Increasing transparency of the workforce, why we partnered with WDI
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Issue #87: A weekly update on responsible investment.
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\\ Weekly Insights \\
This week we are excited to announce that Nossa Data has officially become the technology provider for this year’s WDI response process. The Workforce Disclosure Initiative (WDI), created by ShareAction, aims to improve corporate transparency and accountability on workforce issues by providing companies and investors with comprehensive and comparable data. It is backed by an investor coalition made up of 53 institutions, with $7.5 trillion in assets under management. In 2020, 141 global companies took part in the initiative. Many of the world’s largest brands have committed to creating a response. You can view the full list of responders here.
Why are we excited to be partners with WDI?
The WDI was launched in 2017 to gather information on the issues most crucial to human rights and fairness in the workplace. Similar to the Carbon Disclosure Project (CDP) that was launched in 2000, focusing on the environmental impact of companies, with nearly 9600 corporate respondents, the WDI has already garnered support from many of the world’s largest organisations (Adidas, BMW, Barclays, Nike, Unilever and more). As investors and other stakeholders continue to demand transparency on workforce topics, including mental health implications, gender equity, and more, the WDI bridges an important gap in the market. It sets the disclosure standard for what companies need to be discussing in terms of how they manage their staff and supply chain workers, while it also shows how their approach to workforce management is aligned with their business strategy. While the WDI sets its sights on improving workplace transparency, we are proud to help by providing the tools that make the process as seamless as possible, via the Nossa Data platform.
ShareAction provides the methodology / scoring, we provide the technology and ease of use.
Our partnership means that this year companies responding to the WDI will formally submit their response from our software. They will receive limited access to Nossa Data’s reporting module where they can collaborate across their team and organisation on submitting the 2021 response.
If your organisation has been invited to respond to the WDI survey and you would like to book an onboarding call with us the first time you log in, you can write to us at wdi@nossadata.com to set up a chat.
\\ Nossa News \\
We have been selected as a finalist for the drawdown awards!
The awards recognise excellence and innovation within private capital fund operations. We are excited to have been named in the Technology: ESG category. Read about our nomination here.
Speaking on key trends in ESG
Last week we spoke at the Digital Leadership Forum. We shared about what we are building and discussed for the audience key trends in ESG.
\\ Companies to watch in ESG \\
This week we want to highlight the recent #ESG progress of these companies 🌍🌿
- Lombard Odier Group, a global wealth and asset manager, recently signed a multi-year research partnership with University of Oxford towards sustainable finance and investment research. The collaboration will be the first endowed professorship at a major global research university and will focus on climate change, circular economy and nature.
- Patagonia is set to become carbon neutral by 2025 by switching to renewable energy and addressing its supply chain. Thanks to its use of eco-friendly materials, Patagonia has long been a sustainability leader in its industry.
- Starbucks announced a partnership with Generate Capital, a sustainable infrastructure company, to power Starbuck’s New York stores and part of the surrounding community with renewable energy. It has allocated $97 million of tax equity to 23 community solar projects through a multi-year facility.
- The European Investment Bank (EIB) announced its first sustainability-linked loan agreement with Enel Group. The €600 million deal with E-Distribuzione, Enel’s electricity distribution company, will fund their “e-Grid” project.
- Samsung Electronics has partnered with Deutsche Telekom to create a green smartphone. The phone, set to be released at the end of 2022, will include features such as easy repair and a removable battery.
\\ ESG jobs \\
With so many ESG jobs popping up, we want to help you find the right role!
- Director, ESG Investment Research — BlackRock — New York, NY. Read the job posting.
- ESG Manager Proposal — Architas — Paris, France. Read the job posting.
- Associate for Sustainability and ESG Strategies Growth Equity Fund — JPMorgan — San Francisco, CA, USA. Read the job posting.
- ESG; Climate Change Research Analyst, Fixed Income — Goldman Sachs Asset Management — New York, NY, USA. Read the job posting.
- ESG Securities Manager — Swiss Life Asset Managers — Paris, France. Read the job posting.
- Director, Sustainable Strategist — BlackRock — San Francisco/New York City. Read the job posting.
\\ Top Stories \\
The Green Economy Has a Resource Scarcity Problem
Corporations, investors, and governments worldwide have made ambitious commitments to reduce their operations’ negative environmental and social impacts. But there’s a problem: New solutions will inevitably trigger bottlenecks for the very resources, infrastructures, and capabilities upon which they depend. While the supply of these sustainability-related resources will expand due to investment and innovation, in many categories, rapid growth in demand will likely outstrip supply, heightening competition and pushing up prices.
