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Editorials

 

Shareholder Values

 
"Forty-five percent of U.S. households prefer an environmental, social and governance (ESG) approach to investing… Among those between the ages of 30 and 39, this increases to 64%, and for those younger than 30, it is 67%."
-- Cerulli Associates
 
 (USA)
    October 2018

"The vast majority of Canadian investors are interested in responsible investments (RI) that incorporate environmental, social and governance (ESG) issues, and they would be more likely to choose responsible investments if their financial advisor suggested suitable RI options for them."
-- Responsible
    Investment
    Association (RIA)
 
  (Canada)
    June 2017

"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
-- Acquisition
    International
   
(UK) June 2015

 

Events

 

Global Ethical Investing News & Commentary

Commentaries by Ron Robins  E-mail us your feedback

Links may only be valid for a limited time    June 19, 2021

***List your event on our Events Page***

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Latest Podcast: Best Infrastructure and LGBTQ Friendly Stocks, Plus… "Best Infrastructure and LGBTQ Friendly Stocks, Plus... Green Bonds, Renewable Energy and ESG ETFs. Covered entities include: Vulcan Materials, Caterpillar, AECOM, Nucor, ChargePoint Technologies, iShares Global Green Bond ETF, VanEck Vectors Green Bond ETF, Alphabet Inc., Visa Inc., The Charles Schwab Corporation,, PayPal Holdings, Inc., Microsoft Corporation, Starbucks Corporation, Apple Inc., LGBTQ100 ESG ETF."
-- By Ron Robins

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Sustainability Initiative: Bank for International Settlemen

Green Bonds Were a Better Safe Haven Than Gold During the Pandemic. "Climate-friendly debt served as a better protection against large market fluctuations than gold, as well as performing better than other environmental, social, and governance investments, according to new research from Imran Yousaf of Pakistan's Air University, Muhammed Tahir Suleman of the University of Otago in New Zealand, and Riza Demirer of Southern Illinois University Edwardsville."

[COMMENTARY] This is not a surprising finding. Green bonds have become the new investment favourite. How many people want gold today?
Green Bonds Were a Better Safe Haven Than Gold During the Pandemic, by Jessica Hamlin, June 8, 2021, Institutional Investor, USA.

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Mandatory ESG disclosures are a political inevitability. "The SEC is gathering public input about corporate climate reporting. The comment request is one of several actions the agency has taken over the past several months to elevate ESG oversight, including establishing a climate and ESG enforcement task force...

In a June 3 speech, Roisman said the thrust of climate disclosure seems to be on assessing the damage a company does to the environment, not the havoc climate change can wreak on a company. That led him to question the SEC's role."

[COMMENTARY] It seems to me that investors need to know both sides: the effects of climate change on the company and how the company contributes to climate change.
Mandatory ESG disclosures are a political inevitability, by Mark Schoeff Jr., June 9, 2021, Investment News, USA.

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Banning Investment Managers Who Shun Fossil Fuels Is a Bad Idea. "Texas has joined a group of states proposing legislation that would ban private investment management companies that focus on sustainable investing, to the ire of the oil and gas industry. Attorney J. Carl Cecere argues politicizing state-pension investment strategy is bad for pensioners and violates the First Amendment."

[COMMENTARY] I agree with the writer. Not only because I'm biased towards renewable energy, but also on the basis that asset managers need to have the freedom to invest according to their client's wishes, and so forth.
Banning Investment Managers Who Shun Fossil Fuels Is a Bad Idea, by J. Carl Cecere, June 4, 2021, Bloomberg Law, USA.

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Rating the ESG raters: Why Sustainable Investing Needs More Independent Verifiers. "With an array of data providers and indices to choose from, third party ESG verifiers have stepped into the market to help screen information available and offer some clarity. In Switzerland, one such company is Geneva-based sustainable investment advisory firm Conser. Founded by Angela de Wolff (also one of the co-founders of Sustainable Finance Geneva), the firm has developed its own proprietary methodology to capture a variety of different ESG opinions."

[COMMENTARY] I guess this type of service had to happen. And I think it's good. It'll be a while to see if it takes off.
Rating the ESG raters: Why Sustainable Investing Needs More Independent Verifiers, by Kasmira Jefford, June 2, 2021, Geneva solutions, Switzerland.

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Auditors may see increased demand for ESG attestation. "During a virtual session Monday, Kristen Sullivan, CPA, CGMA, a partner with Deloitte & Touche LLP and the firm's Americas region sustainability services leader, gave an overview of the concerns public companies, directors, and auditors have about the new regulatory focus on ESG disclosures.

To date, ESG disclosures have tended to be separate from regulatory filings. But the CAQ's road map is meant to help guide capital market participants through the frequency and consistency of the disclosures and whether the information is comparable from company to company, Sullivan said."

[COMMENTARY] I've long believed that CSR/ESG disclosures need to be audited and attested to by a regulated and licensed auditing entity. Only in this way can investors and stakeholders have confidence in the facts, data, and material being presented. Furthermore, there must be, as is now occurring, some standardization of such facts, data, and material. It should also be shown in what way it might be material to the activities and financial performance of a company.
Auditors may see increased demand for ESG attestation, by Joseph Radigan, May 28, 2021, Journal of Accountancy, USA.

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The Theory at the Heart of Modern Portfolios Is Leading Investors Astray. "These activities (ESG, SRI, and impact investing) form a coherent challenge to the limitations of modern portfolio theory. MPT, the dominant investment paradigm in the world, focuses on diversification to minimize risk."

[COMMENTARY] Yes, MPT is upended by our emphasis on ESG, sustainability, and ethics!
The Theory at the Heart of Modern Portfolios Is Leading Investors Astray, by Jon Lukomnik and James P. Hawley, May 28, 2021, Barron's, USA.

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Does corporate social responsibility affect shareholder value? Evidence from the COVID-19 crisis. "We observe that firms engaged in more CSR activities outperform other firms. This suggests that CSR plays a positive role in determining shareholder value, particularly for an emerging market where minority shareholder rights are weak. Collaborating with our main finding, we further find that governance metrics play a significant role."

[COMMENTARY] This study was done in India on companies whose main revenues and activities were also in India. It's good to note that CSR was found to be positive for shareholder value.
Does corporate social responsibility affect shareholder value? Evidence from the COVID-19 crisis, by Somya Arora, Jagan Kumar Sur, Yogesh Chauhan, at the Indian Institute of Management Raipur, Raipur, India, May 26, 2021. International Review of Finance.

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Indexing Giants 'Should Prepare for Disruption' Says New Report. "MSCI, FTSE Russell, S&P Dow Jones and Bloomberg could see their dominance of the indexing industry threatened by sustainability specialists, according to a new report."

[COMMENTARY] When a new industry takes shape, there are always new entrants and winners. It'll likely be the same as ESG investing matures. Who will be the winners?
Indexing Giants 'Should Prepare for Disruption' Says New Report, by staff, May 25, 2021, Banking Exchange, USA.

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Keeping Promises? Carbon Risk (CR) Disclosure and Mutual Fund Portfolios. "Indeed, fund managers are sensitive to disclosures only in the presence of binding commitments to environment sustainability. Sustainable funds lower their CR score by reducing exposure to fossil fuels, not by increasing exposure to renewables."

[COMMENTARY] This is a highly insightful paper that illuminates the carbon risk of conventional and sustainable US mutual funds.
Keeping Promises? Carbon Risk (CR) Disclosure and Mutual Fund Portfolios, by John R. Nofsinger, University of Alaska Anchorage and Abhishek Varma, Illinois State University. April 27, 2021.

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Danger of being corrupted? ESG ratings increase risks of greenwashing. "The European Commission (EC) asked 650 individuals and organisations last year for their views on the concentration of providers in the ESG ratings market and on the quality of the ESG ratings' analyses. 74% of respondents called for action.

The European Securities and Markets Authority (ESMA), noting that 'climate and environmental risks constitute a key source of potential financial instability', claimed the 'clear mandate to prevent threats to financial stability and ensure investor protection.'

Consequently, ESMA demands that the regulatory regime should be adapted to tackle not only an increased risk of greenwashing but also risks of 'capital misallocation and product mis-selling'.

Should the EC adopt this proposal, which seems likely, this will not just mean an end to unethical selling practices of ethical ratings, it will also help forward-thinking investors allocate resources and capital to truly eco-friendly projects and to companies that take their ecological and social responsibility seriously. Our children will thank us."

[COMMENTARY] I thought to include the above-extended quote to give importance to the fact that the EU is strongly considering regulating ESG raters.
Danger of being corrupted? ESG ratings increase risks of greenwashing, by Alpay Soyturk. May 19, 2021, Investment Week, USA.

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The Impact Of Sin Stock Exclusion On Portfolio Performance. "'As about 10% of the market can be classified as sin, this would imply an additional 0.10% return loss if sin stocks are excluded. Combined with the 0.27% estimated loss due to the adverse effect on factor exposures ... this brings the total loss in expected return to 0.37% per annum.

Although this might seem small, a pension fund which generates 0.37% lower returns on its equity portfolio than peers may end up providing 5% lower pensions in the long run.' That is not an insignificant loss."

[COMMENTARY] This article reports on a study saying that excluding 11 particular industries in a portfolio results in a 0.37% annual loss in returns. I'm sure many will debate the methodology and conclusions of this study.
The Impact Of Sin Stock Exclusion On Portfolio Performance, by Larry Swedroe, May 19, 2021, Seeking Alpha, USA.

