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ESG Weekly Roundup: March 11, 2022

General ESG News JDSupra: ESG Proposals Make Early Waves in the 2022 Proxy Season

  • Apple Inc. held its annual meeting on March 4, 2022, where two ESG shareholder proposals were approved that asked the board of directors to (1) conduct a third-party civil rights audit for public disclosure and (2) prepare a public report assessing potential risks regarding concealment clauses based on harassment, discrimination, or other illegal acts.

  • Civil rights or racial equity audits evaluate a company’s policies and procedures against civil rights and racial equity concerns. These audits have been performed more frequently in tandem with the current political and social movements, calling companies to action to improve any discriminatory effects from their business. The SEC does not plan to allow companies to exclude civil rights or racial equity audit proposals from the companies’ proxy statements.

  • California’s Silenced No More Act came into effect on January 1, 2022, and prohibits a company from entering into settlement agreements that prevent an employee from disclosing harassment or discrimination-related information. Companies have also been unsuccessful in excluding shareholder proposals on concealment clauses.

  • This proxy season will likely continue to have shareholder support for these types of proposals as ESG is a significant focus now and in the future. If companies are not already doing so, they should be prepared to address shareholders’ growing desires for companies to hold certain positions publicly on ESG matters.

The Conversation: Five key points in the IPCC report on climate change impacts and adaptation

  • The following are five key points from the most recent report released by the UN’s Intergovernmental Panel on Climate Change (IPCC):

1. Risks will be magnified if warming is unchecked.

2. Adaptation is hitting limits.

3. “Maladaptation” can make things worse.

4. Cities are a challenge and an opportunity.

5. The window of opportunity is rapidly closing.

Continuity Central: Boardrooms are not fully grasping ESG risks says Marsh Report

  • Marsh’s latest report discusses trends in ESG reporting and evaluates companies’ readiness to respond to future ESG and pandemic risks based on the annual reports of FTSE100 Index companies, and 60 leading companies listed on the New York Stock Exchange, Euronext, and Hong Kong Stock Exchange.

  • Marsh’s research discovered that Euronext businesses are most concerned about ESG exposures, but only about a third of New York Stock Exchange and Hong Kong Stock Exchange companies identify ESG as a risk.

  • Nearly all companies from the research recognize environmental risks as principal risks but they rarely mention social responsibility.

  • Marsh emphasizes that organizations need to prioritize ESG risk in the boardrooms to improve ESG risk management.

Harvard Business Review: Does Your Company Offer Fruitful Careers – Or Dead-End Jobs?

  • As companies are pushed to measure the value of their workforce’s knowledge and skills, also known as human capital, there are several questions to consider when determining whether the companies are creating jobs that evolve to a fruitful career. The questions fall under the categories of quality, mobility, and equity of their jobs. These factors not only attract the interests of investors who focus on ESG issues but also drive the wellbeing of workers.

Business Insider: Prosperity: Companies foster sustainable communities when they take a long-term view and measure progress

  • Companies should strive to have long-term perspectives towards communities and design endurable programs as prosperity goals foster the health and growth of communities. The World Economic Forum added, “By measuring and reporting on aspects of prosperity more holistically, companies and their stakeholder can become better informed.”

  • In Target’s 2021 corporate responsibility report, Target gave 5% of its profits to communities and pledged to spend over $2 billion at Black-owned businesses by the end of 2025.

  • Verizon’s new business plan, Citizen Verizon, consists of education programs, digital resources for small businesses, technology employment training, volunteer programs for employees and ongoing climate initiatives.

  • Companies frequently overlook the importance of monitoring the effects of their community initiatives.

Lexology: Risk and Response: Key Takeaways from The World Economic Forum Global Risks Report 2022

  • The 17th edition of the World Economic Forums Global Risk Report was released in January this year. The report presents a comprehensive analysis of the key risks predicted to arise from current global economic, societal, environmental, and technological conditions. Here are some of those findings.

