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Issue #95: A weekly update on responsible investment.
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\\ Weekly Insights \\

ESG Criticism: Over the last few weeks I have featured various articles criticising ESG with the most widely distributed one written by BlackRock’s former Head of Sustainable Finance. I really enjoyed reading two rebuttals on the ESG various recent ESG takedowns produced by Morningstar.

The first Morningstar article interviews the founder of Sustainalytics Michael Jantzi. Jantzi addresses concerns related to ESG market maturity and ratings divergence.

ESG is not as new as many think: “Certain people see sustainable investing as a new phenomenon that’s two to three years old. It has a much longer history. I’ve watched it grow over the past 30 years. The mainstreaming has taken place over the past decade and a half.”

Ratings are useless because they are so variable: [ESG Ratings] “reflect a variety of approaches — some, like Sustainalytics’ ESG Risk Ratings, measure risk, other focus on impact, while others look only at reputation or market sentiment, for example. Different starting points lead to different outcomes, so the market has choice.”

Still — investors demand more nuance and sophistication from ESG raters… Looking at Sustainalytics, it is way more robust than it has been historically. It is built around 20 material ESG issues. On top of that, Jantzi shared that Sustainalytics approach centers itself around a combination of human beings and technology.

The next article is with Simon MacMahon, Head of ESG and Corporate Governance Research. What does he think the ESG take down’s have gotten wrong?

  1. Blurring the lines between risk and impact
  2. Not understanding what ESG has accomplished
  3. Failing to recognise that we are very early in ESG adoption

One area that neither rebuttal addressed was concerns around how accurately ESG funds are truly pursuing an ESG strategy. A more recent article I saw was by the Wall Street Journal specifically diving into problems with DWS Sustainable Investing strategy. The article discussed how DWS overstated how much it was using sustainable investing criteria to manage assets and how regulators are now diving into accuracy of ESG claims.

\\ Nossa News \\

Respond to this year’s Workforce Disclosure Initiative!
Nossa Data is the official technology partner to the Workforce Disclosure Initiative, an ESG standard growing in popularity among many of the world’s largest public companies. This year’s response is due on October 29th, 2021. If you are a public company and interested in submitting a response to the WDI, get started by emailing us at wdi@nossadata.com

Reach Out!

\\ Top Stories \\

What is going on in the Corporate Climate Venturing space?

Check out this great graphic by Climate Tech VC.

ESG is under attack, and that’s a good thing
The ESG pushback isn’t just from regulators. It’s coming from the mainstream media and NGOs from around the world, both of which have called out corporate claims and investment funds rooted in ESG as exaggerated, or even fraudulent. The increased scrutiny is a sign that ESG is having a significant impact and the current pushback isn’t necessarily a hindrance to meaningful progress. Instead, it could actually be a boon to the evolution of ESG and its impact. Green Biz.

10 Open Questions for the 40 Trillion-Dollar ESG Industry

1. Usefulness of ESG disclosures to investors.
2. Usefulness of ESG disclosures to stakeholders
3. Have past disclosure efforts to affect societal outcomes worked?
4. Best way to police the tragedy of the commons
5. Are ESG ratings useful?
6. Do stakeholder-oriented institutions walk the talk?
7. How effective is the audit function in certifying ESG disclosures?
8. Does competition in private standard setting work?
9. Is shareholder engagement more effective?
10. Questions on climate reporting and policy

Forbes.

A handy guide to picking your company’s clean energy strategy

Taylor Sloane on LinkedIn.

  • Want to make your ESG processes digital?
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\\ Paper Highlight \\

Sustainable Investment Survey
Pitchbook

This year’s 30-question survey asked global investors and their advisors to react to various topics related to sustainable investing, ESG risk factors, and impact investing. This group of respondents represents the most balanced profile to date. We recorded responses from every region and had increased numbers from each respondent type: LPs, GPs, Both, and Other.

Read the full report.

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Julianne Flesher
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