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The rise of the climate economy is upon us. "What was once a narrow purview around clean tech recently has morphed into the all-encompassing term of climate tech, and unlike the boom and bust cycle that accompanied the clean energy frenzy of the late 2000s, climate tech appears to have a sustainable presence in the minds of long-term investors."

[COMMENTARY] I thought it was interesting that the term climate tech appears to be replacing clean tech. Also, what that means for ethical and sustainable investing.
The rise of the climate economy is upon us, by Michael Ferrari, May 17, 2021, GreenBiz, USA.

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The 100 Best Corporate Citizens of 2021. "As companies decarbonize, align with the Sustainable Development Goals and rebuild an equitable economy post-pandemic, they must be open about their efforts. Each year, 3BL Media evaluates the largest public U.S. companies on ESG transparency and performance."

[COMMENTARY] This is always a good list to review, particularly for ethical and sustainable investors.
The 100 Best Corporate Citizens of 2021, May 17, 2021, 3BL Media, USA.

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ESG Investors Turn to Emerging Markets, Defying Skeptics. "There's a growing number of money managers in green finance turning to markets not usually associated with sustainability. Fund bosses in Europe's North, where climate-friendly investing has gone mainstream, have started looking much further afield to find cheap assets they say will eventually meet their environmental, social and governance goals."

[COMMENTARY] I remember seeing research that says that stock outperformance is superior in companies who are just beginning to grow in their ESG performance. That is when compared to companies already mature in their ESG development. This might be something that many ethical and sustainable investors might consider.
ESG Investors Turn to Emerging Markets, Defying Skeptics, by Leo Laikola, Hanna Hoikkala, and assistance from Filipe Pacheco, May 17, 2021, Bloomberg, USA.

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Faith-Based Investing Makes Up Ground in Gains and Convenience. "Investing according to theological beliefs 'is much easier to do now,' a wealth adviser said. It's also as profitable as investing without a religious screen, and no more risky."

[COMMENTARY] This is a simple overview of US faith-based investing.
Faith-Based Investing Makes Up Ground in Gains and Convenience, by Paul Sullivan, May 14, 2021, The New York Times, USA.

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Investors May Turn to Proxy Voting to Convey ESG Preferences. "As ESG becomes increasingly relevant to investing, investors are realizing the power of active ownership as an investing strategy and are turning their attention to how ESG issues are represented on corporate proxy ballots and how funds vote on these issues, Morningstar reports in 'The Power of the Proxy in Retirement Plans: Empowering workers saving for retirement with a voice on ESG issues.'"

[COMMENTARY] Many corporate boards that have shown a reticence to adopting significant ESG adaptations to their activities might well be forced to do so. As ESG funds grow they will likely become ever more active in pushing their shareholder agendas on corporate boards.
Investors May Turn to Proxy Voting to Convey ESG Preferences, by Ted Godbout, May 11, 2021, National Association of Plan Advisors (NAPA), USA.

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Demand for minerals threatens clean energy rollout, IEA warns. "'Looming mismatch' between world's climate ambitions and availability of necessary critical minerals, according to a new report."

[COMMENTARY] Most ethical and sustainable investors avoid mining stocks. Yet, without massive growth in mining, there will be no growth in the green economy! It's high time that sustainable investors considered investing in mining stocks with the best ESG performance.

Not only will they be supporting a green climate change-friendly economy -- but they will find a new sector that'll likely provide potentially good stock returns.
Demand for minerals threatens clean energy rollout, IEA warns, by Nadia Weekes, May 5, 2021, Windpower Monthly, UK.

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See Japan in a different light: How investors get ESG in world's third-largest economy wrong. "Greenwashing is a persistent and growing problem in the ESG landscape. However, many companies in Japan suffer from this issue in reverse and we believe their ESG ratings are often significantly worse than they deserve."

[COMMENTARY] This is important. I've long thought that Japan is underestimated for its ESG corporate contributions. This article explains the how and why of this. Managers of western ESG portfolios need to consider increasing allocations to Japanese companies.
See Japan in a different light: How investors get ESG in world's third-largest economy wrong, by Richard Kaye, May 5, 2021, Investment Week, UK.

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ESG does not generate outperformance, Scientific Beta warns. "'The results show that the quality factors (high profitability and low investment) make pronounced positive return contributions to most types of ESG strategies,' the report added."

[COMMENTARY] The headline is misleading. What it boils down to is that the concentration on tech and financials in ESG portfolios is largely responsible for their outperformance. When these portfolios are adjusted for such concentration, there's no outperformance.

Also, I don't believe this paper is to be published in a peer-reviewed journal. Thus, one always has to be suspect of such study results when they aren't.
ESG does not generate outperformance, Scientific Beta warns, by Tom Eckett, May 5, 2021, ETF Stream, USA.

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ESG metrics rest on sand, not granite. "The challenge of identifying metrics that drive 'better' or 'worse' ESG results."

[COMMENTARY] This is a good article that describes the situation and challenges of creating and obtaining the 'right' ESG metrics for any given company.
ESG metrics rest on sand, not granite, by Ingo Walter, May 4, 2021, MarketWatch, USA.

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Ethical investing encourages consumers to invest more. "Latest research shows ESG finance encourages investors to leave less in cash."

[COMMENTARY] This shows that investors get excited about ethical, ESG, and sustainable investing once they see how to do it--and particularly if it's during a time of gains!
Ethical investing encourages consumers to invest more, by Mark Shoffman, April 27, 2021, Interactive Investor, UK.

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Sixty-eight of 77 industries significantly affected by climate risk, SASB says. "SASB released an updated Climate Risk Technical Bulletin last week to help companies better understand how they can disclose climate risk in a manner that provides investors with helpful information."

[COMMENTARY] This is not just important reading for the affected companies, but for investors too!
Sixty-eight of 77 industries significantly affected by climate risk, SASB says, by Mike Schnitzel, April 27, 2021, CorporateSecretary, USA.

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Wall Street's Trillion-Dollar ESG Club Comes With Huge Tax Perks. "Four banks pledge $6 trillion in sustainable finance, and the billions they'll save in taxes is one of the benefits."

[COMMENTARY] Hopefully, there's some innate desire to do such investments too though!
Wall Street's Trillion-Dollar ESG Club Comes With Huge Tax Perks, by Max Abelson and Lananh Nguyen, April 23, 2021, Bloomberg Green, USA.

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U.S. SEC review of socially responsible funds finds 'potentially misleading' claims. "The U.S. Securities and Exchange Commission on Friday said it has found 'potentially misleading' claims and inadequate controls around investing environmental, social and governance (ESG) issues in a review of investment advisors and funds."

[COMMENTARY] This is good news. The industry needs some cleaning out of the greenwashing that exists.
U.S. SEC review of socially responsible funds finds 'potentially misleading' claims, by Reuters staff, April 12, 2021, Reuters, USA.

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BlackRock Is Pushing to Offer Sustainable Investments to 401k Plans, CEO Says. "With the Biden Administration friendly to sustainable investing, BlackRock is making a push to offer those types of investments to retirement plans, CEO Larry Fink said in an interview."

[COMMENTARY] Employees of most firms will welcome this! As you know the number of such ESG-ethical-sustainable plans has been pathetic relative to the number of people interested.
BlackRock Is Pushing to Offer Sustainable Investments to 401k Plans, CEO Says, by Leslie P. Norton, April 16, 2021, Barron's, USA.

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SEC will not assess merit of ESG investments: Peirce. "The agency's role is not to determine whether any particular strategy is a good one, but to ensure investors know what they are getting, according to Securities and Exchange Commission member Hester Peirce."

[COMMENTARY] This is what I'd expect from the SEC.
SEC will not assess merit of ESG investments: Peirce, by Mark Schoeff Jr., April 13, 2021, InvestmentNews, USA.

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(US) ESG funds beat out S&P 500 in 1st year of COVID-19; how 1 fund shot to the top. "In the first 12 months of the COVID-19 pandemic, many large investment funds with environmental, social and governance criteria outperformed the broader market. One fund went from being among the poorest performers to the top of the list following tweaks to its portfolio."

[COMMENTARY] This is a good review of how US ESG funds performed in 2020.
(US) ESG funds beat out S&P 500 in 1st year of COVID-19; how 1 fund shot to the top, by Esther Whieldon and Robert Clark, April 6, 2021, S&P Global, USA.

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Op-Ed: Europe's New ESG Rules Create an Opportunity for US Investors. "The regulations will have a tremendous impact on asset managers and firms operating outside the bloc. The EU might be the first to move on sustainable finance regulations, but its objectives are a harbinger of things to come around the globe."

[COMMENTARY] This partly answers the issue raised concerning greenwashing by funds claiming ESG and sustainability credentials. Regulators -- and with President Biden's enthusiasm for ESG -- greenwashing and fund integrity concerning their legitimate ESG claims will come under greater scrutiny.
Op-Ed: Europe's New ESG Rules Create an Opportunity for US Investors, by Hari Bhambra, March 31, 2021, Chief Investment Officer, USA.

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Why all funds becoming ESG may not be a good thing. "The trouble is that as things stand, it is easy for managers to pay lip service to a sustainable investment approach in their marketing material and fund name, while in reality adopting a pretty light touch in that regard - a practice known as greenwashing."