  • Climate risks will have to have a transformative impact on all sectors. Early adaptation is projected to produce significant advantage over the next ten years.

  • Post pandemic socio-economic challenges will intensify focus on ESG strategy and supply change stability.

  • Investment in robust cyber security measures is key in response to intensive digitalization of major industries throughout the pandemic.

  • The following are key recommendations for ESG strategy and risk management laid out by the report.

  • Invest in rigorous risk assessment

  • Carry out in depth ESG due diligence

  • Set and communicate clear ESG targets to internal and external stakeholders

  • Ensure engagement in ongoing risk assessment and horizon scanning

  • Embrace early adaptation and diversify the organization's resilience strategies

IR Magazine: Climate Action, Purpose, Data, And Diversity Raised at ESG Forum

  • The IR Magazine ESG Integration Forum in Europe last week revealed that shareholders are becoming more sophisticated in their expectations of how companies are combatting climate change. Delegates were able to hear how imperative it is to define and articulate corporate purpose. Mark Babington, executive director of regulatory standards at the Financial Reporting Council, noted that non-financial information is as valuable as financial information in the business community.

  • The Intergovernmental Panel on Climate Change reported in February that urgent action is required to help deal with increased climate risk. Having the right tools is important in making data-driven decisions; two thirds of businesses cited a lack of software as a main barrier to accessing data. Delegates were urged not to forget about their suppliers, as some of the greatest impact is happening in company supply chains.

MSCI: ESG And The Invasion of Ukraine (Podcast, 27:53)

  • Russia's invasion of Ukraine has shown investors how ESG can add deeper dimensions to their questions and decisions. This podcast episode dives into Europe's oil majors and Russia, social media misinformation, social ripple effect created by refugees, and more.

VMware: When Good Intentions Aren’t Good Enough: Delivering on ESG Commitments

  • Investors use ESG to decide where to invest their money. Customers use ESG when they choose who to do business with. Employees use ESG to evaluate where they want to work. And these stakeholders aren't just looking for a company's commitments - they're looking for action.

  • The answer is pretty simple and even a bit cliché—creating substantive and systemic change is really difficult. It is not enough to have a plan. It requires a strategy and a theory of change. And that requires buy-in from every level of your organization and the resources to operationalize it

  • Transparency—Owning where we are today and our progress toward where we want to be.

  • Accountability—Accepting responsibility for the results and outcomes we create, not our intentions.

  • Innovation—Channeling the same creativity we use to create value for our customers into reaching our ESG goals.

JD Supra: ESG in 2022 and Beyond: Recent and Emerging Trends

  • Environmental: Greenwashing in the Spotlight(s)

  • The FTC describes the Green Guides as non-binding guidance on the substantiation of environmental and sustainability marketing claims with competent and reliable evidence

  • The SEC Task Force’s priorities, include rulemaking to establish a mandatory ESG disclosure framework and enforcement initiatives “to proactively identify ESG-related misconduct.”

  • Social: More Teeth Coming to DEI

  • The anticipated ESG disclosure framework would establish prescriptive requirements, including a potential definition of “human capital.” This approach would help standardize DEI-related disclosures and allow quantitative analyses across different companies.

  • Similarly, companies that list on the Nasdaq stock exchange will be required by August 2022 to disclose the composition and diversity of their boards using a standardized template

  • Governance: Supply Chain Due Diligence & Compliance

  • Companies should carefully assess China’s Xinjiang Uyghur Autonomous Region (XUAR) (and similar) supply chain risks and whether their ESG programs can satisfy such supply chain due diligence and compliance requirements.

  • ESG in Vogue: New York Targets Global Fashion Industry

  • The Fashion Act takes aim at a “generally unregulated industry that contributes heavily to world greenhouse gas emissions at levels of 4-8.6 %, pollutes billions of gallons of water-dye textiles, and has—knowingly or not—benefited from exploitative labor practices in the downward race to sell the cheapest clothes [the] fastest.”

Diversity, Equity, and Inclusion Forbes: The Importance of Diversity And Inclusion For Today’s Companies

  • Diversity and inclusion are important to improve the culture of a company while generating innovation, creativity, and customer satisfaction. Moreover, diversity and inclusion lead to a productive and profitable workforce.

  • A Harvard Business Review study discovered that diverse companies had 19% higher innovation revenues. According to a McKinsey report, ethnically diverse companies are 35% more likely to outperform and gender-diverse companies are 15% more likely to do so.

  • Millennials, who are estimated to make up 75% of the workforce by 2025, actively look for diversity in the workplace, so diversity should be a primary concern for employers.

  • There are many ways for companies to enhance their diversity and inclusion efforts such as cultural sensitivity training sessions, creating a welcoming environment for any ideas, partnering with local organizations for support, and establishing policies and practices that reflect diversity goals and commitments.

Harvard Law School: Gender Pay Gap

  • Research by the ISS ESG Country Rating Team shows that countries with a higher proportion of women in senior political roles tend to perform better on ESG metrics. The research also that strong female representation in senior corporate roles is also associated with better financial returns.

  • Traditionally, boardrooms have been dominated by male, pale, and stale boards, meaning male, white, and long-tenured individuals. However, jurisdictions around the world have been taking steps to promote board diversity at the regulatory level, and the EU SFDR identifies the unadjusted gender pay gap as an indicator that investors should consider.

  • In reality, the bulk of female employees are earning less than men. It is also worth noting that the financial sector is calling on companies to be more accountable for their performance relating to women’s economic empowerment, this sector is one of the worst performers on this measure.

Sustainalytics: Answering the Call for Progress: How Companies Can Respond to Investor Demands on DEI

  • A recent UN-sponsored PRI report calls on investors to improve DEI in their organizations and portfolios; specifically, it asks investors to take action on creating inclusive corporate cultures, business models, and societies.

  • Companies are being asked to show progress on DEI performance within their own operations, their supply chain, and their communities. They are also being asked 2 clearly report on their progress toward their associated goals.

  • Companies can take a four-pillar approach to improve gender diversity and impacts from their initiatives: identifying areas of impact, measuring the impact of efforts, reporting on the results, and engaging with stakeholders.

JDSupra: Top 5 Reasons to Do a Pay Equity Audit in 2022

  • As employers face greater pressure to increase DE&I efforts along with new pay equity laws, a pay equity audit may be useful for the following reasons:

1. Beat back the Great Resignation.

2. Edge out the competition.

3. Practice what you preach.

4. Prepare for pay transparency laws.

5. Mitigate risk.

Forbes: Does Focusing on Inclusion Mean Ignoring Diversity?

  • Inclusion is the essential ingredient to create and sustain a diverse organization. Diversity cannot happen unless we also focus on inclusion. A clear and measurable way to define inclusion is to look at it as the experiences of individuals within an organization, it is about the behaviors and actions that cause individuals within and organization to feel excluded.

  • Focusing on direct ways to impact diversity is necessary along with taking a holistic approach that creates a mindset of inclusion across every facet of an organization.

Forbes: Inclusion And Belonging Are About What People Do, Not How People Feel

  • Feelings of inclusion and belonging result from behaviors during workplace interactions, author says. Anyone who is made to feel excluded or unwelcome will be more likely to leave a company

  • Measuring feelings of inclusion and belonging is valuable in that it may confirm the link between these concepts and the diversity we measure, but it does little to help us understand, and remove, the root causes of these problems.

  • Inclusion is not so much about how people feel, but about what experiences they have that make them feel that way.

  • The lack of diversity within an organization is a reflection of the differential experiences of different identity groups, he adds. Focusing on people's experiences that make people feel excluded does little to help us understand the root causes of these problems

Dice: 6 Ways to Create a Winning Culture During the ‘Great Resignation’

  • The reason for the mass exodus (resignation): toxic culture, fears of job insecurity and reorganization, burnout, lack of employee recognition and poor response to COVID-19.

