Facebook, Fossil Fuel Subsidies, Food, Nobel Prizes, and Hank Paulson
Here are 5 ESG insights you might have missed this week:
1. Why Do ESG Funds Own Shares Of Facebook?-
Facebook’s platforms have been engineered to make users angrier and angrier to keep them engaged. These are just a few of the conclusions of a recent series of investigative reports by the Wall Street Journal.
These reports beg a pretty big question for ESG funds: Why is Facebook among your top holdings? Take the iShares ESG Aware exchange-traded fund (ESGU), which has more than $22 billion in assets under management. It counts Facebook in its top five holdings—as does the Vanguard ESG U.S. Stock fund (ESGV), with more than $5 billion in assets.
If the Wall Street Journal reports on Facebook are true (their reporting is amply backed by internal Facebook documents), ESG funds may need to take a timeout. Not only would socially conscious investors’ money be supporting a socially irresponsible company, but they’d be paying premium annual fees for the privilege.
Link to Source: https://www.forbes.com/advisor/investing/facebook-esg-funds/
2. Fossil Fuel Industry Gets Subsidies of $11M a Minute, IMF Finds-
Globally, fossil fuel subsidies were $5.9 trillion in 2020 or about 6.8 percent of GDP, and are expected to rise to 7.4 percent of GDP in 2025.
According to analysis by the International Monetary Fund, the production and burning of coal, oil and gas was subsidised by $5.9tn in 2020, with not a single country pricing all its fuels sufficiently to reflect their full supply and environmental costs. Experts said the subsidies were “adding fuel to the fire” of the climate crisis, at a time when rapid reductions in carbon emissions were urgently needed.
Efficient fuel pricing in 2025 would reduce global carbon dioxide emissions 36 percent below baseline levels, which is in line with keeping global warming to 1.5 degrees, while raising revenues worth 3.8 percent of global GDP and preventing 0.9 million local air pollution deaths. Accompanying spreadsheets provide detailed results for 191 countries.
Link to Source: https://www.imf.org/en/Publications/WP/Issues/2021/09/23/Still-Not-Getting-Energy-Prices-Right-A-Global-and-Country-Update-of-Fossil-Fuel-Subsidies-466004 & https://www.theguardian.com/environment/2021/oct/06/fossil-fuel-industry-subsidies-of-11m-dollars-a-minute-imf-finds
3. Hank Paulson: The World's Biodiversity Is in Peril-
We’re Living Through One of the Most Explosive Extinction Episodes Ever.
Twin crises afflict the natural world. The first is climate change. Its causes and potentially catastrophic consequences are well known. The second crisis has received much less attention and is less understood but still requires urgent attention by global policymakers. It is the collapse of biodiversity, the sum of all things living on the planet.
With climate change, we have a plausible, if imperfect, strategy to avoid the worst outcomes. The world needs to get to net-zero greenhouse gas emissions by around 2050 by reducing emissions and taking carbon out of the atmosphere. But for the biodiversity crisis, there is no comparable framework. There are no technological fixes to restore species that go extinct. And no cost-effective, man-made replacement for natural systems.
4. The Future of Food-
New ways to make food are coming—but will consumers bite? Consumers and governments should embrace new ways to make food.
Technologies are emerging that promise to produce food in new ways, in large volumes with less inhumane factory farming and a lower environmental footprint. These range from bioreactors that grow meat to indoor “vertical” farms and new ways of producing fish. Such techniques could make a huge difference.
Just because it is possible to make food in new ways does not mean people will be willing to eat it, however. Given food’s cultural importance, and the fact that it is ingested into the body, conservatism and scepticism are common reactions to new foodstuffs and production processes.
5. Schroder's 2021 Global Investor Study Phase II-
A survey of 23,000 investors across the globe which measures investors’ views on sustainability and ESG investing.
The events of the pandemic have put the spotlight on the social and environmental impacts of basic activities such as air travel, while heightening the need for businesses to act more responsibly and for issues like climate change to be dealt with more urgently. But how is this increase in consciousness influencing behaviors and attitudes toward sustainable investing?
More people are investing sustainably, with awareness having grown over the past four years. However, there are reservations about the returns offered by sustainable funds. These fears continue to act as a barrier to more people choosing sustainable investments, even if the levels of risk and diversification were the same.
One more thing: This year’s Nobel prize for physics went to a trio of researchers for their work on ways to predict the long-term behaviour of complex and seemingly random systems—especially our climate. Thanks to their work we have physical and mathematical models to run scenario analysis.
Find their story here: https://phys.org/news/2021-10-nobel-prize-physics-awarded-scientists.html
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