[COMMENTARY] The warnings about greenwashing are valid. However, it appears that governments and investment industry regulators are increasingly taking steps to ward off the problem.
Why all funds becoming ESG may not be a good thing, by Haydon Waldek, March 30, 2021, Interactive Investor, UK.

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Is harmonization of reporting standards possible or even desirable? "If harmonization means consensus on a single standard, then the answer is most likely no. Why? Let's consider four major components of the context in which this ecosystem operates."

[COMMENTARY] I agree with the writer. For instance, how can you quantify, as the writer says, "culture; values; processes; strategies; product responsibility; quality of management, among others." However, metrics that can be quantifiable and uniformerly used across and within industries-- should be. Thus scores by ESG rating agencies will still differ even with many uniform metrics.
Is harmonization of reporting standards possible or even desirable? By Antonio Vives, March 24, GreenBiz, USA.

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Sustainable agriculture is the next way ESG investors can fight climate change. "7 ways for ESG investors to profit from sustainable agriculture."

[COMMENTARY] There are huge possibilities for sustainable practices and ESG among agricultural companies. This area is only now beginning to be addressed in the public markets.
Sustainable agriculture is the next way ESG investors can fight climate change, by Debbie Carlson, March 24, 2021, MarketWatch, USA.

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Financial world greenwashing the public with deadly distraction in sustainable investing practices. "The financial services industry is duping the American public with its pro-environment, sustainable investing practices. This multitrillion dollar arena of socially conscious investing is being presented as something it's not. In essence, Wall Street is greenwashing the economic system and, in the process, creating a deadly distraction. I should know; I was at the heart of it.

As the former chief investment officer of Sustainable Investing at BlackRock, the largest asset manager in the world with $8.7 trillion in assets, I led the charge to incorporate environmental, social and governance (ESG) into our global investments."

[COMMENTARY] This is quite an indictment. However, there's more detail in the article which expands on the fact that ESG itself is needed!
Financial world greenwashing the public with deadly distraction in sustainable investing practices, by Tariq Fancy, March 16, 2021, USA Today, USA.

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CFA Institute Launches Global Certificate in ESG Investing. "The CFA Institute has announced that it will market a certificate in environmental, social and governance (ESG) investing, created by the CFA Society of the United Kingdom, in financial hubs across the globe."

[COMMENTARY] They've been a long time in getting around to this! It's a great step forward though for the financial profession.
CFA Institute Launches Global Certificate in ESG Investing, by Amanda Umpierrez, March 17, 2021, planadvisor, USA.

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Ratings Agencies Punish Companies That Try To Do Good. "In their study, Lioui and his co-authors compared the data of several ratings agencies: Asset4 (Refinitiv), MSCI KLD, MSCI IVA, Bloomberg, Sustainalytics (Morningstar) and RobecoSam. Fitch, Moody' MCO +0.2% and S&P also provide thousands of ESG data scores...

How do the ratings agencies decide how good or bad a company is at ESG? Mostly their assessment is based on a company's own reporting with some other metrics thrown in from trade journals, news articles or other sources."

[COMMENTARY] This situation continues to describe the need for standardized ESG reporting formats AND formal independent auditing of those reports by qualified professionals akin to chartered accountants or CPAs.
Ratings Agencies Punish Companies That Try To Do Good, by Ollie Williams, March 7, 2021, Forbes, USA.

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Bank of England given new mandate to buy 'green' bonds. "The Bank of England will change its approach to buying corporate bonds after the government said environmental and climate goals should now be explicitly considered part of monetary policy. In Wednesday's Budget, Rishi Sunak, the chancellor, said the BoE should support the government's efforts to make the UK economy greener and achieve zero greenhouse gas emissions by 2050, and updated its mandate."

[COMMENTARY] Will US Treasury Secretary Janet Yellen issue the same order to the US Fed? It's possible. Though the Fed says it's 'independent.' Nonetheless, in recent statements, the chair of the US Federal Reserve Jerome Powell has said that central banks need to take a much more active role in assisting green financing! And what about the ECB?

Should such things happen, it could give a massive impetus to green bond issuance and the green bond market generally!
Bank of England given new mandate to buy 'green' bonds, by Camilla Hodgson and Valentina Romei in London and Nathalie Thomas in Edinburgh, March 3, 2021, Financial Times, UK.

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ESG investment favours tax-avoiding tech companies. "The huge rise in environmental, social and governance-based investing is funnelling money into companies that pay less tax and provide fewer jobs than many counterparts with lower ESG ratings, analysis shows."

[COMMENTARY] ironically, a high percentage of most ESG portfolios consist of companies who pay the least in taxes and are the most expert in tax avoidance. Most ESG investors are likely ignorant of this situation as well. Will it change their portfolio holdings if they knew the true tax situation of the companies they invest in? Probably not for most of them.
ESG investment favours tax-avoiding tech companies, by Steve Johnson, February 22, 2021, Financial Times, UK.

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Global Survey Finds Businesses Increasing ESG Commitments, Spending. "ESG has become a hot topic in recent years, but despite increased investment, fewer than half of employees believe their own companies' ESG performance is effective. The majority of respondents (81%) said their company has a formal ESG program in place. But there is not a high level of confidence that companies are effectively performing against all of their stated ESG metrics."

[COMMENTARY] It seems that companies still have a difficult time meeting their ESG goals. Does this mean that there's still a great deal of 'greenwashing' in corporate ESG reports?
Global Survey Finds Businesses Increasing ESG Commitments, Spending, February 23, 2021, JDSupra, USA.

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Introducing the 2021 Carbon Clean200: Investing in a Clean Energy Future. "Corporate Knights and As You Sow have released the annual Clean200 list of publicly traded companies that are leading the way with solutions for the transition to a clean-energy future."

[COMMENTARY] Always an eagerly sought-after list by a very competent team.
Introducing the 2021 Carbon Clean200: Investing in a Clean Energy Future, by Andy Behar and Toby A.A. Heaps, February 18, 2021, Corporate Knights and As You Sow, Canada. 

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Meta-study underlines ties between ESG and corporate success. "Researchers from the NYU Stern Center for Sustainable Business and Rockefeller Asset Management looked at 1,141 peer-reviewed papers and 27 meta-reviews -- themselves based on roughly 1,400 studies -- published between 2015 and 2020...

The meta-study finds a positive link between ESG and financial performance in 58 percent of the corporate studies, with 13 percent showing a neutral impact, 21 percent mixed results and only 8 percent showing a negative relationship. Among investment studies, 59 percent find similar or better performance relative to conventional investment approaches while only 14 percent show negative results."

[COMMENTARY] More clear research on why companies adopt ESG and why ESG is gradually gaining dominance in the investment industry.
Meta-study underlines ties between ESG and corporate success, by Ben Maiden, February 19, 2021, Corporate Secretary, USA.

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S&P Global makes over 9,000 ESG Scores publicly available to help increase transparency of corporate sustainability performance. "S&P Global (NYSE: SPGI) launched a new public webpage highlighting S&P Global's full suite of environment, social and governance (ESG) solutions, and for the very first time, access to S&P Global ESG Scores on 9,200 companies. S&P Global ESG Scores are the key factor for selecting companies for the Dow Jones Sustainability Indices (DJSI)."

[COMMENTARY] The range of research options for individual ethical and sustainable investors continues to expand. This is a welcome addition to those options.
S&P Global makes over 9,000 ESG Scores publicly available to help increase transparency of corporate sustainability performance, press release, February 16, 2021, S&P Global.

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A Little-Known Green Fund Soared 114% in 2020. We Caught Up With Its Manager. "Thanks to its investments in disruptive technologies, the little-known Shelton Green Alpha Fund (ticker: NEXTX) soared 114% in 2020, winning a coveted five-star Morningstar rating."

[COMMENTARY] Of course the real test is how the fund performs long-term! Now, was the fund into a few lucky segments and companies? Time will tell.
A Little-Known Green Fund Soared 114% in 2020. We Caught Up With Its Manager, by Leslie P. Norton, February 14, 2021, Barron's, USA.

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S&P Global annual report finds record ESG disclosure. "The yearbook, published since 2004, covers a record 7,032 companies, compared with 4,700 in 2020, across 40 countries and 61 industries, and is now publicly available."

[COMMENTARY] These numbers confirm the rapid adoption of ESG and sustainability reporting by the world's largest corporations. I've waited over forty years for these days!
S&P Global annual report finds record ESG disclosure, by Hazel Bradford, Pensions&Investments, USA.

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$1 trillion in oil and gas pipelines worldwide could become stranded assets, new report warns. "The pipeline industry faces growing questions about whether it’s wise to build a massive network of pipelines that could become obsolete well within their projected 50-year-plus lifespans."

[COMMENTARY] I suspect most of those connected with the development of new pipelines are concerned for the next 5-15 years. Beyond that is too far into the future to consider. They want their incomes and returns 'now'.
$1 trillion in oil and gas pipelines worldwide could become stranded assets, new report warns, by  Sharon Kelly, February 8, 2021, Nation of Change, USA.

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What Happens When a Company Gets an A From One ESG Rater and an F From Another? "With the explosion of ESG data and ratings, there's little agreement on what makes a company good or bad."

[COMMENTARY] I agree that ESG reporting metrics and information should be standardized. However, what particular metrics and information are favored by raters should be up to them. Hence, there should still be lots of room for independent opinions concerning ESG 'grading.'
What Happens When a Company Gets an A From One ESG Rater and an F From Another? By Judy Segal, February 2, 2021, Institutional Investor, USA.