1. Retention strategies ought not to be one-size-fits-all. Considering every company’s demographic is vastly different from the next, the way it engages and cultivates relationships with its employees should not be a carbon copy of their competitors, of large brands, of anyone.

2. Peer-to-peer friendships, mentorships, social groups, and other people-first initiatives—whether in or out of the office—will go a very long way in improving retention.

3. Creating opportunities for everyone to have fun at work is critical in times of high turnover.

4. DE&I initiatives are always the most successful when they are supported at the top – no question about it. A company with strong DE&I will embolden unique ideas, foster independence, encourage entrepreneurship, and inspire creativity.

5. In the face of the Great Resignation, employers are ramping up both wage increases and non-financial benefits, offering incentives such as fertility benefits, mental health support and caregiver leave policies.

6. Employees today are craving flexibility—whether that’s job location, the hours they work or how they work. The study reiterates that employees are leaving if their employer is not responding to their needs

Institutional Investor: How DEI Can (Finally and Fully) Be Incorporated Into the ESG Investment Process

  • Two of the top three themes across ESG investing right now involve DEI and stewardship, which is closely tied to DEI.

  • Social unrest driven by the pandemic has revealed a fragility in certain segments of the economy, such as the gig sector in leisure entertainment, and workers realize they have very little protection. This has created greater awareness of how interconnected people, planet, and profit are – really accentuating the ‘S’ in ESG

  • Improved standards around management of ESG issues supports effective long-term financial performance.

  • The term “diverse” in the context it was traditionally used (firms 50% owned by women or minorities) is too narrowly defined.

  • We want to understand for asset management firms of every size, from small and mid-sized to trillion-dollar asset management firms, because every firm should be held accountable for the way they are embracing diversity within the business and outside it, too.

ESG Disclosures, Standards, Rankings, and Reporting JDSupra: ESG Metrics and Executive Compensation – What to Consider to Do It Right

  • The relationship between ESG performance and executive compensation is trending amongst organizations that are prioritizing ESG with their business goals. ESG metrics linked to compensation can help organizations measure and progress with their ESG initiatives. Because measurements produce improvements, the addition of compensation in ESG measures may overall improve corporate culture, people, and the environment.

ESG Today: Science Based Targets Initiative Removes Fossil Fuel Companies’ Commitments and Validated Targets

  • The Science Based Targets initiative (SBTi) has announced that it will no longer accept commitments or validate targets from fossil fuel companies, and it will remove those with previous commitments as it works to develop more robust oil and gas target setting methodologies. Companies may be reinstated once this methodology is developed.

  • The criteria outlined for companies that will no longer be able to join the initiative includes “companies with any level of direct involvement in exploration, extraction, mining and/or production of oil, natural gas, coal, or other fossil fuels, irrespective of percentage revenue generated by these activities.”

  • The initiative will continue to accept commitments from companies that derive less than half of sales from the sale, transmission, and distribution of fossil fuels, companies with less than 5% of revenue from fossil fuel assets for extraction activities with commercial purposes, and electric utilities that mine coal for their own power generation.

ESG Today: Moody’s to Update its ESG Assessment Methodology

  • Moody's ESG Solutions has launched a consultation that seeks input from clients and other market participants on proposed revisions to its ESG assessment methodology.

  • The revised methodology proposes several changes like introducing new subcategories such as physical climate risks, cyber and technology risks, and responsible tax, as well as increasing the number of industry frameworks from 40 to 51.

  • Moody's also aims to add on an overall ESG grade, which will allow users to understand and organizations relative ESG performance.

Captive International: Biggest ESG risk is ignoring ESG (and greenwashing): CICA panel

  • Europe is leading the way on ESG, and the SEC is soon to follow with ESG reporting required for companies.

  • As reporting requirements become effective, companies are expected to face reputational and litigation risks increasingly. Litigation risks may ultimately fall on captives, who have been taking on directors’ and officers’ risks.

