Where theory and practice meet: Sustaining and impactful, and especially for governance fiduciaries.
The northern polar jet stream is weakening in strength as a result of climate change. That’s causing the band of wind to sway off course. Meteorologist Marion Maturilli is carrying out research to understand the wide-ranging impact of this trend.
https://www.dw.com/en/when-the-jet-stream-weakens/video-62097932
2022 is wrapping up on many levels as the most challenging year financially since the Global Financial Crisis, geo-politically since 9/11, and politically since the McCarthy years, when the country was divided over fears of a fifth-column, communist invasion.
One casualty in this bubbling cauldron of uncertainty has been what has become known in the past few years as ESG investing. 2022 marked the first year of negative outflows in over a decade with investors pulling $13.2 billion out of ESG funds through November 2022, according to Lipper. Even when considering the broader universe of fund outflows this year, ESG outperformed and not in a good way.
(https://www.reuters.com/business/sustainable-business/esg-funds-set-first-annual-outflows-decade-after-bruising-year-2022-12-19/)
The secular headwinds are obvious at this stage: in Europe the Ukraine War and the implosion of its energy market. In the U.S., rampant inflation. In the emerging markets, the insidious and growing activism of authoritarian regimes on the world stage, namely China, Russia, Iran and North Korea.
Certain factions in the United States have seized on this backdrop of uncertainty and placed a portion of the blame on the ESG movement, characterizing it as woke, damaging to the middle class and harmful to the economy.
Exhibit A: Blackrock has seen over $2 trillion in assets flow out, particularly from a wave of public pensions that have fallen under state legislation banning ESG investments.
Exhibit B: Vanguard announced recently its intention to back away from the NetZero Alliance to address “confusion” over its ESG positions as a leading indexer.
While a political backlash in the U.S. seems to be the norm these days on just about any issue, this has marked a sea-change in the ESG movement, just as the SEC pursues stronger mandates to enforce greenwashing claims.
This has no doubt made for a tougher business environment for ESG investing.
All that being said, beneath the subterfuge is real underlying progress developing, and it is happening in the places that matter most: companies. A confluence of rationalization happening at the ESG standards level, in the form of the International Sustainability Standards Board, combined with pending rules on SEC climate-related financial disclosure has lit a fire, and companies are not backing away.
Data science is leading the way, and companies that are measuring are finding that they can also manage. Capital markets will remain part of the equation, providing some additional carrots and sticks, but the real traction will only happen with companies that find ways to innovate ourselves into a new carbon pathway, as one example.
This is also I think bringing some new life to the whole rationale where I think ESG as an investing experience has found itself marooned. For too long investment managers have fallen back on this idea that ESG is a risk management exercise. This may be true, and certainly can be argued, but it only carries us so far. People wanting to do the right thing and have a passion for doing the right thing, is where the whole idea of good corporate citizenship started. ESG investing has failed with investors who thought this concept could be simply rationalized and outsourced. As we are finding out, doing sustainability is a roll up the sleeves activity that is best placed when as an integral part of doing business.
| ESG Courses at Marquette University are available for professionals to attend today! New environmental, social, and governance (ESG) courses to serve as preparatory courses for industry-driven certifications for accounting, investment professionals and ESG leaders, offered to professional learners in an asynchronous format, with one course on a hybrid online/live platform. The timeliness of these offerings coincides with the new SEC Climate Disclosure rules. In the U.S., not just public companies will be subject to the SEC requirements; “Scope 2 and 3” reporting will impact thousands of private companies, too, who contribute as suppliers and partners to these companies. Corporations are in a unique position today to elevate ESG practices in partnership with Marquette University. Prepare your organization today for the ESG requirements of tomorrow! Vouchers are included for participants to access the Fundamentals of Sustainability Accounting (FSA) Credential™ (FSA I, FSA II teaching to the SASB Standards) by the IFRS Foundation, and the Certificate in ESG Investing by the CFA Institute. |
Swedish climate activist Greta Thunberg has broken ranks with the German Green Party on the subject of atomic energy and urged the government not to abandon the technology.