Impending sustainability scarcities are already visible in several categories:
- Carbon Credits
- Recycled Plastics
- Battery Inputs
- Green Hydrogen
- Sustainable Cotton
Forward-looking companies are already trying to secure the resources they will need before sustainability scarcity becomes the norm.
E&S proposals build momentum this proxy season
Investor support for environmental and social shareholder proposals at Russell 3000 companies has increased significantly this year, based on early proxy season analysis from Georgeson. According to the analysis, 30 environmental and social proposals have already passed, which is the highest number on record. This is a 50 percent increase on the total number of such proposals receiving majority support during the 2020 proxy season. There is also record-breaking support for shareholder proposals focused on plastic pollution, political contributions and board diversity. Georgeson says investors have submitted nearly 150 percent more workforce diversity-related proposals in 2021 than in 2020 (from 37 to 91), while climate change proposals have risen by 73 percent (from 36 to 62).
IR Magazine.
Biodiversity Target-Setting: Guidance for banks
This guidance primer is a resource for implementation to support banks in preparing to set portfolio-level biodiversity targets. “It is expected that in the next 6–12 months there will be agreed global biodiversity goals that give clear targets and allow more harmonised metrics for ‘nature positive’ portfolios. In concert, in the climate space, a more detailed roadmap for deforestation and nature-based solutions is expected that will allow for banks to converge on this topic also within their ‘net zero’ strategies.” The primer is aimed at helping to prepare banks to take a systematic approach to setting and achieving biodiversity targets in the context of the Principles, and move towards implementing and managing biodiversity impacts (as well as exposure to biodiversity-related risk).
Read the Principles for Responsible Banking report.
St. James’s Place: We are not trying to be “woke”
St James’s Place is not trying to be “woke” in its attitude to sustainable investing, its investments director has said. “People often confuse ESG with ethical investing, and the two are not the same,” he said. “What we don’t do [at SJP] is ethical investing or screening because that has been what’s led to…underperformance. “Ethical investing says I don’t like tobacco, so I’ll just hold no tobacco stocks. It says I don’t like oil and gas, so I won’t hold any oil and gas stocks. “Whereas we think what you want to do is understand the industry and the industry leaders and help them become better businesses.” He uses an example of where SJP’s leverage has impacted a firm’s environmental standards, in pressuring Shell to sign up to a net zero pledge in January. “We voted against them in April, because we felt they hadn’t gone far enough. “They have now committed to a 45 per cent reduction [in carbon emissions] by 2035. So we think that’s what it means to use capital as a force for good.”
FT Advisor.
DuPont Sustainable Solutions Acquires KKS Advisors
DuPont Sustainable Solutions (DSS) announced that KKS Advisors, a leading global Environment, Social, Governance (ESG) consulting firm will join DSS. With this acquisition, which was effective June 30, DSS adds to its offerings new intellectual property (IP), methodologies, tools, and capabilities in ESG and sustainability. Combining this with DSS’ operations heritage and expertise in operations risk, capability development, data analytics and digital technology enables DSS to now provide a truly integrated transformation solution to clients, to implement sustainability goals and aspirations.
Consult DSS.
- Want to make your ESG processes digital?
** Schedule a call to speak with Nossa Data
*** Email Team@nossadata.com
\\ Paper Highlight \\
Decarbonizing Everything: Climate Data, Industry Returns and Portfolio Construction
State Street: Alex Cheema-Fox, Bridget R. LaPerla, George Serafeim, David Turkington, and Hui (Stacie) Wang
This paper evaluates the relative merits and applicability of various measures of corporate climate risk, and investigates how these measures can be combined to enhance risk-adjusted returns of equity portfolios. Metrics that are directly observable and easily quantified are limited by their relatively narrow scope, while metrics that are broader in scope are limited by their qualitative and potentially subjective construction.
Looking across 43 industries the paper examines the performance of long-short investment strategies based on three metrics:
- Carbon emissions from operations
- Carbon emissions from operations plus estimated upstream and downstream emissions
- Analyst ratings of a firm’s climate-related risk and opportunities management.
Results suggest that portfolios formed on carbon emissions perform better in industries that exhibit higher dispersion in carbon intensity across companies, consistent with the notion that greater dispersion in climate-related business strategies provides a useful proxy for the likelihood that climate change impacts the financials of companies in that industry.
Investment strategies that weight each industry by the variation of carbon outcomes across firms exhibit superior performance compared to market capitalisation-weighted industry portfolios. These findings are synthesized into a framework that combines qualitative and quantitative measures to produce targeted strategies for managing climate risk while increasing risk-adjusted returns.
\\ Leading Across ESG \\
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Julianne Sloane
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