Busting ESG myths and the difficulties of parental leave
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Issue #79: A weekly update on responsible investment.
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Busting ESG Myths
In this newsletter, I love a good visualisation so I was excited when I saw a visual piece on ESG fact checking. I recommend visiting the article itself but what were the myths they were busting?
- Fact Check — Not Necessarily:
ESG comes at the expense of investment performance
2. Fact Check — False:
Investors talk about ESG but don’t invest in it
3. Fact Check — Not Necessarily:
ESG investment strategies eliminate entire sectors
4. Fact Check — False:
ESG investing is only for millennials
5. Fact Check — True:
ESG investing is here to stay.
Parental Leave in VC
I also wanted to loop in the article by Sifted about parental leave. An important S topic and a challenging one. I loved the way this article looked at maternity leave as it comes specifically to the venture capital industry.
“We work in an industry which is incredibly results-driven and incredibly transparent in terms of how good you are,” Warner adds. “You live and die by if you got into one of those four or five [standout companies] in a year. Not being in the market for any period of time is a concern; there’s no two ways around it.”
Interesting lists: I found this cool resource to search Climate Tech ML companies. Explore the list.
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We are in the Barclays lookbook!
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\\ Companies Making Statements \\
- Mattel — Mattel Launches New Toy Takeback Program Called Mattel PlayBack. Read their announcement.
- IBM — IBM investors and board back DEI report. Read about how IBM received support.
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What ESG is Not
ESG is not stripping out high carbon assets to placate activist investors seeking to end the use of fossil fuels, or force companies not to sell guns anymore. Nor is it appropriate use of ESG when Airbnb announcing in 2019 that they wouldn’t list properties for rent in the West Bank, only to backtrack weeks later under massive pressure from the State of Texas. Leadership in ESG, for boards and management, is asking, “What are our greatest environmental liabilities and how do we ameliorate them?” “Are there better, more sustainable, efficient, and accretive ways of production that we should be using?”
Forbes.
Carbon is a buzzword on corporate earnings calls
Don’t think carbon is an important topic? Just look at the growth in number of mentions in earnings calls over the last 12 months. Mentions of carbon and associated keywords have tripled over the past three years to about 1,600 per quarter, according to a UBS analysis of earnings call transcripts. Searches for the word in a financial context on Google have also reached an all-time high, according to the Swiss bank. Carbon emissions is staying high on the political agenda.
Analysis: What happened when a U.S. state required details on corporate diversity
Sixty-six of the 74 companies that filed forms since the Illinois law was passed provided enough information to parse out their racial diversity. Non-white people held about 15% of the average company’s boardroom seats, compared to their 40% share of the state’s population. Among the S&P 500, 9% of directors were Black as of January, according to researcher Equilar, up from 8% in August. Hispanics were 4.2% of S&P 500 directors, up from 3.6% in August. Asian or Pacific Islander directors accounted for 4.5%, up from 4.4% in August.
Reuters.
Who’s afraid of stakeholder capitalism?
Pursuing stakeholder capitalism requires taking a long-term view — something that is associated with creating value. A McKinsey Global Institute study that looked at 615 large- and midcap U.S. publicly listed companies found that those with a long-term view outperformed the rest in earnings, revenue, investment, and job growth. To the extent that inculcating an ethos of stakeholder capitalism requires taking a long-term view — and it certainly does — the evidence is that doing so is positive for shareholder value, too. The same is true for those companies that have an explicit focus on economic, social, and governance (ESG) indicators, all important elements in stakeholder capitalism. Taking ESG into account not only addresses risk, it also creates healthy returns.
Fortune.
ESG rules, rather than IMP regulations, will nudge shipping to net zero
Climate change is only one of many environmental, social and (corporate) governance (ESG) issues facing shipping companies, but it is one the industry is rightly focused on, both because it represents the greatest long-term commercial risk and because of stakeholder stipulations. These are really two sides of the same coin: the more stakeholders ratchet up demands via initiatives like the Poseidon Principles and the Sea Cargo Charter, the greater the risk to those companies unable or unwilling to adapt. The IMO is working to nail down measures needed to achieve its 2030 and 2050 decarbonisation goals, goals which themselves now lag well behind many national commitments under the Paris Agreement and are therefore coming to be seen as insufficiently ambitious.
Lloyds Register.
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\\ Weekly Report Feature \\
Measuring what matters: The scramble to set standards for sustainable business
Moral Money: Financial Times
In lieu of a report this week, I saw a great article with a lot of wonderful visualisations done by Moral Money with the Financial Times.
“Sustainability disclosure is now at the top of the agenda for the world’s largest investors, the world’s largest companies and regulators in almost every major market,” says Janine Guillot, chief executive of the Sustainability Accounting Standards Board (SASB). “That’s a sea change from where this conversation was even five years ago.”
Investors want focus on ‘materiality’ as well as quality
Poor data quality is one of the biggest hurdles in the path of ESG investing
Companies are dealing with hundreds of different ESG regulations and standards around the world.
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Julianne Sloane
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