  • The biggest ESG risk for companies is ignoring ESG because investors, regulators and customers are now expecting companies to report on and integrate ESG.

Investopedia: Unpacking MSCI’s ESG Ratings (Podcast 31:00)

  • Unpack what MSCI’s ESG ratings are and what they are not with Meggin Thwing Eastman, MSCI’s ESG Research Managing Director and Global ESG Editorial Director.

Reuters: How ESG is changing the landscape in labor and employment law

  • It is paramount for companies to not only understand the hallmarks of an ESG program, but also the critical role that labor and employment law plays in identifying and addressing ESG risks and opportunities.

  • Given the numerous labor and employment issues implicated in ESG programs, companies would be wise to work with their labor and employment counsel to audit existing policies and practices to determine where areas of improvement may be and develop solutions to address weaknesses.

  • Regulators are increasingly requiring companies to establish ESG policies and practices. a successful ESG program should address several labor and employment issues. Companies are increasingly linking executive compensation to the achievement of ESG goals, and labor and employment issues are implicated with the drafting of these executive employment agreements.

  • Labor and employment counsel are also an essential partner when developing workplace policies related to mental health and well-being.

Investment Trends Pensions Age: Regulation driving ESG consideration for investors

  • Barnett Waddingham (BW) conducted a survey that found 91% of the survey’s respondents think that responding to legislation drives ESG considerations when making decisions, followed by managing risk (77%) and demand from members and policyholders (28%).

  • Several survey respondents also recognized recommendations from advisers and new regulations as reasons for making changes in their investment strategies.

  • Climate change has been identified as the most important ESG theme, but gender and multicultural diversity as well as pay equality were also addressed in the survey.

  • Beyond climate change, BW expects more regulations related to the various ESG criteria to exist soon.

Sustainability: How ESG investment returns are growing as market evolves

  • ESG is transforming investments as investors anticipate increasing returns. Fidelity found that half of a variety of ESG global investments from 1970-2014 beat the market, and only 11% performed poorly. BlackRock discovered that more than 80% of sustainable investment funds outperformed non-ESG-based share portfolios.

  • ESG and sustainable investing are projected to grow at a rapid pace, 43% between 2018 and 2036.

  • Investors and policymakers are demanding more ESG disclosure. The data will advance the monitoring of a portfolio’s ESG rating and help investors make decisions. The SEC is set to require additional company disclosures, and the European Commission completed its Sustainable Finance Taxonomy that sets standards governing environmentally responsible corporate activities.

  • Social and biodiversity impacts are also trending in ESG this year.

Seeking Alpha: ESG Risks Are Real Credit Risks

  • Patrick O’Connell from AllianceBernstein, a global asset management firm, notes that many ESG risk factors are difficult to quantify but caveats that all investing is complex.

  • Each year, two-thirds of the worst performers of emerging-market corporations are because of ESG considerations. O’Connell observes that ESG risks are real credit risks and investors need ESG policies to alleviate ESG considerations.

  • If investors engage with the company, its stakeholders and data, investors can have a better understanding of ESG risks before the market and then act to protect portfolios from the ESG risks.

ESG Today: S&P Global Launches $1.25 Billion Bond with Interest Tied to Scope 3 Emissions & Supply Chain Diversity Goals

  • S&P Global has announced the launch of its first sustainability-linked bond (SLB) issuance, with the offering of $1.25 billion of 2029 sustainability linked senior notes and debt costs tied to sustainability goals like emissions reductions and supplier diversity. If S&P Global does not hit its targets, the bonds will be subject to a 25-basis point rate increase starting in 2026.

  • Sustainability-linked securities are the fastest growing segment of the sustainable finance market, with 2022 volumes expected to more than double to $200 billion.

  • The new SLB offering coincides with the recent publication of S&P Global's Sustainability-Linked Bond Framework which outlines the KPIs tracking the company's performance toward its defined targets.

