FTX/SBF, COP27, Climate Tech, S-CAPM, and Knowledge Gaps

1. On The Whole FTX/SBF Saga-

"ESG has been perverted beyond recognition" Sam Bankman-Fried
We’re posting this final article to show that the whole anti-ESG narrative and most people that criticize ESG have no idea what ESG means. ESG is not the sanctimoniousness, virtue signaling of “saying the right things” and saving the world as SBF did.
If investors (not referring to retail clients here) would have actually done a proper due diligence while integrating ESG, they would have avoided this governance nightmare and saved their money as others did- see why Social Capital didn’t invest in FTX for an example.
Link to Source: https://www.insightsesg.com/post/on-the-whole-ftx-sbf-saga

2. COP27 Final Document-

As we publish this week's newsletter, COP27 negotiations are still happening.
It's unclear how specifically — or vaguely — "loss and damage" will be addressed in the final summit document that diplomats are struggling to produce. A 20-page draft released by the Egyptian COP president in Sharm el-Sheikh was a blank slate on how to compensate vulnerable nations for climate damages.
The most recent draft text from host Egypt re-ups last year's pledge to move off coal, but does not — as many nations hoped — call for phasing down all fossil fuels.
Link to Source: https://www.insightsesg.com/post/cop27-final-document

3. PwC’s 2022 Report on the State of Climate Tech-

PwC’s third annual State of Climate Tech report finds relative stability in venture capital investment at a moment when sharp increases are needed to meet emissions objectives.
In fact, climate tech investment in the 12 months to Q3 2022 represented more than a quarter of every venture dollar invested, a greater proportion than 12 of the prior 16 quarters. Indeed, these levels for rolling 12-month average investment have been mostly stable since the beginning of 2021.
The volume of critical early-stage funding required to scale up the next wave of climate tech success stories is trending in the wrong direction. The deficit of funding and the decline in the number of deals for early-stage start-ups that are looking to scale up, which we first identified last year, appear to be deepening. Investment is still not aligned with carbon impact, reflecting an inefficient market for investing in climate outcomes.
Link to Source: https://www.insightsesg.com/post/pwc-s-2022-report-on-the-state-of-climate-tech

4. A Sustainable Capital Asset Pricing Model (S-CAPM)-

Evidence from Environmental Integration and Sin Stock Exclusion.
This paper shows how sustainable investing—through the joint practice of exclusionary screening and environmental, social, and governance (ESG) integration—affects asset returns.
The author characterizes two exclusion premia generalizing Merton’s (1987) premium on neglected stocks and a taste premium that clarifies the relationship between ESG and financial performance. The author estimates and explains the dynamics of these premia.
Link to Source: https://www.insightsesg.com/post/a-sustainable-capital-asset-pricing-model-s-capm

5. The Tenacity of ESG Investing-

A green-finance boom has not been followed by bust.
This year’s greenwashing scandals, and investors’ relaxed attitude towards them, have demonstrated an important truth: that there is money to be made from environmental investing. So long as that is true, businesses claiming to provide investors with the genuine, truly green article will not be going anywhere.
Social values give investors a non-pecuniary reason for allocating money and sticking with their choice, a rare advantage for funds in an industry where a competitive edge normally means lower fees.
Link to Source: https://www.insightsesg.com/post/the-tenacity-of-esg-investing

One more thing: Frontier released an open-source online database that highlights 100+ major innovation gaps in the carbon removal field.

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