EU Green Deal, Fact Checking ESG Myths, and Elon Musk
Here are 5 ESG insights you might have missed this week:
Investor Priorities for the EU Green Deal-
The PRI’s report sets out recommendations to ensure that investors can scale up their contribution to the EU Green Deal and sustainability goals more broadly.
Recently, the EU made substantial policy announcements including the launch of the European Green Deal Investment Plan, the Circular Economy Action Plan and the initial consultation on the revision of the Non-Financial Reporting Directive. In addition, the Technical Expert Group on Sustainable Finance made final recommendations on the EU Taxonomy and released an additional Usability Guide for the proposed EU Green Bond Standard.
The EU has sought a global leadership role on sustainability. Private finance is critical to the realisation of the EU’s sustainability ambitions. Despite the ongoing disruption caused by the COVID-19 pandemic, climate ambition remains high on the EU’s agenda and the forthcoming revised Action Plan on Financing Sustainable Growth seeks to be the most ambitious plan of its kind in the world.
Source: https://www.unpri.org/policy/investor-priorities-for-the-eu-green-deal/5710.article
Is There Really No Evidence That ESG Strategies Outperform?-
Commentary from Alex Edmans (London Business School) on Scientific Beta's study claiming that there is “no evidence that ESG strategies outperform” after controlling for risk (We actually included the study in last week's newsletter).
Certainly, the straw man needs to be attacked, because many people treated those studies as gospel – ESG skeptics were rubbing their hands in glee and claiming victory, and ESG advocates defensively alleging that the authors must have an ideological bias against ESG.
What the Scientific Beta study has highlighted is that we should not react to research based on emotion. We should apply the same scepticism to a study that reinforces our view of the world as one that contradicts it, and have the same openness to a study that finds an “inconvenient truth” to one that supports what we would like to be true. They should not have had to make this point, but it is valuable that they have.
Source: https://www.growthepie.net/is-there-really-no-evidence-that-esg-strategies-outperform/
Fact Check: The Truth Behind Five ESG Myths-
Visual Capitalists publishes helpful infographics to provide a fact check on five common ESG myths.
“ESG Comes at the Expense of Investment Performance”. Fact Check: Not necessarily
“Investors Talk About ESG But Don’t Invest In It”. Fact Check: False
“ESG Investment Strategies Eliminate Entire Sectors”. Fact Check: Not necessarily
“ESG Investing Is Only For Millennials”. Fact Check: False
“ESG Investing is Here to Stay”. Fact Check: True
Source: https://www.visualcapitalist.com/fact-check-the-truth-behind-five-esg-myths/
Why ESG Investing is Becoming the Norm-
A lot of investors say they want to put their money into “ESG” funds. But unless you actively opt for a “sin” fund jammed full of companies behaving badly, that’s probably what you’re getting anyway, says Merryn Somerset Webb.
The problem with ESG investing is that it is hard work – you have to do actual research if you want to find a fund to suit your preferences. That might be one reason ESG action doesn’t seem to match ESG survey-answering.
Good news then: it might not be necessary for you to do anything at all. If your ESG feelings are of only average intensity it might already have been done for you. In 2019, 39% of investing institutions said they did not implement specific ESG policies. In 2021, only 28% said the same, says the Natixis report. So, more than 70% of institutions are now ESG a-go-go. The number saying they integrate it into their processes was up from 19% to 48%, with various impact/active ownership/best in class strategies making up the rest (ESG is marketing buzzword heaven).
Energy Usage of Crypto Mining-
Bitcoin and Tesla shares price drops following announcement on Elon Musk’s Twitter account.
Tesla Inc. will halt sales of cars using bitcoin due to the effects on the environment that cryptocurrency mining can have, Chief Executive Elon Musk said Wednesday, and prices of Tesla shares and the cryptocurrency dropped immediately after.
“Tesla has suspended vehicle purchases using bitcoin,” Musk posted on Twitter. “We are concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” he continued.
One more thing: From Janine Guillot, CEO of the Sustainability Accounting Standards Board (SASB)- A short video on why sustainability standards should be industry-specific, based on metrics and focus on areas that affect financial performance.
Find the video here- https://www.cnbc.com/video/2021/05/07/sustainability-standards-should-be-industry-specific-metric-based-expert.html
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