ESG Today: SEC Chief Gensler Looking into Developing Label, Disclosure Rules for ESG Investing Products

  • U.S. SEC Chair Gary Gensler has stated that the Commission is looking into rules for ESG investment products, including disclosures for fund managers addressing the criteria used for ESG, green, or sustainable labeled products. Gensler has compared investment labels to nutrition labels in their need to help investors understand what they are buying.

  • Gensler also highlighted the rapid growth in ESG investment products, as well as the lack of clarity surrounding ESG and sustainability information for funds labeled this way.

  • Gensler has asked his staff to build apart existing naming conventions and to consider recommendations about whether fund managers should disclose underlying data and criteria used in ESG investing.

Financial Review: From modern slavery to climate – ESG powers investor choice

  • The global population has become more broadly aware of ESG issues in the past 2-3 years, and ESG has moved into mainstream investing. There is also a misconception that it is only millennials and younger generations interested in ESG issues and investing, because a lot of pre-retirees are also thinking about the impacts of their investments.

  • Investors are interested in climate change, specifically, as well as issues like corporate responsibility, representation of women in boards. and workplace practices relating to the modern slavery act.

  • There are different types of ESG investors, from purely ethical investors to those seeking returns from their ESG investment. There is also confusion about what ESG investing is and should be, which often leads to accusations of greenwashing. Unifying frameworks like the EU's taxonomy help to clear up much of this confusion and provide a template for other countries and regions.

  • It is also worth noting that a good ESG score does not always mean that a company Is doing all that it should for all ESG issues, which can lead to even more confusion. Good ESG investment managers must be clear about what they are trying to achieve and how they are going to do it.

Financial Advisor Magazine: Why ESG And Impact Investing Is Important For Lower-Middle-Market Companies

  • Justin Kulla, a partner of impact investing and ESG, develops frameworks to help TZP Group’s lower-middle-market portfolio companies to de-risk and identify innovative approaches to value creation in the long-term. TZP Group has developed ESG 360°, a customized program that helps companies unlock value within the full range of stakeholders at every level. They also launched an impact investing fund strategy after noticing a generational shift towards companies that address global problems.

  • TZP Group developed these strategies because they feel it has always been important to be a “Partner of Choice” – where they invest in closely held companies with owners and managers that want to maintain a significant stake and partner with investors who offer complementary strategic, operating, and financial skills, all designed to help navigate the challenges and opportunities that are lower-middle market companies face.

Eurasia Review: Sustainable Finance in Emerging Markets Is Enjoying Rapid Growth, But May Bring Risks – Analysis

  • Sustainable finance incorporates ESG principles into business decisions and investment strategies and has become more mainstream in emerging markets over the last few years. ESG investments now make up almost 18% of foreign financing for emerging markets excluding China, quadruple the average for recent years.

  • The expansion of sustainable finance is also evident in the more active green bond issuance by non-financial firms and government related sectors. These recent gains in ESG markets may be an opportunity for emerging markets to access more stable funding sources and develop a more mature sustainable finance ecosystem to avoid fragmentation of markets and regulatory approaches international coordination and the adoption of global standards remain paramount.

Forbes: ESG Investing: The Only Way Is Ethics – Or Is It?

  • ESG investing adds another filter to the potential stock choices made by a fund manager to take into account a company's environmental, social and corporate governance practices

  • In theory, companies that actively support positive change across a number of measures - as determined by independent ESG research - will find themselves nearer to the top of a fund manager's `buy' list than their rivals.

  • Would-be ESG investors need to make long, hard decisions before they start allocating cash to perceived feel-good stocks and funds.

  • The extra analysis associated with ESG measures means investors may end up with exposure to better-managed companies.

  • Whichever side of the debate you take, it's worth remembering that ESG investing remains susceptible to the same human factors we see elsewhere, namely, fear and greed. Individual stocks or industrial sectors that are popular with ESG investors will end up overvalued if they are hyped up too much.