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Advisers expect half recommended assets will be ESG within five years. "Financial advisers expect demand to rise sharply for ESG assets according to new research from the lang cat. They estimate that the proportion of ESG investments recommended in five years will be 48%, compared to just 19% today.

The findings form part of Crossing the ESG Event Horizon--an adviser's guide, a new report from the lang cat, supported by Schroders, which seeks to understand the issues around considering environmental, social and governance factors alongside financial factors in the investment decision-making process."

[COMMENTARY] I don't think there's anything to add to this story. It's obvious to all in the investment industry that this is the way it's going to work out.
Advisers expect half recommended assets will be ESG within five years, by Peter Wilson, January 28, 2021, IFA Magazine, UK.

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2021 Global 100 ranking by Corporate Knights. "The 17th annual cohort of the world's most sustainable corporations continue to soar above their peers."

[COMMENTARY] This is one of the best lists of its kind for ethical and sustainable investors.
2021 Global 100 ranking by Corporate Knights, January 25, 2021, Canada.

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IIRC revises integrated reporting framework. "The International Integrated Reporting Council has published its revised Integrated Reporting Framework, incorporating some major changes since the IR Framework was first published in 2013."

[COMMENTARY] Some form of standardization of corporate ESG and sustainability reporting continues to gain momentum. We'll soon see even the US SEC on board!
IIRC revises integrated reporting framework, by Michael Cohn, January 21, 2021, Accounting Today, USA.

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Why ESG Funds Fail to Scale. "Many investment professionals might read these and believe that launching a new ESG investment firm or ESG offering will be an automatic success. Our analysis of the data shows that this is far from the truth: Most of these efforts fail."

[COMMENTARY] This analysis suggests that starting a fund small, not quickly gaining significant assets, and an intensely competitive environment, are the main reasons why ESG funds remain small.
Why ESG Funds Fail to Scale, by Gabriel Karageorgiou and George Serafeim, January 11, 20121, Institutional Investor, USA.

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The ESG investment industry is broken. "Yet over time, I've come to realize that the ESG investment industry is by and large little more than a marketing mechanism, and will not lead to productive change...

In 2015-16, for instance, I noticed that one of the largest positions held by Generation Investment Management - co-founded by former U.S. vice-president Al Gore and Goldman Sachs' Asset Management head David Blood - was in Facebook. This is a company whose business is to collect every possible byte of their users' data and resell the information to the highest bidder, regardless of the privacy violations that crop up along the way, which is a systematic (though legal?) violation of their users' privacy."

[COMMENTARY] I can see the point being made here. Nonetheless, a turn has been made in the financial markets that does promise change for the better concerning ethics and the  sustainability of our world.
The ESG investment industry is broken, by James Rastehm January 1, 2021, The Globe & Mail, Canada.

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During Biden Administration, SEC will require Climate Change Risk and ESG Disclosure. "Public companies will be required to disclose climate risks and greenhouse gas emissions under President-elect Biden's administration. The Securities and Exchange Commission (SEC) will institute rulemaking and guidance on the federal monitoring of environmental, social and governance (ESG) issues."

[COMMENTARY] What a 180-degree turn this will be for the SEC and many public companies! See that DOL ruling restricting pensions investing according to ESG principles also eliminated soon!
During Biden Administration, SEC will require Climate Change Risk and ESG Disclosure, by Benjamin D. Stone, December 29, 2020, The National Law Review, USA.

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Doing Good: Where Sustainable Investing Gets It Wrong. "But does a higher ESG score for an investment product necessarily translate into doing more good?"

[COMMENTARY] Though not specifically addressed in this article -- though I concur with its thesis -- is that the services or products of a company are often left out of ESG sustainable performance ratings. So a few tobacco companies can still score highly on ESG according to some raters!
Doing Good: Where Sustainable Investing Gets It Wrong, by Lucie Teplá, December 16, 2020, INSEAD, Singapore.

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ESG Standards Convergence Could Happen in Next 12 to 24 Months, Accounting Body Chief Says. "Reporting standards in the world of environmental, social and governance investing, long a thicket of competing frameworks, could converge within 12 to 24 months, said Janine Guillot, head of the Sustainability Accounting Standards Board."

[COMMENTARY] I believe such news of convergence in standards would be almost universally welcomed.
ESG Standards Convergence Could Happen in Next 12 to 24 Months, Accounting Body Chief Says, by Leslie P. Norton, December 14, 2020, Barron's, USA.

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Dramatic increase in sustainability reporting due to generational attitudes, ESG investing. "Eighty percent of companies now report on sustainability, compared with only 12 percent in 1993."

[COMMENTARY] This read provides a good appreciation of reasons for the growth and acceptance of sustainability reporting.
Dramatic increase in sustainability reporting due to generational attitudes, ESG investing, by Kristen Beckman, December 9, 2020, Benefits Pro, USA.

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5 Drivers Behind the Sustainable Investing Shift. "What is driving the shift to sustainable investing? This visual dashboard from Raconteur explains five key drivers, from generational shifts to investors' preferred strategies."

[COMMENTARY] This is a useful read for advisors and brokers to understand and grow their client base.
5 Drivers Behind the Sustainable Investing Shift, by Iman Ghosh, December 9, 2020, Visual Capitalist, Canada.

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The Future of ESG Is ... Accounting? "That revolution is being led by the IFRS Foundation, the body that oversees the work of the International Accounting Standards Board (IASB) in setting financial reporting requirements for most companies in the world, across more than 140 jurisdictions. (In the U.S., these requirements are set by the Financial Accounting Standards Board, or FASB).

This past September, the IFRS Foundation proposed the creation of a parallel Sustainability Standards Board (SSB)."

[COMMENTARY] Now that ESG is mainstream, it's about time that the accountancy organizations got involved in creating universal accounting standards for companies' ESG reporting.
The Future of ESG Is ... Accounting? By Richard Barker, University of Oxford, December 3, 2020, Harvard Business Review, USA.

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Asset managers complain over CFA's proposed ESG standards. "CFA Institute' plan to create a global ESG standard has triggered concern among some US and European asset managers already juggling overlapping regulations and rising costs in a crowded space."

[COMMENTARY] These concerns are valid. It seems to me that perhaps the UN's PRI should get involved with all the standards-setting organizations to coordinate the standards. A UN body just might be the best vehicle for doing that.
Asset managers complain over CFA's proposed ESG standards, by Caroline Byrne, December 2, 2020, Corporate Secretary, USA.

Canadian ESG Assets Surge to $3.2 Trillion. "According to the latest available data, RI assets grew from $2.1 trillion at the end of 2017 to $3.2 trillion as at December 31st, 2019. This represents a 48% increase in RI assets under management (AUM) over two years. These figures reflect assets that fall into seven different RI strategies or categories including ESG integration, shareholder engagement, negative screening, norms-based screening, positive screening, thematic ESG investing, and impact investing."

[COMMENTARY] In Canada, as in the US and around the world, ESG assets are surging! ESG is mainstream now.
Canadian ESG Assets Surge to $3.2 Trillion, press release, November 25, 2020, Responsible Investment Association (RIA), Canada.

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Brave new world of ESG bonds can sometimes leave investors cold. "A new type of bond that penalizes issuers for failing to meet social and environmental goals is raising concern among some investors that buying the debt may not be all that ethical."

[COMMENTARY] These are early days for green bonds. No doubt there'll be a lot of marketplace learning to be had. However, their future, in general, is assured.
Brave new world of ESG bonds can sometimes leave investors cold, by Ayai Tomisawa, November 26, 2020, The Japan Times, Japan,

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Fidelity, Vanguard Rank Lowest in Morningstar's New ESG Rating. "Some of the country's largest asset managers, including Vanguard, Fidelity and American Century, received low marks in Morningstar's first assessment of asset managers' commitment to incorporating ESG factors in their investment processes and strategies.

Others, like BlackRock, which has stressed sustainability as its 'new standard for investing,' and Pimco, received the second-to-lowest rating of 'Basic.'"

[COMMENTARY] This analysis demonstrates that the big conventional firms may say a lot about their ESG prowess but still lag the real ESG asset managers!
Fidelity, Vanguard Rank Lowest in Morningstar's New ESG Rating, by Bernice Napach, November 19, 2020, ThinkAdvisor, USA.

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Companies that pay fair wages weather downturn better. "Just Capital's researchers found that the top 20% of firms enjoyed a 6.5% higher average annual return versus their industry peers. Companies whose miserly pay packets landed them in the bottom quintile were found to earn 3% less than their industry peers."

[COMMENTARY] The data looks convincing. Questions I have and not sure they're answered are: 1) Were the firms paying the higher wages in an oligopoly/monopoly type situation where barriers to entry to their markets were almost impossibly high, and 2) Which comes first? Do high profits allow for higher wages or higher wages create greater productivity and profits?
Companies that pay fair wages weather downturn better, by Rick Spence, November 18, 2020, Corporate Knights, Canada.

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The US SIF Foundation's Biennial "Trends Report" Finds That Sustainable Investing Assets Reach $17.1 Trillion. "The total US-domiciled assets under management using sustainable investing strategies grew from $12.0 trillion at the start of 2018 to $17.1 trillion at the start of 2020, an increase of 42 percent. This is 33 percent - or 1 in 3 dollars - of the total US assets under professional management."

