Professional Pensions (November Issue)
“The problem with ESG fund ratings is primarily that they are fairly new—and are therefore prone to criticism that they are not detailed enough, are missing information, or are failing to analyse certain aspects of companies.” At this stage, “to truly reduce ESG risk exposure, those overseeing funds may need to do their own research and engage with companies to properly inform their decision-making.”
Tags: Criticism, Decision-making, Detailed, Engage, ESG, Fund ratings, New, Research, Risk exposure
Institutional Investor (May 24)
Quants may be able to “fundamentally transform the ability of investors to find companies that embrace ESG principles.” Beyond crunching more widely available ESG data, some hope that unstructured data, ranging “from people’s comments on social media to data mined from online retailers,” can reveal “hard-to-measure issues like corporate culture or a commitment to the environment.”
Tags: Commitment, Corporate culture, Data mining, Environment, ESG, Hard-to-measure, Investors, Quants, Social media, Unstructured data
Institutional Investor (October 29)
“Just as information from barometers and thermometers can help us prepare for tomorrow’s weather, so corporate information on environmental, social and governance (ESG) issues can help investors make better decisions and prepare for the future” by providing such information “as whether supply chain management takes account of climate risk, whether fixed assets are based in areas prone to flooding and cyclones and whether the scale of a company’s greenhouse gas (GHG) emissions is contributing to more extreme weather events over the long term.” But the problem is “too few companies report on such ESG factors. And when they do, it is often voluntarily reported, which tends to mean different methodologies and measures too inconsistent for investors to compare efficiently.” There is an obvious solution. Global stock exchanges should “coordinate the reporting of sustainability metrics just as they do with financial metrics.”
Tags: Climate risk, ESG, Extreme weather, Fixed assets, GHG emissions, Investors, Methodologies, Stock exchanges, Supply chain management
Institutional Investor (June 26)
“Despite the rise in prominence of environmental, social and corporate governance issues, many corporations still do not include ESG risks into their financial performance.” Part of the problem is the lack of a robust international framework, but progress is being made with the London-based International Integrated Reporting Committee expected “to release a prescriptive integrated framework that provides guidance details for measurements by industry sector by mid-to-late next year. Prior to that, GRI will publish their own prescriptive, but not as detailed, framework by next May.” Another issue, however, is data collection. Companies will “need the processes and controls to collect the data” for ESG reporting. Ultimately, Institutional Investor believes, “getting ESG risk in financial statements may need investor muscle…. It may be up to a few active ESG investors to push changes at the board level.”
Institutional Investor (August 2)
“What do we mean when we say socially responsible investing?” Environmental, social and corporate governance (ESG) investing has been growing in popularity, but there is little agreement over how the social aspect should be reported by companies. There is, however, a push for companies to “do a better job of both considering and reporting on their social impacts…. less emphasis should be put on social outputs (for example, the number of bed nets provided to prevent malaria), and more on social impacts (the result or change that is a consequence of the outcome).” Social reporting is still in its infancy, much as environmental reporting was decades ago. In the future, it will be “important for companies to move the social impacts discussion up several notches to the board level, so that it can permeate all aspects of operations.”
Tags: Corporate boards, ESG, Social impacts, Social reporting, SRI
Institutional Investor (May 15)
Emphasizing the growing importance of environmental, social and governance factors (ESG) to investors, two major pension funds announced sustainable investment initiatives. The $236 billion California State Employees Retirement System (CalPERS) pension plan will “fully integrate ESG factors in all investment decisions, and across all asset classes.” Meanwhile, the $152.9 billion California State Teachers Retirement System (CalSTRS) has pledged that all of its “external managers will include an analysis of how environmental, social, and governance (ESG) issues factor into their strategies.” CalSTRS CEO Jack Ehnes said, “No matter what you’re doing with us, there are ESG risks that we think will have a long-term impact on the portfolio, and we want to be sure that you’re articulating for us how you’re looking at them.”
Tags: CalPERs, CalSTRS, ESG, Pension funds, Sustainable investment
