Where theory and practice meet: Sustaining and impactful, and especially for governance fiduciaries.
Author: Christopher K. Merker, Ph.D., CFA
Christopher K. Merker, PhD, CFA, is a director with Private Asset Management at Robert W. Baird & Co. He holds a PhD in investment governance and fiduciary effectiveness from Marquette University, where he has taught the course “Sustainable Finance” since 2009. Executive director of Fund Governance Analytics (FGA), an ESG research partnership with Marquette University, he is a member of the CFA Institute ESG Working Group, an international committee currently exploring ESG standards, publishes the blog, Sustainable Finance, which covers current topics around governance and sustainability in investing, and is co-author of the book, The Trustee Governance Guide: The Five Imperatives of 21st Century Investing.
One of the buzziest acronyms in the investing world is “ESG.” These three letters are a tidy summary of a big-picture idea: That it’s possible to “do good and do well” by investing in your values. While ESG focuses on environmental, social and governance themes, there are several other schools of thought on values-driven investing. These approaches, arguably led by ESG, have become more mainstream over the past few years. Many people and institutions are eager to incorporate “responsible” investing into their portfolios.
From computers and money to relations with China, 1971 changed the world in many ways.
Fifty years ago, America entered a magical year. Any year could hold moments of great significance, but 1971 stands out. After a decade of upheaval, the country was seeking a new start. These events launched it.
In 2017 we launched Sustainable Finance with one mission: to curate the best in research and reporting on sustainability. Founded at Marquette University in Milwaukee, Wisconsin, we were the first university to offer programs in Sustainable Finance starting in 2005.
Since launching the blog, we have seen visits to our site double every year, and this year has seen our best year yet, with thousands of visitors from over 65 countries. As we close out 2020, we want to thank our readers for their support in making Sustainable Finance the number one sustainable finance blog in the world.
Gross Domestic Wellbeing (GDWe)™ offers a holistic alternative to GDP as a measure of social progress. Using the framework and data in the Office for National Statistics Measures of National Wellbeing Dashboard, the Trust has developed a tool that provides a single figure for GDWe in England and mapped this against GDP for the past six years.
In this report, we provide both an analysis of overall Gross Domestic Wellbeing (GDWe) for the past six years, and an individual GDWe score for each of the 10 domains of wellbeing in the ONS dashboard, to highlight areas requiring attention. We have supplemented this analysis with a thematic review of over 800 recommendations from nearly 50 commissions and inquiries since 2010 – from Marmot to Grimsey, Dilnot to Taylor – to highlight the many areas of mutual focus, challenge, and concern. The recommendations show that though the data currently being collected by the ONS offers a useful starting point and a framework for measuring wellbeing, there are significant gaps.
The Private Inequity report found that manager responses tilted most toward easier moves that foster limited systemic change – 28% making statements and 15% donations – and least to the more substantive internal and external changes to policies and practices, which each saw action from less than 10% of managers. Climate change fostered the fewest manager actions overall, while the pandemic got the most.
The report also has 11 recommendations for managers to improve their ability to respond and help address systemic crises, including guidance on transparency and compensation policy changes, audits of current practices, new accountability mechanisms, and integration of diversity, equity, and inclusion principles, Rothenberg says.
“While we recognize the private equity industry is responding to calls for stronger ESG integration, and many have taken steps in a positive direction, systemic crises demand timely action and less of a piecemeal approach,” said Delilah Rothenberg, Executive Director of the Predistribution Initiative and a contributing author for the report. “Despite limited action to date, private equity firms are well-positioned to drive positive change given their ability to influence portfolio company governance, priorities, and even capital structures. To step up to the plate and demonstrate leadership, private equity investors need to conduct holistic assessments of their internal and external business practices to identify exposure and contributions to such risks, develop action plans with clear targets and timelines to close gaps, and communicate publicly about their ongoing progress.”
The tipping point may come next year, when Goldman Sachs Group Inc. projects that spending on renewable power will overtake that of oil and gas drilling for the first time.
Meet the clean supermajors. They have the clout and financial might of the energy behemoths that plumbed the world over for oil and gas before them. But instead of digging mines and drilling wells, they’re leading the race to electrify the global economy.
These four companies—Enel, Iberdrola, NextEra Energy and Orsted—prioritized the building or buying of clean-power plants when those assets were still considered alternative and expensive. Now they’re on the cusp of a breakthrough. Ever-cheaper solar panels and wind turbines are beginning to dominate new power installations, threatening the growth of natural gas on our power grids and upending energy markets.
A broad cross section of big U.S. corporations including Amazon.com Inc., Citigroup Inc. and Ford Motor Co. are calling on Congress to work closely with President-elect Joe Biden to address the threat of climate change.
In a letter to be sent to Congress and the Biden transition team on Wednesday, more than 40 companies say they support the U.S. rejoining the Paris climate accord, and urge “President-elect Biden and the new Congress to work together to enact ambitious, durable, bipartisan climate solutions.”
Securities regulators world-wide are “gravitating” to a view that companies’ global-warming disclosures should differ by industry sector, US Securities and Exchange Commission Chairman Jay Clayton said.
Clayton said he spoke with an International Organization of Securities Commissions task force yesterday about how to create global standards that are “meaningful.”
“This is an area where, for certain sectors and certain companies, we all believe disclosure is required, it’s material,” he told the Senate Banking Committee yesterday. “Different sectors, different ways.”
The U.K. is making its big corporate and financial sectors think more rigorously about climate change. There could be write-downs, but also reassurance for investors that problems aren’t building up out of sight.
From next year, many U.K. companies and funds will have to report how their assets and organizations will affect and be affected by global warming. The new rules, announced by the country’s Treasury chief, Rishi Sunak, as part of a post-Brexit financial strategy last week, are in line with 2017 recommendations from the Task Force on Climate-related Financial Disclosures.
The U.S. Federal Reserve for the first time called out climate change among risks enumerated in its biannual financial stability report, and warned about the potential for abrupt changes in asset values in response to a warming planet.
“Acute hazards, such as storms, floods, or wildfires, may cause investors to update their perceptions of the value of real or financial assets suddenly,” Fed Governor Lael Brainard said in comments attached to the report, released Monday.
“Chronic hazards, such as slow increases in mean temperatures or sea levels, or a gradual change in investor sentiment about those risks, introduce the possibility of abrupt tipping points or significant swings in sentiment,” Brainard said.