[COMMENTARY] The value of sustainable investing assets in the US has reached levels unimaginable just a few years ago. It's difficult to believe that they will grow yet more in the years ahead. But they will!
The US SIF Foundation's Biennial "Trends Report" Finds That Sustainable Investing Assets Reach $17.1 Trillion, press release, November 16, 2020, US SIF, USA.

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Why ESG Investors Are Happy to Settle for Lower Returns. "However, they do outperform the rest of the market when there are unexpected shifts in customers' tastes for green products and investors' tastes for green holdings, the authors added."

[COMMENTARY] I'm unsure with the conclusion that ESG investors settle for lower returns. That might've been the case -- until fairly recently. I suspect that many new ESG investors are seeing the outperformance of ESG stocks and are buying them for that reason only.
Why ESG Investors Are Happy to Settle for Lower Returns, by Wharton Business School, November 9, 2020, University of Pennsylvania, USA.

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A Paris Exit Creates Climate Liability for U.S. Businesses. "If the U.S. stays out of the Paris agreement, there will be consequences for American businesses with a global footprint, and even for some without... The lack of a plan to substantially (or entirely) eliminate net carbon emissions creates an unfunded liability for companies... [and] access to global capital, which might be choked off if investors go beyond merely encouraging companies to stick to environmental commitments and start demanding it."

[COMMENTARY] I suspect the above issues were never considered by the Trump administration. Yet, they could be severe and negatively affect US corporate profits.
A Paris Exit Creates Climate Liability for U.S. Businesses, by Nathaniel Bullard, November 5, 2020, Bloomberg, USA.

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The World's Courtrooms Could Unleash the Next Wave of Green Investing. "The legal risk for pension funds that fail to account for climate change in portfolio investments is about to become a little clearer."

[COMMENTARY] In light of the US DOL's ruling (see below) a successful similar case in the US would be a great challenge to that ruling!
The World's Courtrooms Could Unleash the Next Wave of Green Investing, Bloomberg, November 1, 2020, USA.

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DOL's Final ESG Rule Appears Slightly Softer Than Proposal. "The final version of the regulation emphasizes the importance of using only 'pecuniary' factors in the assessment of investment options within tax-qualified retirement plans, rather than expressly limiting the use of environmental, social and governance themed investments."

[COMMENTARY] It's unfortunate for US retirement account investors that the current US administration is so centered on 19th century thinking concerning energy. Even with the slight weakening of the language the regulation is still a significant impediment for many asset managers to deal with. Will there be a new administration and a changed ruling?
DOL's Final ESG Rule Appears Slightly Softer Than Proposal, John Manganaro, October 30, 2020, Planadvisor, USA.

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Does selling 'stranded assets' lower global carbon levels? "The likely outcome is that less climate-conscious firms will buy these carbon-intensive assets at cheap prices, motivated by the ability to secure above-average returns. So while offloading assets reduces an individual company's carbon footprint and potentially enables it to reach net-zero by 2050, it is likely that this will not provide a net benefit to global emissions."

[COMMENTARY] The article also says that the acquirer of the assets might have higher costs of capital and other factors that in the end make the acquired asset much less valuable. It'll be fascinating to see how this plays out. Now, what does this mean for valuing companies with significant potential stranded assets?
Does selling 'stranded assets' lower global carbon levels? by Stephanie Baxter, October 30, 2020, Petroleum Economist, UK.

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How gold can be a major player for socially responsible investing. "It is both possible and practical to own gold that is responsibly sourced: science, technology, and public and regulatory focus are improving the industry and standards of sourcing and production are recognised as paramount when buying any form of gold asset in seeking to ensure adherence to socially and environmentally responsible values."

[COMMENTARY] Investing in gold is an absolute 'no' for many ethical and sustainable investors. However, this article might give them something to think about...
How gold can be a major player for socially responsible investing, by Rumi Mahmood, October 28, 2020, Goldhub.

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Sustainability Initiative: Bank for International Settlements. "Worldwide, central banks and regulators have slowly implemented new policies and initiatives to reduce their exposure to climate risk. Leading the way is the Bank for International Settlements (BIS), which, in 2017, took up the challenge of introducing a corporate bond investment pool that screens investments according to environmental, social and governance (ESG) principles."

[COMMENTARY] If the BIS is fully behind ESG investing, how far behind can the whole investment world be?
Sustainability Initiative: Bank for International Settlements, by Rachael King, October 28, 2020, Central Banking, UK.

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It's time we added a letter to ESG. Here's why. "While the recognition of all things ESG is finally happening, there is no time to waste to add a 'T' for technology -- making ESGT -- to include the vast and growing array of technology and digital issues, risks and opportunities."

[COMMENTARY] The case is compelling when you see the list of reasons for this in the article. I guess 'governance' could cover the 'T'. But that doesn't cover the scope of the issues mentioned.
It's time we added a letter to ESG. Here's why, Andrea Bonime-Blanc, October 14, 2020, World Economic Forum, Switzerland.

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ESG Investing Will Not Grow Successfully Without Global Data Standards And Regulations, Says OECD. "Last week, the OECD released its 2020 business and finance outlook report, Sustainable and Resilient Finance. The reports delivers a consequential and timely conclusion: ESG scoring and reporting has the potential to unlock a significant amount of information on the management and resilience of companies, but will require agreed global data standards and regulations."

[COMMENTARY] I agree with the OECD that global ESG data standards would be good. However, even if standards aren't reached the case for ESG has been made.
ESG Investing Will Not Grow Successfully Without Global Data Standards And Regulations, Says OECD, by Lawrence Wintermeyer, October 8, 2020, Forbes, USA.

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ESG Investing Looks Like Just Another Stock Bubble. "In recent years, ESG-related investments have consistently outperformed their counterparts. That, however, could be an accident -- many ESG funds invest heavily in tech companies, and tech most likely is rallying for reasons that have nothing to do with ESG. Many ESG funds exclude fossil fuel investments, but fossil fuel investments could also be doing poorly for reasons that have nothing to do with ESG. Look closely, and it appears that ESG is just another old-fashioned stock market bubble."

[COMMENTARY] The writer makes a few valid points--though overemphasized in my view. Yes, tech is doing well -- partly because of the lock-downs. And fossil fuels doing badly as a result of them. However, one can't escape the fact that many industries are simply preferred by the 50%-80% of investors who want to invest ethically and sustainably!
ESG Investing Looks Like Just Another Stock Bubble, by Jared Dillian, October 5, 2020, Financial Advisor, USA.

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Report: Asset managers must explain how sustainability measures benefit stakeholders. "Asset managers need to do more to explain how sustainability measures actually benefit stakeholders, according to the Thinking Ahead Institute. In its new report, Sustainability: Understanding impact and value creation, the institute warns that investment organisations need to be wary of the gap between their positive intentions for a more sustainable economy and their ability to deliver it."

[COMMENTARY] This report is a reminder of how important it is for companies and the investment community to understand what is material and relevant for a company's sustainability and profitability.
Report: Asset managers must explain how sustainability measures benefit stakeholders, by Stephen Little, October 6, 2020, Investment Week, UK.

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Americans believe sustainable funds can offer higher returns. "The Schroders survey found only 4% of respondents wouldn't invest because they fear worse performance."

[COMMENTARY] What a turnaround! When Americans were asked in all previous years a similar question the answers would've been completely the reverse! It was the widespread belief among investors that ethical-sustainable--ESG investing would underperform. This change of understanding among investors is terrific news!
Americans believe sustainable funds can offer higher returns, by staff, September 28, 2020, Investment News, USA.

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Canada's Responsible Investment Week October 26-30. Theme: Diversity and Inclusion in the Investment Industry. "D&I Week is a week of education and insights for investment professionals to advance diversity and inclusion in their organizations and their portfolios. Join us for 10 live, interactive webcasts with industry leaders and virtual networking."

[COMMENTARY] Canada has a week every year devoted to the promotion of ethical, sustainable, and responsible investing. This year's theme is logical given what is happening in society. In particular, on a proportional basis, Canada is home to probably the world's most diverse population. I encourage everyone in Canada's investment industry to participate if at all possible.
Canada's Responsible Investment Week October 26-30. Responsible Investment Association, Canada.

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The Performance of Stocks with the Worst ESG Scores. "Investors underestimate the negative consequences of high environmental, social and governance (ESG) risks, and underreact to prior negative ESG events. High ESG risks destroy shareholder value."

[COMMENTARY] The research described in this article is worth reviewing and understanding for all investors.
The Performance of Stocks with the Worst ESG Scores, by Larry Swedroe, September 21, 2020, Advisor Perspectives, USA.

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BlackRock Reaffirms Commitment to ESG Investment Standards. "At the annual Morningstar Investment Conference in Chicago, BlackRock CEO Larry Fink said that by the end of this year, 100% of its portfolios will integrate ESG metrics, up from 70% at the end of April, Financial Planning reports."

[COMMENTARY] As the world's largest asset manager with $7.4 trillion in assets, BlackRock is setting the example for all fund managers.
BlackRock Reaffirms Commitment to ESG Investment Standards, by Max Chen, September 18, 2020, ETF Trends, USA.

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European ESG Disclosure Requirements for Asset Managers. "A new European regime on sustainability-related disclosures in the financial sector will come into force from March 2021, after first being announced in 2018 during the European Commission's Action Plan on Sustainable Finance."

