This week, Bloomberg estimated that assets dedicated to ESG investing will reach $50 trillion by 2025, up from $35 trillion at the end of last year. Those are big numbers.
Here are three big questions related to ESG we are following and are worth watching in 2022.
First, will ESG be regulated? The Wall Street Journal last weekend delved into the business of ESG rating and advisory, pointing at the potential conflicts of interest stemming from some companies selling both ESG ratings and ESG consulting services to corporates. This debate has been going on for a while and will intensify as ratings agencies, advisories and consulting firms continue to spend billions enhancing their ESG offering.
Regulators on both sides of the pond seem to think more oversight is needed on ESG ratings; companies argue that they have effective controls to prevent potential or apparent conflicts. A big question is whether the SEC will move on ESG regulation this year on top of its already busy agenda.
Second, who decides what’s green? The European Commission is moving forward with a proposal to label certain nuclear energy and natural-gas investments as sustainable. The plan is aimed to wean countries off fossil fuels and is described as “a means to an end” by the EU Financial Services Commissioner. Climate activists and certain investors aren’t buying it. The CEO of a group representing investors including BlackRock and Vanguard wrote an open letter warning this would compromise Europe’s position in sustainable finance.
In the U.S., the Biden Administration is facing similar criticisms by the likes of Wellington for being “too lenient” with small oil and natural gas producers when it comes to methane emissions enforcement.
Have a great weekend,
Chris and Felipe
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Wall Street Journal: Wall Street’s Green Push Exposes New Conflicts of Interest
The giant firms that audit the books, rate the bonds, advise on proxy voting and categorize the world’s companies are spending billions to boost their climate-related operations. Read More
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Reuters: U.S. Markets Regulator Flags Risks for Ratings Firms in ESG Boom
Credit ratings agencies face new risks as they throw themselves into the fast-growing business of environmental, social and governance (ESG)-based investing. Read More
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Reuters: EU Securities Watchdog Launches Review of ESG Ratings Sector
The European Union's securities watchdog on Thursday launched a review of the bloc's fast growing but largely unregulated market for environmental, social and governance (ESG) ratings on companies. Read More
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Bloomberg: Europe Is Losing Nuclear Power Just When It Really Needs Energy
Countries are plunging deeper into an energy crisis, but some governments are still shutting down reactors. Read More
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Financial Times: Asset Managers Dismiss Biden’s Methane Clampdown as Too Lenient
Move to regulate leaks of potent greenhouse gas would exempt small wells from oversight. Read More
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Wall Street Journal: Nuclear Power, Natural Gas Secure EU Backing as ‘Green’ Investments
Proposal to expand what can qualify as sustainable investment sparked outcry from some member states, investors. Read More
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Financial Times: Big Oil Groups Regain Swagger with Largest Profits in Years
Investors return to ExxonMobil and Chevron as they funnel proceeds to buybacks and dividends. Read More
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Wall Street Journal: Shell Woos Financial Investors, Not Green Ones
Energy giant used windfall profits from tight oil and gas market to splash out on dividends and buybacks rather than to expand its green ambitions. Read More
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Bloomberg: ESG by the Numbers: Sustainable Investing Set Records in 2021
Even with the current market tumult, anyone who thinks ESG is a bubble might want to hedge their bets. Read More
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Bloomberg: Nelson Peltz Gets Janus Board Seats, Amping Up Pressure on Firm
Nelson Peltz, an investor with a long winning streak of bringing major change to companies, is joining Janus Henderson’s board along with Trian Fund Management co-founder Ed Garden, the firms said Tuesday. Read More
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Financial Times: Why the US Right Wants to Put Workers in the Boardroom
A Republican bill that proposes to give labor a new voice is a challenge to vested interests on left and right. Read More
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Financial Times: The Rising Costs of Climate Change for Banks
Despite the rough ride for renewable energy companies of late, earnings reports highlight big money being made in environmental, social and governance (ESG) investing. Read More
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Fortune: World’s Most Admired Companies
Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation. Read More
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The Deal: FTC Dems Quietly Float Longer Merger Reviews
The commissioners complained they need more slack to conduct initial assessments of transactions and complete their investigations after companies comply with detailed document requests. Read More
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Wall Street Journal: Activist Investors Take Aim at U.K. Inc.
Elliott Management, Third Point and Trian Fund Management are among the firms pushing for changes at big U.K. companies. Read More
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Harvard Law School Forum on Corporate Governance: The Corporate Governance Gap
After decades of research and policy advocacy, there is a growing sense that many public corporations are finally nearing the promised land: their boards seem more diverse, large investors seem more engaged, and directors seem more accountable than ever. But is this perception accurate? Read More
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Through a combination of focused lectures and case studies, curated readings, and in-depth interviews with over 50 thought leaders, we demonstrate how to incorporate environmental, social, and governance considerations into business and investment strategy.
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Hosted at the Lotte New York Palace, this event will focus on the latest campaign practices of activists, how they unfold, their outcomes, and how boards and executives work constructively toward improved stock performance.
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