock lending lacked transparency. The identity of the ultimate buyer and their intentions are not known, the fund said.
GPIF’s move is said to be triggered by environmental, social and governance (ESG) considerations, and the resulting need to improve its image as an investor.
World Bank issued its debut green bonds in Denmark in 1997, the first and longest maturity green bond issued in that market. After a hiatus of 22 years, the World Bank has returned to Denmark with a Danish green bond issue of DKK 3 billion (USD 441 million). Six Nordic funds subscribed to the issue.
Sir Christopher Hohn, the head of activist fund TCI, has demanded the companies improve their pollution disclosures. Those boards that fail to meet his demands will not receive his vote. In fact, he’ll vote against directors on issues like carbon emissions.
JP Morgan acquired EcoSecurities in 2009 for $220 million but sold it in 2013 to Mercuria, the global energy, and commodity group.
According to a Reuters report, Mercuria has now sold Ecosecurities back to Pedro Moura Costa and partner Pablo Fernandez for an undisclosed amount.
Asset Managers and Climate Change
A BloombergLaw report said Neptune would explain to investors how its business will weather mounting environmental, social, and governance (ESG) concerns. According to this report, Neptune will publish for the first time, its ESG plan in its Annual Report around April 2020. Readying for an IPO means readying a low-carbon strategy, the article said.
Engaged investors continue to be concerned about climate change, gender adversity, and pay equality, says a report from Farient Advisors and the Global Governance and Executive Compensation Group. Investors are perturbed about the disconnect between executive performance and ever-escalating compensation.
Heliogen, a startup backed by Bill Gates, announced a breakthrough solar energy technology that could be a boon for heavy industry. Heliogen uses artificial intelligence and mirrors to reflect and concentrate sunlight to generate ultra-high temperatures. Said to be The Holy Grail of clean energy, it generates no emissions and is cheaper than fossil fuels.
SEC Commissioner Allison Herren Lee wants the SEC to clarify its role and update disclosure requirements on ESG.
In prepared remarks addressed to the Investment Advisory Committee (IAC), SEC Commissioner Lee drew attention to investors’ growing interest in ESG. The IAC was meeting to consider the topic “Whether Investors Use Environmental, Social, and Governance (ESG) Data in Investment/Capital Allocation Decisions.”