[COMMENTARY] As covered previously, these new requirements will make it easier for investors to understand individual fund strategies and goals.
European ESG Disclosure Requirements for Asset Managers, by Kirsten Lapham, John Verwey, Amar Unadkat, and Michael Singh, September 18, 2020, The National Law Review, USA.

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Morgan Stanley Sustainable Reality Report Reveals Sustainable Funds Outperformed Traditional Funds and Reduced Investment Risk Despite Global Pandemic. "In January-June 2020: U.S.-based sustainable equity funds outperformed their traditional peers by a median of 3.9%. U.S.-based sustainable taxable bond funds outperformed their traditional peers by a median of 2.3%."

[COMMENTARY] This is the first such data I've seen on green bond funds for the first half of 2020. It's good to know that they too outperformed their benchmarks.
Morgan Stanley Sustainable Reality Report Reveals Sustainable Funds Outperformed Traditional Funds and Reduced Investment Risk Despite Global Pandemic, press release, Morgan Stanley Institute for Sustainable Investing, September 17, 2020, USA.

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New Journal On Impact And ESG Investing. "At a pivotal time of increasing client interest and adoption of social investing that is still confronting ongoing misconceptions and push back from some corners of government oversight and advisor skepticism, the Institute is happy to announce a new, much needed, professional research and thought leadership based resource covering the full social landscape of ESG, impact, and sustainable investing.

The first issue of The Journal of Impact and ESG Investing has just been launched this month by Portfolio Management Research, which is a leading provider of independent financial research within the investment sector."

[COMMENTARY] The launch of this journal is terrific news for ethical and sustainable investors.
New Journal On Impact And ESG Investing, by Bill Hortz, September 17, 2020, Financial Advisor Magazine, USA.

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Sustainability Leaders to Work on Common Corporate Reporting Standard. "A group of five global sustainability leaders that set environmental, social, and governance (ESG) standards will work together to develop a common framework for corporate reporting, the firms said Friday.

The lack of consistent sustainability disclosures has made assessing companies confusing and difficult, according to a joint report released Friday from the environmental nonprofit CDP (formerly the Carbon Disclosure Project), the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board (SASB). Together, the organizations set the majority of ESG reporting in the industry."

[COMMENTARY] This is great news for ethical and sustainable investors. Such common standards have been sought for decades! I hope it also includes the independent auditing of what company's report.
Sustainability Leaders to Work on Common Corporate Reporting Standard, by Sarah Min, September 14, 2020, Chief Investment Officer, USA.

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BIS Sees No Proof Green Bonds Improved Firms' Carbon Footprints. "Companies that issue green debt aren't necessarily reducing their carbon emissions, underscoring the need for firms to have an environmental rating, according to a report from the Bank for International Settlements."

[COMMENTARY] The reasoning behind green bonds is that the proceeds are used for green projects. Thus, by definition, a company's green-sustainable activities should be improved. It's fascinating that the BIS research found the carbon intensity of companies issuing green bonds not to be much changed.
BIS Sees No Proof Green Bonds Improved Firms' Carbon Footprints, by Jill Ward, September 14, 2020, Bloomberg Green, USA.

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Where ESG Ratings Fail: The Case for New Metrics. "One agency's A+ is another's 'laggard' -- and neither links to financial performance. Hybrid metrics will change everything, argue Harvard Business School's Mark Kramer and leaders in the shared-value movement."

[COMMENTARY] It'll be interesting to see if this concept proves itself. It's an appealing idea. I suspect the mathematics involved could be considerable.
Where ESG Ratings Fail: The Case for New Metrics, by Mark Kramer, Nina Jais, Erin Sullivan, Carina Wendel, Kerry Rodriguez, Carlo Papa, Carlo Napoli, and Filippo Forti, September 7, 2020, Institutional Investor, USA.

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ESG Bond Funds Fear Becoming Too Political. "The development of 'sustainable' government bond funds may be hitting a road bump as fund managers fear being overly critical of western government policies, notably those of the United States."

[COMMENTARY] This reminds me of the US DOL's missive about trying to restrict the application of ESG in pension funds. It's so backward-looking!
ESG Bond Funds Fear Becoming Too Political, by Max Chen, September 3, 2020, ETF Trends, USA.

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New Challenges to the Merits of ESG Investing. "The data used to measure a company's compliance with environmental, social and governance (ESG) guidelines is inconsistent and leads to misleading results. Moreover, when teams at the same company manage comparable ESG and non-ESG funds, the former more often underperforms the latter."

[COMMENTARY] Do all analysts come to the same conclusions when reviewing a company's financial statements in light of the company's prospects? No. I think the diversity of opinion is what makes financial markets. However, I do believe that audited common metrics need to be used in ESG measurements across companies and industries.
New Challenges to the Merits of ESG Investing, Larry Swedroe, August 31, 2020, Advisor Perspectives, USA.

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US Stocks With Higher ESG Scores Have Lower Returns. "EU stocks with higher ESG scores significant enhanced returns. "We observe that, for EU firms, there is a significant negative relationship between the market value and the excess return, suggesting that smaller EU companies generate higher returns on average," added the study.

In contrast, for US and other Asian firms there was a significant negative relationship between the ESG scores and excess returns. The authors said this could arguably be a result of less focus on sustainability in the US, leading to lower demand by investors than in the EU."

[COMMENTARY] This is fascinating, though unsurprising research. I would like to see such studies peer-reviewed and published in reputable journals.
US Stocks With Higher ESG Scores Have Lower Returns, by Shanny Basar, August 27, 2020, Traders Magazine, USA.

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Academics Attack ESG for Failure to Outperform During Crisis. "'These results suggest that innovation-related assets rather that social capital investments offer the greater immunity to sudden, unanticipated market declines,' the authors wrote."

(COMMENTARY] I believe I understand the study's main contention. However, ESG funds generally are full of 'innovation-related assets.' Such assets frequently have high ESG ratings too! That's why the ESG funds outperformed.
Academics Attack ESG for Failure to Outperform During Crisis, by Amy Whyte, August 20, 2020, Institutional Investor, USA.

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Vast majority of comments oppose ESG proposal - analysis. "More than 95% of the firms, groups and individuals who submitted comment letters or signed petitions in response to the Department of Labor's proposal on environmental, social and governance investments in ERISA plans opposed the initiative, an analysis published Thursday from several investor organizations and financial industry firms found."

[COMMENTARY] I suspect that despite the overwhelming opposition to this rule the Department of Labor will not back down. Trump's base is likely highly supportive of it.
Vast majority of comments oppose ESG proposal - analysis, by Brian Croce, August 20, 2020, Pensions & Investments, USA.

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Investors continue to align with SDGs. "Five years on since the SDGs were launched, an increasing number of investors are putting capital to work to earn returns alongside helping solve global scourges like the climate crisis, poverty and inequality."

[COMMENTARY] Investments that align with the UN's SDGs that make good returns are the ideal of ethical and sustainable investing!
Investors continue to align with SDGs, by Sarah Rundell, August 18, 2020, Top 1000 Funds, USA.

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Barclays Launches Systematic Study of ESG-Focused US Equity Funds. "Barclays' Quantitative Portfolio Strategy ('QPS') team finds that ESG-labelled funds do not necessarily provide more ESG exposure than conventional funds."

[COMMENTARY] This is interesting research. Of course, everything is in the details and I'd love to get some expert ESG opinion on Barclays' findings.
Barclays Launches Systematic Study of ESG-Focussed US Equity Funds, August 13, 2020, BusinessWire on Yahoo! Finance, USA.

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Why ESG ratings need an overhaul. "Under certain ESG standards, the ratings of fossil-fuel giant Exxon Mobil and electric car maker Tesla could well be the same."

[COMMENTARY] Such an anomaly as cited above has to do with ESG company raters not rating the ESG characteristics of a company's products or services and issues with cross-industry scoring. ESG raters typically rate only the ESG performance of a company's 'operations'.
Why ESG ratings need an overhaul, by Jim McClelland, August 9, 2020, Raconteur, UK.

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Ethical CSR focus triggers hostile investor activism, study finds. "This is because some activist investors view CSR as a sign that a company is wasting money rather than focusing on shareholder returns, according to research conducted by Pennsylvania State University's Mark DesJardine, Erasmus University's Emilio Marti and HEC Paris business school's Rodolphe Durand."

[COMMENTARY] Note this study included years as far back as 2000. Attitudes have changed recently and I wonder if the propensity for investor activism of this type is still occurring at the same rate?
Ethical CSR focus triggers hostile investor activism, study finds, by Laurence Fletcher, August 3, 2020, Financial Times, UK.

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Racial Injustice Will Have Greater Weight in ESG Scores, S&P Global Says. "About 217 businesses in the S&P 500 have publicly supported the Black Lives Matter movement to show solidarity and protect their reputations. Question: How sincere are they?"

[COMMENTARY] Rather than only saying that black lives matter, companies need to consider their internal functions and activities to determine how they can address internally such issues. Afterall, ESG scores are going to increasingly include corporate diversity issues!
Racial Injustice Will Have Greater Weight in ESG Scores, S&P Global Says, by Sarah Min, July 24, 2020, Chief Investment Officer, USA.

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Morningstar: DOL's ESG Proposal 'Out Of Step' With Best Advisor Practices. "If the DOL passes the rule as proposed 'it would lead to worse outcomes for plan participants as plan sponsors shy away from assessing ESG risks in selecting investments. Indeed, since most participants use qualified default investment options--and ESG considerations would be barred in these options--most participants would not get the benefits that ESG risk analysis can deliver,' Brock Johnson, president of Morningstar Retirement Services, said."

