Negative Emissions, Blackrock, Casual Work & ESG Ratings - ESG Weekly Roundup #5
ESG has much focus on the qualitative. The quantitative is still critical.
Hi there,
Every Sunday I’m putting together this brief roundup of what I’ve been reading, watching and listening to. I'll write longer pieces on weekdays. Last week I started my ESG Alphabet Soup series and wrote about definitions, environmental factors, and social factors. The next edition that looks at governance factors will land in your inbox on Tuesday. I look forward to getting your feedback in the comments or on Twitter.
Regards,
Brennan
Reading Time: 10 minutes
Chart Of The Week
Engagement priorities and voting guidelines – Consistent with the commitments we outlined in January, we updated our voting guidelines in nine markets to align with our January letter to clients. In addition, when we published our 2020 engagement priorities, we mapped them for the first time to the UN Sustainable Development Goals, such as Gender Equality and Affordable and Clean Energy. For each priority, we also added specific Key Performance Indicators for how we expect to hold boards accountable.
Source: BlackRock’s mapping of their ESG engagement priorities to the UN Sustainable Development Goals
Quote Of The Week
Despite COVID-19 bringing social and governance factors into focus, nearly half of advisers (46%) said they believe that environmental factors are the most important for their clients in the near term. Just 34% cited governance and 20% cited social. Advisers explained that environmental issues are most likely to engage retail clients when investing for both the short and long term (46% and 63% respectively), with concerns about climate change, sustainability and resource efficiency, being the top three ESG issues advisers believe will change how people invest over the short and long term.
Source: Advisers see ESG as an opportunity to grow their businesses
What I’ve Been Reading
BlackRock released its sustainability investment process integration update:
We committed that by the end of 2020, all active portfolios and advisory strategies would be fully ESG integrated in consultation with our clients - meaning that, at the portfolio level, our portfolio managers have accountability for appropriately managing exposure to ESG risks and documenting how those considerations are used in investment decisions. As of April 30, already more than 70% of the approximate 5,600 active portfolios managed by BlackRock have met both criteria. All of our active portfolios will be fully ESG integrated by the end of Q4 2020.
Citigroup launches new ESG investment banking group:
“The current Covid crisis will elevate the importance of ESG to our clients, as they increasingly focus on more sustainable and resilient strategies and on recovery plans that help drive the just transition to a net-zero emissions future,” global BCMA heads Tyler Dickson and Manolo Falcó said in a memo to bankers sent on Tuesday.
Companies have become more focused on environmental, social and governance (ESG) factors in recent years as activists and investors put pressure on them and companies that put these considerations at the forefront are rewarded.
MSCI makes public ESG metrics for indexes and funds to drive greater ESG transparency
MSCI today announced that it has made public the MSCI ESG Fund Ratings provided by MSCI ESG Research LLC for 36,000 multi-asset class mutual funds and ETFs, and MSCI Limited has made public ESG metrics for all of its indexes covered by the European Union (EU) Benchmark Regulation (BMR). The ESG ratings and metrics are available as part of two new search tools now available to anyone on the MSCI website.
When is a Casual not a Casual?
In another example of the uncertain nature of casual employment, the Full Bench of the Federal Court of Australia has again confirmed that an employee engaged as a casual can still be considered a permanent employee despite there being a contract of employment stating otherwise.
Trump admin slaps solar, wind operators with retroactive rent bills:
Renewable companies are also facing significant headwinds from the coronavirus. Project delays have threatened their ability to tap lucrative federal subsidies needed to compete with fossil fuels and cut the growth outlook for U.S. wind and solar installations by 5% and 10%, respectively, this year, according to the Energy Information Administration.
On health and privacy: technology to combat the pandemic:
Governments, technology firms and citizen groups are using new technology such as mobile applications (apps) to treat patients and contain the spread of Covid-19. While these applications hold substantial promise, users are concerned about their privacy. This Bulletin gives an overview of new technological applications, the different forms of control over data and the related privacy issues. It draws some lessons from the use of personal data in finance (BIS (2019)) to inform discussions on the use of health data and policies to address public concerns going forward.
Google Australia pays more tax, but still makes billions on local sales counted in Singapore:
The Federal Government's tougher anti-avoidance laws, aimed at recouping more tax from multinationals, saw a number of multinationals previously restructure their tax affairs to pay more tax locally than they have in past years.
However, the laws have not been able to stop the legal practice of companies like Facebook and Google channelling hefty amounts of advertising revenue via low-tax countries such as Singapore.
"Once the GFC hit, some of those businesses, particularly the ones who were internationally exposed, they were saying, 'Oh, actually, I'm really concerned about my business and I can't really bear any imposition that might come with a scheme at this point," he said.
Stripe’s first negative [carbon] emissions purchases:
Last year, Stripe announced our Negative Emissions Commitment, pledging at least $1M per year to pay, at any price, for the direct removal of carbon dioxide from the atmosphere and its sequestration in secure long-term storage. We’ve since built a small team within Stripe to focus on creating a market for carbon removal by being an early customer for promising negative emissions technologies.
Over the last few months, we’ve brought together experts across a series of disciplines and institutions to guide us. We have published our process, applications, and project database on GitHub to equip other potential purchasers with better information and encourage transparency in negative emissions purchasing.
What I’ve Been Watching
A great webinar from Dechert LLP. An example observation is that the SEC is concerned that some advisors are using ESG as a marketing overlay without incorporating it into their investment processes.
S&P Global has a new ESG rating product based on the SAM Corporate Sustainability Assessment. There are many competing products in the ESG rating space, and a rating is no replacement for your own research process.
There is a lot of detail to explore under the hood of each rating, and each company rating can vary depending on who is doing the rating. The release of MSCI’s ESG ratings on top companies is a good step towards transparency in this complicated space.
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The ESG Alphabet Soup Series
Is ESG Investing Just Marketing Spin? [definitions]
Is ESG Investing Just About Climate Change? [environmental factors]
Social Risks, Modern Slavery, And ESG Investing [social factors]