Registration is now open for the Marquette Sustainability 2.0 Conference (Oct. 26/27), the Midwest’s destination conference for senior executives and investment professionals! If there were ever a time to hear from experts on the energy transition, both challenges and opportunities, this is the year! Plus we will have dedicated panels on water, DEI, ESG and impact investing and much more!
https://www.marquette.edu/business/companies/sustainability.php
When Dr. Chris Merker began teaching ESG — Environmental, Social and Corporate Governance — at Marquette in 2009, his classroom was filled with blank stares.
“People didn’t really give it too much thought back then,” Merker says.
By this point, Merker, a director of Private Asset Management at Robert W. Baird & Co., had been thinking for years about ESG. The U.S. had recently been through two economic downturns, and Merker had been trying to understand why. When he first heard about ESG, around the time the United Nations founded its Principles for Responsible Investment initiative in 2005, he thought that between a growing list of corporate governance failures and rising stakeholder concerns, perhaps it could offer a window into why the world was struggling.
ESG is far different from traditional accounting. Accounting is typically viewed purely from financial statements — an organization’s value on paper was its true value. But, according to research by Ocean Tomo, over the past 50 years, the market value of companies has become increasingly disconnected from its book value. ESG has fostered new ways to understand factors that don’t show up on a financial statement — including reputation, relationships with employees, and how an organization may have exposures to growing environmental risks.
More than a decade later, Merker says everything has changed. He no longer receives blank stares when discussing ESG, which has morphed into a new language of accounting standards and metrics. This is a language that corporations, investors and students alike are all scrambling to learn.
We are delighted to announce our keynote speakers for the 2022 Marquette Sustainability 2.0 Conference scheduled for October 26-27. We look forward to a special keynote panel discussion on the energy transition and the potential future of nuclear power with leaders from two outstanding organizations.
For further details on the conference:
https://www.marquette.edu/business/companies/sustainability.php
Mr. Dan Pickering, Founder and CIO, Pickering Energy Partners
Dan Pickering is the Chief Investment Officer of Pickering Energy Partners (PEP). PEP manages client assets via energy strategies focused primarily on public markets and private equity. Prior to PEP, Mr. Pickering served as the President of Tudor, Pickering, Holt & Co. and Chief Investment Officer of TPH Investment Management. Dan has spent 26 years as an energy portfolio manager, researcher and analyst, first at Fidelity Investments (where he managed ~$1 billion of energy sector funds), then as Head of Research at Simmons & Company and as the founding partner of Tudor, Pickering, Holt & Co. Dan currently serves as the portfolio manager of the PEP Energy Equity Opportunities Fund and on the Investment Committee of PEP’s energy co-investment and private equity strategies. He also serves on the Advisory Board’s for Tudor, Pickering, Holt & Co, the Energy ESG Council, the Houston CFA Society, as well as the Board of Trustees for Texas Children’s Hospital and the Texas Children’s Hospital Foundation. Dan grew up in Missouri, has a BS in Petroleum Engineering from the Missouri School of Science and Technology and an MBA from the University of Chicago.
Mr. Brent Ridge, President and CEO, Dairyland Power Cooperative
Prior to Dairyland, Ridge served as Vice President, Corporate Services, and Chief Financial Officer and Treasurer at Energy Northwest (Richland, Wash.). His responsibilities included finance, treasury, enterprise risk management, asset management, human resources, supply chain, information services and energy services and development. He also served as Vice Chairman of the Corporate Nuclear Safety Review Board for Columbia Generating Station. Earlier in his career at Energy Northwest, Ridge served as Asset Manager, Controller and Chief Risk Officer. He was also the manager of Construction and Maintenance Services, responsible for power plant modifications, outage and online major maintenance, facilities and commercial engineering. Ridge earned a bachelor’s degree in Civil Engineering from the University of Idaho and an MBA from Regis University (Denver, Colo.). He also completed the Reactor Technology Course for Utility Executives at MIT, the Utility Executive Course at the University of Idaho and the Advanced Management Program at Harvard University.
We look forward to seeing you in October!
The problem extends well beyond crude oil and its derivatives. The price of natural gas has soared, futures for coal delivered to Europe have risen 137% this year, and cash prices for Appalachian coal have more than doubled since last June.
Yet the long-term outlook is more hopeful. The policies we adopt in response to the current price surge can create a more stable energy sector a decade from now. We need something we haven’t had for a long time: a comprehensive energy strategy built on realistic premises about supply, technology and politics.