[COMMENTARY] I believe the DOL's proposed rule is about hindering ESG. It's saying US employee default pension plans should not exclude fossil fuel companies as most ESG plans would. So, it's simply an attempt to boost fund holdings of fossil fuel companies!
Morningstar: DOL's ESG Proposal 'Out Of Step' With Best Advisor Practices, by Tracy Longo, July 24, 2020, Financial Advisor, USA.

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US SIF Foundation Launches Sustainable Investing Course for Individual Investors. "The course, which takes approximately 30 minutes to complete, provides a brief overview of the development of sustainable investing and summarizes the investment options and strategies available. It also links to additional resources and offers next steps for interested investors."

[COMMENTARY] This is a great idea. It could also be a good adjunct to my DIY Ethical-Sustainable Investing pays Tutorial!
US SIF Foundation Launches Sustainable Investing Course for Individual Investors, press release, July 23, 2020, US SIF, USA.

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Canada's CPP Investments [C$409.6 billion pension fund] Sustainable Investing Policy: Update Reinforces ESG Role in Long-Term Value Creation. "Integrating ESG factors, including climate change, into investment analysis and asset management activities supports the organization's clear legislative objective: to maximize long-term investment returns without undue risk of loss."

[COMMENTARY] I've included this item to contrast this highly successful -- and one of the world's largest -- pension funds, with the recent US Department of Labor's ruling endeavoring to limit the use of ESG in US pension funds!
CPP Investments Sustainable Investing Policy: Update Reinforces ESG Role in Long-Term Value Creation, press release, July 23, 2020, Canada Pension Plan Investment Board, Canada.

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BlackRock Heats Up Climate Change Pressure On Boards. "BlackRock announced that it voted against management at 53 companies worldwide (primarily in the energy sector) for 'lack of progress' on climate concerns during the 2020 proxy season, and directed another 191 companies to take faster action."

[COMMENTARY] Blackrock, at last, appears to be serious about getting companies on board with climate change! It's a great example for all other fund managers.
BlackRock Heats Up Climate Change Pressure On Boards, by Michael Peregrine, July 19, 2020, Forbes, USA.

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ESG Investing Is About Long-Term Risk Management. "Sustainable investing isn't just about values, it's about managing risks that affect all investors."

[COMMENTARY] Some interesting data about ESG ratings and returns in this article. Important for all ethical and sustainable investors to understand.
ESG Investing Is About Long-Term Risk Management, by Alex Bryan, July 14, 2020, Morningstar, USA.

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Most ESG Investing Makes A Charade Of Fighting Climate Change. "Thus far, ESG funds have merely divested capital from the fossil fuel industry. They have put hardly any capital into new cleantech companies that could help with the energy transition. Energy efficiency technologies, hydrogen power, carbon capture and nuclear fusion remain severely underfunded."

[COMMENTARY] The writer makes one particularly good point about ESG funds. That is, only moving around funds between highly rated ESG companies just doesn't cut it. Could some ESG funds create venture capital arms?
Most ESG Investing Makes A Charade Of Fighting Climate Change, by Wal van Lierop, July 14, 2020, Forbes, USA.

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GRI and SASB are collaborating. Is that good news for companies? "For years, corporate reporters -- those inside companies responsible for creating sustainability reports and reporting environmental, social and governance data to various other organizations -- have been frustrated by what many refer to as an alphabet soup of standards and frameworks: CDP, GRI, IIRC, PRI, SASB, TCFD, UNGC and more.

And while they grumbled at how those various organizations' requests weren't harmonized, they dutifully complied with their requests and mandates. Finally, help may be on the way."

[COMMENTARY] It's great to see these groups collaborating. Should they succeed, it'll be a real boost to ethical and sustainable investors everywhere in understanding and comparing corporate CSR/ESG reporting.
GRI and SASB are collaborating. Is that good news for companies? Bu Joel Makower, July 13, 2020, GreenBiz, USA.

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ESG Scoring Is Failing: Time For Improvement. "While companies are developing more comprehensive criteria, the standards are far from consistent. The reasons for the inconsistencies are numerous, but of greatest concern is the bias of ratings and the lack of public disclosure about the criteria and standards used in making those ratings."

[COMMENTARY] I find that many company ESG ratings' firms do provide considerable information concerning how they score the companies they rate. I think it's the individual companies -- and not the ratings' firms -- that need numerical consistency in their reporting. I see the ratings' firms more like equity analysts --  who vary (often greatly) in their analytical methods and conclusions.
ESG Scoring Is Failing: Time For Improvement, by George Strobel, July 2, 2020, Forbes, USA.

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Corporate Knights 2020 Best 50 Issue. Now out. Always a great source for ethical and sustainable investing ideas. Cost Cdn$4.99.
2020 Best 50 Issue, Summer 2020, Co9rporate Knights, Canada.

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How To Read The Proposed New ERISA Rule And What It Gets Wrong On Sustainable Investing. "Secretary of Labor Eugene Scalia explained the rationale for the new rule: 'Private employer-sponsored retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan. Rather, ERISA plans should be managed with unwavering focus on a single, very important social goal: providing for the retirement security of American workers.'"

[COMMENTARY] One can sense the US administration's frustration with the growing importance of ESG by fund managers. How about the fact that ESG funds are outperforming their conventional counterparts? Isn't that evidence of providing the best opportunity of providing for the retirement security of American workers.?
How To Read The Proposed New ERISA Rule And What It Gets Wrong On Sustainable Investing, by Bhakti Mirchandani, June 25, 2020, Forbes, USA.

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Regulatory changes see ESG go mainstream. "A raft of regulatory changes introduced in recent years are placing environmental social and governance (ESG) funds at the centre of the advice process, industry experts have claimed...Ryan Medlock, senior investment development and technical manager at Royal London, said: 'There have been a raft of new regulations, mostly coming from EU level, and they leave the US and Australia playing catch up.'"

[COMMENTARY] Despite what's happening in Europe, until there's a change in the US administration I see little chance of any new regulatory changes favouring ESG investing coming anytime soon.
Regulatory changes see ESG go mainstream, by David Thorpe, June 24, 2020,
FT Advisor, UK.

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Canada's Greenest Employers. "This special designation recognizes the employers that lead the nation in creating a culture of environmental awareness in their organizations. These employers have developed exceptional sustainability initiatives -- and are attracting people to their organizations because of their environmental leadership."

[COMMENTARY] Green employers often correspond to best ESG performers too. So ethical and sustainable investors might want to review who's on this list!
Canada's Greenest Employers, June 2020, Canada.

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100 Best Corporate Citizens of 2020. "Now more than ever, corporate leadership on environmental, social and governance (ESG) issues is imperative. And so is transparency. As companies decarbonize, align with the Sustainable Development Goals and rebuild an equitable economy post-pandemic, they must be open about their efforts. Each year, 3BL Media evaluates the largest public U.S. companies on ESG transparency and performance."

[COMMENTARY] One of the best of the annual ESG corporate rankings!
100 Best Corporate Citizens of 2020, June 22, 2020, 3BL Media, USA.

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Top investors publish list of companies that have failed to disclose climate data. "Last Friday, the UN and the UK launched the high profile Race to Zero campaign with the news that around 1,000 corporates around the world have pledged to deliver net zero emissions by 2050 at the latest.

Today, investor-backed climate disclosure group CDP takes on the flip-side of corporate engagement with the climate crisis with the publication of a list of just over 1,000 companies that have declined to provide relevant information on their environmental impacts to investors."

[COMMENTARY] This is an important read for all ethical and sustainable investors as it might influence them in their investment selections.
Top investors publish list of companies that have failed to disclose climate data, by James S Murray, June 9, 2020, UK.

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Has responsible investment lost its soul? "When investors have to justify decisions based on financial materiality, is it truly responsible?"

[COMMENTARY] This is a fascinating question. Do a company's ESG activities that are financially material to it reflect your values? Would you buy a stock based on financial materiality at the cost of ignoring your values?
Has responsible investment lost its soul? By Rob Lake, June 10, 2020, UK.

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Where to Find Low-Cost ESG Funds. "Investing in sustainable funds doesn't have to cost more than traditional funds, thanks to a raft of newer funds with lower costs."

[COMMENTARY] There are many great charts in this article including one showing the over/under annual costs in various fund categories of ESG funds compared to their conventional counterparts.
Where to Find Low-Cost ESG Funds, by Katherine Lynch, June 6, 2020, Morningstar, USA.

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From tyranny to salvation: the credibility of common metrics for ESG reporting. "Professor Brendan O'Dwyer and Professor Chris Humphrey from the Accounting and Finance division at Alliance Manchester Business School critique the growing calls for standardised ESG metrics in company reporting."

[COMMENTARY] Standardization of ESG metrics is important so that companies can be better compared on them. This article is a useful read for everyone in the investment industry.
From tyranny to salvation: the credibility of common metrics for ESG reporting, by Brendan O'Dwyer and Chris Humphrey, June 1, 2020, Accountancy Age, UK.

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What To Make Of The SEC's Warnings And Recommendations For ESG Investing. "May has been a busy month for environmental, social, and governance (ESG) ratings and disclosure at the US asset management industry's top regulator, the Securities and Exchange Commission (SEC) between Chairman Jay Clayton's warning yesterday on ESG ratings and a recommendation earlier this month for ESG disclosures. This is due in part to the growth in sustainable investing."

