Impact investing took a direct hit with a speech by Securities and Exchange Commissioner Hester Peirce delivered recently to the American Enterprise Institute, just before the July 10 Financial Services House Committee hearing on Building a Sustainable and Competitive Economy: An Examination of Proposals to Improve Environmental, Social and Governance Disclosures.
The speech, which took on environmental, social and governance ratings and proxy voting especially, was seen by some in the impact investing business as anything from surprisingly uninformed to a call to action for the ESG industry to do better.
Focuses on both structural and process factors of governance
Covers related investment topics in each chapter, including fiduciary duty, financial literacy, asset allocation, and socially responsible and impact investing
Draws from the annual U.S. Public Pension Governance Survey and other leading industry and academic research
Includes special “practitioner sections” in each chapter geared to the more technical reader
More than 80% of the financial assets in the United States fall under the purview of a trustee. That’s a big responsibility for an estimated 1% (around 1.5 million people) of the U.S. working population charged with overseeing investments for millions and millions of beneficiaries, public sector, and non-profit organizations. In a world proliferated by investment products, increasingly dominated by indexes, faced—particularly in the pension world—with increasing liabilities, more regulation, and a growing number of social and sustainability objectives, what’s a trustee to do?
The Trustee Governance Guide is here to help guide today’s board trustee through the brave new world of 21st century investing. The book focuses on the critical aspects of the Five Imperatives: Governance, Knowledge, Diversification, Discipline, and Impact. Based on more than a decade of research, practice, and discussions with many key decision makers and influencers across the industry, this book addresses the many topics related to better governance, greater mission-driven financial performance, and impact. The questions the book addresses include:
What is good governance, how do we know it when we see it, and why does it matter?·
How much knowledge is necessary to be a competent board member?
How big should my endowment be?
What are the key elements of a diversified portfolio?
How much does cost matter?
What’s the difference between socially responsible and ESG investing?
Can I focus on sustainability and still be a good fiduciary?
This book provides a way for boards to improve and benchmark their own governance performance alongside their peers, and uniquely covers related investment topics in each chapter.
BlackRock, the world’s largest asset manager, is doubling down on its view that investors in the US don’t yet fully appreciate the just how disastrous an economic impact climate change could have at a time when environmental, social, and corporate governance investing is garnering mainstream attention.
“Climate-related risks already threaten portfolios today, and are set to grow, we find,” strategists at the BlackRock Investment Institute wrote in a report this week, homing in on threats the massive US municipal bond market could face as the planet warms.
Investors are more interested than ever in how publicly traded companies handle environmental, social and governance issues, but many say they lack the information to make ESG investment decisions and their advisors often offer little help.
Those are some of the major findings of a new Natixis survey on ESG investment issues, which essentially combines the results of four previous global surveys of close to 12,500 individual investors, financial professionals, institutional investors and professional fund buyers. About 12.5% of those surveyed are from North America, primarily the U.S.
My friend, Mike Underhill, was quoted in this article. He runs Capital Innovations, a real assets and infrastructure investment firm. A quick and interesting read!
Globally, sustainable investing assets in the five major markets stood at $30.7 trillion at the start of 2018, a 34percent increase in two years. In all the regions except Europe, sustainable investing’s market share has also grown. Responsible investment now commands a sizable share of professionally managed assets in each region, ranging from 18 percent in Japan to 63 percent in Australia and New Zealand. Clearly, sustainable investing constitutes amajor force across global financial markets.
From 2016 to 2018, the fastest growing region has been Japan, followed by Australia/New Zealand and Canada. These were also the three fastest growing regions in the previous two-year period. The largest three regions— based on the value of their sustainable investing assets—were Europe, the United States and Japan.
In a few short decades, sustainable investing has grown from a niche corner of the financial world to a phenomenon large enough that the primary challenge for investors may come in understanding its true scope, the changes it represents for businesses and financial markets, and how to position their personal finances for the future.
By early 2018, funds guided by environmental, social and governance (ESG) issues totaled $98 billion in the United States, a 58% increase over the previous year, according to a 2018 Morningstar report.
The Treasury Department has released a new round of proposed regulations governing opportunity zone funds that answers several key questions that have kept potential investors and fund operators on the sidelines.
The zones in which the funds invest are either in or adjacent to depressed communities, and there are over 8,700 spread throughout the U.S. To date, most of the early opportunity zone funds are focused on real estate developments, but the tax benefit is also available for other types of businesses opportunity in the zone.
In America, the world’s largest economy and its second biggest polluter, climate change is becoming hard to ignore. Extreme weather has grown more frequent. In November wildfires scorched California; last week Chicago was colder than parts of Mars. Scientists are sounding the alarm more urgently and people have noticed—73% of Americans polled by Yale University late last year said that climate change is real. The left of the Democratic Party wants to put a “Green New Deal” at the heart of the election in 2020. As expectations shift, the private sector is showing signs of adapting. Last year around 20 coal mines shut. Fund managers are prodding firms to become greener. Warren Buffett, no sucker for fads, is staking $30bn on clean energy and Elon Musk plans to fill America’s highways with electric cars.
Yet amid the clamour is a single, jarring truth. Demand for oil is rising and the energy industry, in America and globally, is planning multi-trillion-dollar investments to satisfy it. No firm embodies this strategy better than ExxonMobil, the giant that rivals admire and green activists love to hate. As our briefing explains, it plans to pump 25% more oil and gas in 2025 than in 2017. If the rest of the industry pursues even modest growth, the consequence for the climate could be disastrous.
