Displaying items by tag: sustainability

While ESG continues to face backlash on the political front, this is still a strong demand for sustainability from investors. For example, recent research from Ernst and Young (EY) found that sustainability experience at the board level in Europe has increased over the last six months as companies respond to investor demand. The latest EY Boardroom Monitor found that 32% of companies currently have board directors with professional experience or expertise in sustainability. While that figure may seem low, it’s a big jump from EY’s Boardroom Monitor in June, when only 19% of boards monitored listed sustainability expertise. The jump in experience corresponds with EY’s research that showed sustainability was a dealbreaker for investing for a majority of investors. Over fifty percent (51%) of investors said boardroom experience in sustainability has a ‘significant’ impact in terms of making a company an attractive investment. Twenty-two percent went further, saying it has a “highly significant” impact on a company’s investment case. Other findings from EY’s research revealed that sustainability experience is much more prevalent among female board members. While the current gender split in financial services boardrooms is 58% male and 42% female, 72% of board directors with experience in sustainability are female.

Finsum:According to research from Ernst and Young, sustainability experience in the board room jumped from 19% in June to 32% as companies respond to investor demand.

If your clients are invested in Chinese companies and have a preference for ESG, it may be time for a change in their portfolios. It appears sustainability rules in western countries are at odds with what’s happening in China. While Chinese equities offer strong growth potential, their ESG ratings rank lower than western nations and most emerging markets. For instance, Sustainalytics, a sustainable rating agency owned by Morningstar, downgraded three Chinese big-name tech companies on its watchlist in October. The three stocks, Tencent, Weibo, and Baidu, were moved to the category of “non-compliant with UN principles.” In addition, Hong Kong Watch, a UK-based group that researches investment and human rights issues in China, recently said in a report that “many of the biggest asset management, state pension, and sovereign wealth funds were passively invested in companies allegedly involved in the repression of Uyghur Muslims in China’s Xinjiang region.” The report found three major stock indices provided by MSCI included at least 13 companies that “have allegedly used forced labor or have profited from China’s construction of internment camps and surveillance apparatus in Xinjiang.” Another problem is that Chinese companies are less likely to respond to queries from ESG rating agencies.

Finsum:With ESG investing continuing to gain momentum, it appears that many Chinese companies are at odds with ESG due to censorship and repression in China.

According to a report by US SIF Foundation, a trade group for the sustainable investment industry, the U.S. market for ESG products is less than half of the size previously reported. Assets in U.S. sustainable investments fell 51% from $17.1 trillion at the beginning of 2020 to $8.4 trillion at the start of 2022. The difference is mainly due to changes in the methodology used to calculate the numbers and the impending tightening of regulation, according to the trade group. Ahead of new fund labeling rules by the SEC, the foundation noted that asset managers were being “more circumspect in what they consider to be assets that incorporate ESG criteria”, which led to “modest to steep” declines in ESG AUM reported compared to 2020. In addition, the 2022 report made a new distinction between firm and fund-level claims to sustainability. For example, it did not include “The AUM of investors that stated they practice firm-wide ESG integration without providing additional information on specific ESG criteria that are used in decision-making and portfolio construction.” Rather, they only included the assets of investors or vehicles that “incorporate one or more specific ESG criteria, plus the assets of funds which specify that ESG or sustainability is integral to its decision-making or portfolio construction.”

Finsum:Due to impending regulatory changes and a new calculation methodology, the U.S. market for ESG products is less than half of the size previously reported.

After listing three new equity sustainability ETFs earlier this month, Dimensional Fund Advisors launched a new bond sustainability fund, the Dimensional Global Sustainability Fixed Income ETF (DFSB). The fund, which trades on the NYSE Arca, invests in a broad portfolio of investment-grade debt securities of U.S. and non-U.S. corporate and government issuers, including mortgage-backed securities. DFSB will also take into account the impact that companies may have on environmental and sustainability considerations to lower carbon footprint exposure. More specifically, the fund will exclude companies that the manager considers to have high greenhouse gas emissions intensity or fossil fuel reserves relative to other issuers. DFSB has an expense ratio of 0.24% and is benchmarked against the Bloomberg Global Aggregate Bond Index. The new fund brings DFA’s ETF lineup to 28 with over $64 billion in assets.

Finsum:DFA adds to its ETF lineup with a bond sustainability fund that aims to lower carbon footprint exposure.

They’re watching

Meaning mediablog.com, which reported a few ways it picked up on the radar on companies tweaking their ESG messaging in various publicity pieces this month. 

There’s a focus on the “E” in ESG; namely, increasingly, Americans are fretting over and more engaged with global warming

The “S”? No less important, especially if you have a soft spot for “great” community outreach programs and the money set aside toward it. 

Meantime, 94% of people didn’t believe enough had been done to advance the cause of sustainability and social issues, according to a recent global study from Oracle.

Now, in the landscape of success breeds success, the second edition of the “ESG and Green Finance Opportunities Forum” by The Chamber of Hong Kong Listed Companies will take place on Oct.  27, according to finance.yahoo.com.

That comes in the aftermath of last year’s inaugural event. The theme for this year’s is Navigating Climate Risk and Financing Climate Actions.

Confirmed to deliver the opening address is Financial Secretary Paul Chan Mo-po. A luncheon speech will be given by Secretary for Environment and Ecology Tse Chin-wan.