Yahoo Finance: What Could Go Wrong? The Case for Governance

  • Equity and fixed-income investors agree that good governance includes fair treatment of stakeholders, accurate and transparent reporting with appropriate disclosures, and minimal conflicts of interest between management and the company

  • Even when governance is good for equity investors, it is not always good enough for credit investors. Bond investors are primarily concerned with reducing risk to their investment, while equity investors focus on increasing returns

  • Both ratings companies and ESG data services use proprietary methodologies, so they lack transparency and comparability. Plus, ESG services consider governance from an equity investor’s perspective

  • The difference between a good investment and unexpected losses might come down to the issuer’s governance practices.

Bai: How banks can measure hidden ESG risks

  • Major publicly traded companies publish key metrics in their sustainability reports, but these reports are not standardized. The lack of standardization creates a significant challenge for banks that have limited options for understanding the ESG impact of much of their portfolio.

  • As more companies begin to create sustainability reports and measure their Greenhouse Gas Protocol Scope 3 impact (which includes metrics covering their full value chains ), many will field a wide variety of requests from different sources.

  • Banks can form consortia that standardize data collection and educate businesses on how to estimate their ESG metrics.

  • Data vendors can create a more efficient reporting system by enabling companies to efficiently share their data once they have created estimates.

  • Banks and other stakeholders can leverage the data that is available. Despite significant limitations, there are ways to obtain some understanding about certain ESG risks.

Axios: SEC chair pushing for greater transparency around ESG funds

  • Many institutional investors have ESG allocation targets, so there's lots of incentive to affix the acronym. This cuts across asset classes, including mutual funds, hedge funds, credit funds, private equity funds and venture capital funds.

  • The SEC estimates that there are at least 800 registered investment companies with more than $3 trillion in AUM, claiming to work toward ESG goals.

  • And then noted how, in the investment space, a high-yield bond fund will disclose summaries of underlying credit ratings. ESG funds, however, are all over the place.

  • ESG is at the edge of becoming goopy jargon; something slapped onto investment funds for marketing purposes.

Companies & Industries PropModo: How Do You Measure the Social in Real Estate ESG?

  • Social impact investing is seeing a renewed focus since the onset of the COVID-19 pandemic, but social impact can be the most difficult to analyze and embedded in investing strategies. Social data is difficult to collect, standardize, and report, But the social impact of investments is especially important for real estate portfolios whose assets make up the building blocks of cities.

  • The renewed focus on social impact and accountability is now tide to the idea that returns will be higher from investing in companies that pay close attention to their social impacts. The pandemic put a new focus on building health and Wellness, but there are several other factors that intersect.

  • Real estate also has a role to play in racial equity and has a negative history of discriminatory actions, specifically redlining. More global asset managers are targeting projects that increase shares of affordable housing for minority communities, but it can be difficult to get traditional banks to consider investments in low-income neighborhoods.

  • However, the question remains about how to standardize the measurement of social impact. There are discussions about “social credits” that could be developed the way carbon credits work but to measure outcomes in hunger, education, employment, and philanthropy, but this has not been universally accepted. ESG investors will drive the need for social impact data and measurement and decide what indicators are most impactful.

ESG Today: RepTrak Acquires ESG Data Provider ESG Analytics

  • RepTrak Has acquired ESG Analytics, which uses data and artificial intelligence to measure risks and opportunities in the ESG practices of countries, companies, and funds.

  • According to RepTrak, the acquisition is meant to expand the company’s presence in the ESG space and accelerate its strategy that fills a gap in the market by combining ESG and reputational data.

ESG Today: Free ESG Data Source ESG Book Launches on Google Cloud

  • ESG Book and Google Cloud have announced their collaboration to deliver ESG data solutions through cloud technology and enabling Google Cloud's customers to access ESG Book’s suite of sustainability solutions.

  • According to both companies, the new collaboration will allow ESG Book to enhance its cloud-based capabilities, and it will enable access of ESG Book via Google Cloud’s Analytics Hub.

