Behind the ESG headlines - March 11, 2022

By mathew-loup

Spring is tantalizing close for those in the northern hemisphere, while our friends in the southern half prepare for autumn and a different kind of change. Seasons used to be constant, but everyone on the planet has seen rapid and abrupt changes to these familiar patterns caused by climate change.

The knock-on effects are just some of the many facets of the environmental, social and governance (ESG) issues that we all face on a personal and professional level. Our best hope is for everyone, especially leaders, to get better informed so that they make better decisions. 

Here are our top five picks from articles, blogs, reports or videos that are addressing the complexities of the ESG agenda and the impact of the three major global events around us: war in Ukraine, climate crisis and COVID-19.

  1. It’s not just high-schoolers that flunk their grades. A new report from You Sow, which promotes corporate social responsibility and shareholder activity, found that only three major US companies got an A grade for their efforts towards net zero. Microsoft, Pepsi and EcoLab were the teacher’s pets, while Alphabet and Apple managed acceptable B grades. The number of Fs in Road to Zero was startling and included some big names such as Amazon, JP Morgan Chase and Home Depot. Tesla fared worst of all, not scoring a single ranking point.
  2. More homework is needed for some companies. A new study by CDP of 13,000 companies worth $US64 trillion found that only a third have climate transition plans. And only 6% had publicly available plans with a net-zero target. With 24 indicators legitimizing a climate transition plan, only 1% of the companies surveyed disclosed information against all of them. “Currently one third of organizations disclosing through CDP reported developing a low carbon transition plan,” said Nicolette Bartlett, Chief Impact Officer, CDP. “This does not match the appetite from investors, customers and employees and governments who are pushing for more scrutiny since COP26.”
  3. The war in Ukraine has had knock-on effects in financial markets, some of them unexpected. With countries in western Europe suddenly ramping up defence spending, investors and asset managers and considering changing that S classification for ESG portfolios. With an unjust and unjustified war on, should military spending now be excluded from the European Union’s taxonomy of “harmful activities”? According to Merryn Somerset Webb of the Financial Times, you definitely should. “If you supply weapons to the invaded underdog in an unprovoked fight, or the countries backing said underdog to pass along, could we not file your activity under S as a social good?” Webb asks. “Surely.”
  4. Foundations would seem a natural fit for ESG or impact investing. Curiously though, that has not been the case. According to CAPTRUST’s 2020 Endowment & Foundation Survey, only 3% of them directed funds in that direction. Even fewer have ESg strategies for their own operations. This all seems a tremendous opportunity for change, but who will grab it?
  5. Mr Bond, we’ve been expecting you. Transition bonds are becoming increasingly popular for companies in industries that struggle with the net-zero transition, such as concrete, oil and gas, aviation, fossil fuels and shipping. S&P believes these transition bonds could soon cover off US$1 trillion of the finance needed to get these companies up to climate-change speed.

Mathew Loup is Competent Boards’ Director, