Is Your Board Ready to Take on ESG? (Newsletter 10/22)
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ESG Ratings & Reporting
Bloomberg to Add Sustainalytics Ratings and Research to Terminal
Sustainalytics‘ ESG Risk Ratings and Controversies Research reports and data, among other Sustainalytics offerings, are now available on the Bloomberg Terminal. Investors can easily access this data for over 18,000 companies, giving investors the ability to incorporate Sustainalytics scores into screening processes, portfolio analysis, and engagement and voting practices.
Arabesque and Glass Lewis Partner to Provide Sustainability Performance Data
Arabesque S-Ray ESG data will now be included in Glass Lewis Proxy Paper research reports for over 8,000 companies. Arabesque’s research pulls from over 30,000 sources for sustainability performance metrics, including net-zero targets. This partnership gives Glass Lewis clients access to ESG, climate, and regulatory data solutions for corporate governance and shareholder engagement. Over 1,300 institutional clients use Glass Lewis’ research and solutions.
SASB Develops Materiality Finder
SASB created a Materiality Finder, which enables companies to understand quickly and easily which disclosure topics are included in their industry standard and to compare topics across up to four industries. While similar to SASB’s Materiality Map, the new Materiality Finder adds a company search function, more precisely identifying which metrics and topics are important for each industry, and allows side-by-side industry comparisons.
SBTi to Launch Net-Zero Standard
Next week, the Science Based Targets Initiative (SBTi) will release the first science based net-zero standard for companies to align with as they commit to achieving net zero carbon emissions.
Polar Capital Launches Two New Sustainability Focused Funds
Polar Capital launched two new funds under the sustainable thematic equity team. The Smart Energy fund invests in global solution providers that will benefit from the energy transition and looks for exposure on long-term growth themes. The Smart Mobility find will invest in companies globally that are supporting the decarbonization, electrification, and automation of transportation, which covers technologies, products, and services. A newly appointed group, the sustainable thematic equity team is led by Thiemo Lang, who recently joined from Robeco Switzerland, and includes Thomas Guennegues, Guenther, Hollfelder, Junwei Hafner-Cai, and Stefanie Rath.
BlackRock Encourages Sustainable Investing by Identifying Outperformance Opportunities
BlackRock published a research paper on how sustainability data and research can allow investors to identify sustainable business practices and business performance leading to investment outperformance based on the investment styles. The report shares the two approaches BlackRock uses for sustainable investing – ESG integration, where ESG considerations are factored into investment decision-making alongside traditional investment processes, and sustainable funds, which incorporate both sustainable strategies and ESG considerations into the investment process. BlackRock manages over $400 billion in sustainable strategies.
Corporate Boards Take on ESG…But Are They Ready?
PwC’s 2021 Corporate Directors Survey found ESG issues are top of mind for corporate boards. However, failing to understand ESG factors prevents meaningful oversight of sustainability issues and implementing effective ESG strategies. The survey encompasses responses from over 850 public company board directors. Key findings from the survey are as follows:
- 52% of directors said ESG is regularly on their Boards’ agenda
- 64% said ESG is now linked to company strategy, up from 49% in 2020
- Only 25% of directors said their boards understand ESG risks well
- 52% support tying executive compensation to diversity and inclusion goals
The Most Diverse Group of New Corporate Directors Take a Seat
The Wall Street Journal reported that U.S. public companies added the most diverse set of directors over the past year, with more Black, women, and first-time directors than in previous years. However, the changes were seen at larger corporations and were not as prevalent within smaller companies. A study by Spencer Stuart found that a third of new independent board members within the S&P 500 identified as Black, a jump from 11% last year. Latino directors saw an increase as well, at 7%, up from 3% the previous year.
ESG Spending to Spike in 2022
In a recent survey, Verdantix found global corporates expect ESG initiative budgets to rise in 2022, with 57% expecting double-digit growth in expenditures. As shown in the image below, companies are forecasting higher spending on ESG solutions, such as health & safety management system, ESG platform, environmental management systems, and sustainability reporting software.
Airlines Ramping Up Climate Initiatives
Following the International Air Transport Association’s commitment a few weeks back to work toward achieving net zero carbon emissions by 2050, Southwest and Alaska Airlines have announced new climate initiatives. As part of Southwest’s path to achieve carbon neutrality by 2050, the airline has announced a 10-year Environmental Sustainability plan. Southwest’s approach includes four main components: Reduce, Replace, Offset, and Partner. On the other hand, Alaska Airlines is launching Alaska Star Ventures, a new investment arm that will further emerging technologies to help enable the company’s achievement of net zero carbon emissions.
Ikea, Amazon, & Unilever Aim for Net Zero Shipping By 2040
A group of nine multinational companies, including Ikea, Amazon, Inditex, Patagonia, and Unilever, have pledged to use only zero emissions ships for transporting cargo by 2040. Amazon’s goal covers any cargo it handles, even items for third party sellers that have Amazon ship their goods. This initiative rules out utilizing ships that run on liquefied natural gas (LNG), substantiating the decision of Maersk, the largest container shipping company globally, to invest in ships that can run on green methanol.
Featured Article: How to Message Your ESG Strategy to Investors
In 2020, 85% of investors said they consider ESG factors when making investment decisions1, up from 16% in 20092. Investors look at ESG performance in relation to investment risk – both in terms of how to avoid it and how to mitigate. Now, the key sources of potential investment risk are going to be material topics. Materiality is another way to assess the potential impact on a company’s operations, financial performance, or reputation. Understandably, these are the topics that investors are typically most interested in learning more about. In order to accurately identify a company’s material topics, a company must engage with a broad set of stakeholders, including investors.
To see why investors care about ESG and how you can tailor ESG information to investors, click here and continue reading.
- UK Launches Sustainability Disclosure Requirements for Businesses and Investors
- Lazard’s Q3 2021 Review of Shareholder Activism
- DWS switches indices on six ETFs to integrate ESG criteria
- The London Stock Exchange introduces new climate reporting guidance for issuers
- Not Woke or Greenwashing: ESG Is Just Solid Risk Management
- What’s A Surefire Way To Hit ESG Targets? Start With Transparency (forbes.com)
- Wales to get UK’s first hydrogen-powered brewery
- Toyota Charges into Electrified Future in the U.S. with 10-year, $3.4 billion Investment