[COMMENTARY] I thought the Trump administration was about de-regulation? Is the SEC (whose head is appointed with Trump's approval) about to impose significant regulation of ESG funds and investments?
What To Make Of The SEC's Warnings And Recommendations For ESG Investing, by Bhakti Mirchandani, May 29, 2020, Forbes, USA.

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China Crisis Puts Spotlight on Human Rights Risk for ESG Investors. "'The E and the G (risk) might not be changing so much, but the S may be changing with the Hong Kong demonstrations, and the way China has suppressed them, and the silencing of people during the Covid-19 crisis,' says Felix Boudreault, co-founder of Sustainable Market Strategies, which provides ESG investing advice."

[COMMENTARY] It's important that this risk is coming to the fore now. Before this, I was always concerned about the quality of Chinese accounting/audited statements and the quality and reliability of their CSR/ESG reporting!
China Crisis Puts Spotlight on Human Rights Risk for ESG Investors, by Leslie P. Norton, May 29, 2020, Barron's, USA.

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Man vs. machine: A tale of two sustainability ratings systems. "Two companies, Morningstar and Truvalue Labs, represent two distinctly different ways to assess companies on ESG data."

[COMMENTARY] I say there's a need for both and even more variety of opinions. What makes a person a buyer of a stock and the other a seller? More often than not, it's one's assessment of future returns. Hence, diversity of opinion is what stock markets -- and thus ratings -- are all about.
Man vs. machine: A tale of two sustainability ratings systems, by Mark Tulay, May 25, 2020, GreenBiz, USA.

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Just How Good An Investment Is Renewable Energy? New Study Reveals All. "Renewable energy investments are delivering massively better returns than fossil fuels in the U.S., the U.K. and Europe, but despite this the total volume of investment is still nowhere near that required to mitigate climate change.

Those are some of the findings of new research released today by Imperial College London and the International Energy Agency, which analyzed stock market data to determine the rate of return on energy investments over a five- and 10-year period."

[COMMENTARY] As the prices of renewable energy continue to fall, many renewable energy producers could continue to outperform their fossil fuel competitors.
Just How Good An Investment Is Renewable Energy? New Study Reveals All, by David Vetter, May 28, 2020, Forbes, USA.

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It's time for our financial statements to reflect the vital value of nature. "Most companies are in the dark when it comes to accounting for their impacts and dependencies on the environment, and investors struggle to compare what little disclosure there is in a meaningful way."

[COMMENTARY] In due course, all companies will have to account for their use and depletion of natural capital in their financial statements. How can the costs of natural capital be agreeably designated if there aren't markets to determine them?
It's time for our financial statements to reflect the vital value of nature, May 22, 2020, Corporate Knights. Canada.

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S&P Launches ESG Scores Based on 20 Years of Corporate Sustainability Data. "S&P Global has announced the launch of its S&P Global environmental, social, and governance (ESG) Scores with coverage of more than 7,300 companies, representing 95% of global market capitalization."

[COMMENTARY] The competition in ESG ratings continues to heat up -- thus mirroring the global interest in ESG!
S&P Launches ESG Scores Based on 20 Years of Corporate Sustainability Data, by Emily Holbrook, May 18, 2020, Environmental Leader, USA.

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'Generic and hugely mismatched': why ESG data remains insufficient. "[Peregrine Communications] research, which is entitled 'Making a Difference, Marketing a Difference', found a 67% global increase in ESG-related content from asset managers across top national media in the last 12 months. However, 34% of topics disproportionately focus on generic topics."

[COMMENTARY] Company reports need to get to the specifics that are material to their company when providing investor ESG information! Too many companies think they can take the easy route by talking in generalities, which incidentally, usually adds nothing to their stock values.
'Generic and hugely mismatched': why ESG data remains insufficient, by Victoire Barbin Perron, May 12, 2020, Citywire Selector, UK.

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Revealed: the top ESG funds and managers from around the globe. "Citywire research discovered that ESG mirrors of existing funds outperformed their peers during the worst of the March market downturn and the momentum for sustainability-minded funds remains strong. Citywire Selector looked more closely at the strategies of outperforming funds considered sustainable by Morningstar last month, with many offering a tech leaning or an emphasis on specific sub-sectors of the market."

[COMMENTARY] This is a good review that most ethical and sustainable investors will want to read.
Revealed: the top ESG funds and managers from around the globe, by Citywire, May 12, 2020, UK.

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T. Rowe Price Report Says ESG Disclosure Issues was #1 Topic Among Worldwide Companies in 2019. "The company said that the rising risks associated with climate change will impact virtually its entire universe of portfolio holdings to varying degrees. Because of this, climate change alongside other ESG factors is being increasingly factored into analysts' evaluation of company fundamentals."

[COMMENTARY] Many analysts also believe that the COVID-19 pandemic is making companies even more aware of the climate and environmental issues.
T. Rowe Price Report Says ESG Disclosure Issues was #1 Topic Among Worldwide Companies in 2019, by Emily Holbrook, May 11, 2020, Environmental Leader, USA.

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Few links between ESG criteria and executive pay -- report. "Few FTSE All World companies link executive pay to ESG criteria, according to a report from Sustainalytics. The report, 'The State of Pay: Executive Remuneration and ESG Metrics,' is aimed at helping global equity investors assess how ESG criteria are factored into executive compensation, as a topic for corporate engagement."

[COMMENTARY] In an era where the issue of executive compensation is coming to the fore, this is a timely report!
Few links between ESG criteria and executive pay -- report, by Hazel Bradford, April 30, 2020, Pensions&Investments, USA.

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SEC Rule Changes Will Hobble ESG Investors. "The proposed SEC rule changes would raise proposal resubmission thresholds from 3%, 6%, and 10% for those voted on once, twice, or three or more times respectively to 5%, 15%, and 25%... back-testing by the Sustainable Investments Institute contends that under the new rules, 30% of the 614 proposals that went to vote between 2010 and 2019 would not have been eligible for resubmission."

[COMMENTARY] Clearly, this is another way that the SEC-Trump administration, wants to damp down rising shareholder advocacy on sustainability and ESG issues.
SEC Rule Changes Will Hobble ESG Investors, by Mark Tulay, April 24, 2020, Barron's, USA.

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Commentary: Active beats passive in promoting sustainable development. "Genuinely active investment managers, with high active share and more concentrated portfolios, should be better placed to assess these gray areas and therefore make more considered and conscious judgments."

[COMMENTARY] This analyst makes a case for active management for ESG funds.
Commentary: Active beats passive in promoting sustainable development, by Lorna Logan, April 23, 2020, Pensions&Investments, UK.

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Green 50: Top business moves that helped the planet. "There is a lot to reflect on from the last 50 years. Amidst the COVID-19 pandemic, it's worth remembering we have a pretty good track record of fixing planetary-scale problems when we set our minds to it."

[COMMENTARY] Corporate Knights have provided a wonderful offset to our present fears by compiling this list. It serves to remind us of the positive developments that businesses can make to society. Well done Corporate Knights!
Green 50: Top business moves that helped the planet, by Adria Vasil Laura Väyrynen & Toby Heaps, April 20, 2020, Corporate Knights, Canada.

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How Are "Green Bonds" Coping With COVID-19 Turmoil? "The current volatile environment does not seem to be impacting the trend towards sustainable finance -- allocations to green bonds are not being affected at all... NN IP expects the sovereign green bond segment to also benefit from the unprecedented fiscal and monetary policy response."

[COMMENTARY] Enormous amounts of bonds will be issued by governments coping with the COVID-19 crises. And green bonds will likely comprise a major segment of that issuance!
How Are "Green Bonds" Coping With COVID-19 Turmoil? By editorial staff, April 15, 2020, Wealth Briefing, UK.

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Future Returns: Covid-19 Bonds Emerge as a Financing Tool. "'There's been a flurry of activity in the number of social bond issues in response to the pandemic,' says Kevin Ranney, director of sustainable financial solutions at Sustainalytics, an ESG rating and analytics firm. 'I expect that we're going to see a surge, based on what our team is observing and hearing in conversations with underwriters and prospective issuers. In general, the market is really looking for innovation in this area.'"

[COMMENTARY] COVID-19 is giving a tremendous boost to the green bond market and it's likely to greatly expand interest in them.
Future Returns: Covid-19 Bonds Emerge as a Financing Tool, by Karen Hube, April 14, 2020, PENTA, USA.

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Don't Be Fooled by Most ESG Rankings. Focus on Materiality Instead. "The Wall Street Journal recently ran an article about how big technology stocks dominate ESG funds. Tech companies are not usually associated with the big ESG issues like climate change, renewable energy, or diversity. So, are investors being fooled?"

[COMMENTARY] The writer makes a good case for materiality. This article is well worth reading.
Don't Be Fooled by Most ESG Rankings. Focus on Materiality Instead, by Emily Steinbarth, Advisor Perspectives, April 8, 2020, USA.

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LSE sustainable business head: ESG is the highest priority for large investors. "David Harris, group head of sustainable business of the London Stock Exchange, spoke to Fintra TV about how he works to integrate sustainable finance across the capabilities of the group..."

[COMMENTARY] It's good to hear in these uncertain times that stock exchanges like the London Stock Exchange believe so confidently that ESG has the 'highest priority for large investors.'
LSE sustainable business head: ESG is the highest priority for large investors, by Finextra TV, April 6, 2020, UK.

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