Leading Practices, Disclosure Regulation, PE, and Big Oil
Here are 5 ESG insights you might have missed this week:
Current Leading Practices by Asset Managers on Responsible Investment-
From responsible investment research NGO ShareAction research outlining the current state of real-life leading practice by asset managers on core ESG topics, including highlighting those with leading practices in various ESG areas.
ShareAction analysed the responsible investment practices of the world’s largest 75 asset managers across four topics: responsible investment governance, climate change, human and labour rights and biodiversity.
The new research is aimed at enabling asset owners to better assess the performance and practices of asset managers on key sustainability topics, and to guide their engagements with asset managers. The guide includes a series of suggested ‘next steps’ for the sector, such as voting policies that commit to supporting all independent ESG resolutions on a ‘comply or explain’ basis.
Source: https://shareaction.org/race-to-the-top-a-leading-practice-guide-to-responsible-investment/ & https://www.esgtoday.com/shareaction-highlights-leading-asset-manager-practices-on-esg/
To Fight Climate Change, Should Green Investors Reconsider Big Oil?-
From HBS, sustainability funds eschew some of the biggest backers of green technology: oil companies. Research by Lauren Cohen offers reasons to re-evaluate the role of traditional energy companies in addressing climate change.
Should eco-conscious investors support a company that’s developing innovative solutions to climate change—even if that company is also a major polluter? The market’s answer to this question has been a resounding “no,” as evidenced by the investment policies that exclude traditional oil producers from most so-called sustainable funds.
Faced with mounting concerns about climate change, oil companies are diversifying their businesses, putting money toward renewable energy sources and green technology. While sustainable funds shun fossil fuel producers, which contribute half of the world’s greenhouse gases, Cohen’s study suggests that these companies could also play a key role in stemming the damage.
"They are investing about three times more than the average firm in climate change mitigation technology."
Source: https://hbswk.hbs.edu/item/to-fight-climate-change-should-green-investors-reconsider-big-oil
The Expanding Case for ESG in Private Equity-
From Bain's 2021 Global Private Equity Report: Customers, employees and limited partners are demanding more sustainable, socially conscious corporate behavior. PE firms that can deliver are reaping the rewards.
ESG investing continues to face skepticism in the private equity industry, especially in the US.
But proactive firms aren’t waiting for ROI studies to pan out before incorporating sustainability and social responsibility into how they invest and operate.
ESG isn’t just a nice thing to do. It is becoming a critical element in gaining market share, engaging employees and raising capital.
Source: https://www.bain.com/insights/esg-investing-global-private-equity-report-2021/
U.S. Regulator Launches Review of Companies' Climate Risk Disclosures-
The SEC announced that it will update its guidelines on how publicly traded companies should disclose climate change-related risks to investors.
“Now more than ever, investors are considering climate-related issues when making their investment decisions. It is our responsibility to ensure that they have access to material information when planning for their financial future.” - U.S. Securities and Exchange Commission, Acting Chair Allison Herren Lee.
Lee herself has criticized the SEC’s lack of clear guidance on Environmental, Social, and Governance - known as ESG - disclosures, saying in August that many market participants use the rubric as a “significant driver in decision-making.”
The Economic Costs of Climate Change: Lessons Learned From COVID-19-
Kearney examines three profound lessons that can be drawn from the coronavirus pandemic for the ongoing climate crisis.
COVID-19 has illuminated three lessons for climate change: the capacity of the global population for behavioral change, the need for international cooperation to manage shared challenges, and technology’s role in advancing solutions.
The spread of COVID-19 demonstrates that advanced preparation for crises is crucial to minimizing a disaster’s impact. This lesson holds for the climate movement. Preparation now can prevent catastrophe later. Much like COVID, tackling climate change requires cutting-edge technology and supportive policy. Global coordination is necessary because one country’s efforts to lower emissions will mean little if others do not. At the same time, technology will be crucial to realizing decarbonization goals and developing adaptation needs. The pandemic experience may ultimately reignite the climate movement by encouraging humans to change their behavior or simply to keep many of the lifestyle changes they made during the pandemic. The environment that emerges—commercial and natural—will be fundamentally transformed as a result.
One more thing: The CFA Institute Certificate in ESG Investing- a foundational certificate offering you both practical application and technical knowledge in the fast-growing field of ESG investing.
Find more information here- https://cfainstitute.org/en/programs/esg-investing
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