ESG Today: Target to Help Customers Identify Products With Sustainable Packaging

  • Target announced Wednesday the launch of Target Zero, a new initiative aimed at enabling customers to identify products and packaging that are designed sustainably. The new program is being launched in response to growing customer interest in products that reduce waste all while helping the company advance its sustainability strategy “Target Forward.”

  • Target Forward includes commitments to incorporate circular design in the products that the company sells as well as in the supply chain and operations. Target has engaged with its brand partners on the initiative working together to identify products that meet specific requirements to be a part of the program's first cohort.

ESG Today: Climate Action 100+ Calls For Massive Scale-up Of Sustainable Aviation Fuel, Slower Air Travel Growth

  • Climate-focused investor engagement initiative Climate Action 100+ and Principles for Responsible Investment (PRI) announced Thursday the release of an updated sector strategy for the aviation industry. The strategy outlines actions for investors, aviation companies, and the broader sector to take to accelerate the transition to net zero and align with 1.5°C scenario.

  • The aviation industry is responsible for 2-3% of global emissions and that figure will potentially rise dramatically over the coming decades if no action is taken. Climate Action 100+ is an initiative that targets the world's largest corporate greenhouse gas emitters to promote taking necessary action on climate change and align their business strategies with net zero to help limit the global average temperature rise to 1.5°C.

Forbes: Foundations Begin to Embrace ESG

  • Foundations have begun to realize how they invest their funds could have more impact on the causes they wish to support. Many have taken the initial step of negative screening - trying to ensure that they are not investing in companies that are counter-intuitive to their missions. According to the US SIF Foundation, the issue areas that foundations most often cite in their negative screenings are tobacco, conflict risk, carbon emissions, and alcohol.

  • Considering this, foundations have begun to positive screen their investments – investing in companies that are doing good. There is also mission-related investing where assets are directed to companies whose business strategies are related to the foundations mission. Moving forward, foundations can look at their own operations and how they interact and treat their stakeholders and create publicly reported goals and then report on the progress towards those goals.

CNBC: How The War In Ukraine And Climate Change Are Shaping The Nuclear Industry

  • Security fears stoked by Russia invading Ukraine and targeting the Zaporizhzhia nuclear power plant, along with climate change, has pushed the future of nuclear power industry forward.

  • Currently, there are about 440 nuclear reactors operating in more than 30 countries, supplying about 10% of the world’s electricity. 55 new power reactors are currently being constructed in 19 countries. China and Russia have been the most dominant forces in nuclear power but the United States is trying to make a move to win with nuclear technology.

SSIR: ESG + Public Health = ESHG

  • It is important to emphasize social factors that are measurable, such as public health. While Public Health might be implicit in the Social in ESG, it is not explicit.

  • By setting frameworks around hot-button industries and influencing ESHG outcomes, asset managers will pre-empt both stakeholder and regulatory pressure

  • Getting to a more virtuous cycle with public health is going to take action and vision, not to mention putting the necessary investment on the line, to do it.

  • Currently more than a third (36 percent) of U.S. workers are part of the gig economy, and by 2027 more than half will be. With no health benefits and often little in the way of retirement plan, these workers represent a special challenge for health investing.

Government Policy

GreenBiz: The failed promise of ESG and the Wall Street Journal

  • ESG is a risk mitigation tool, one not in the typical toolbox used in diligence, and that is material at the bottom line.

  • ESG can create a "risk profile" of an investment, but doesn’t "tell us anything about the impact on overall emissions, pollution, water use, or society and the environment."

  • As a solution, the idea that government and the market could combine to ``tax and regulate'' within the urgent time frame required to cool off our overheating planet is as blue sky as any delusional fantasy of pivoting the world's energy transition overnight.

  • The only way to make headway on real climate mitigation, Fancy says, is for governments to reassert their leadership and rule-making powers and call the shots on future climate policy.

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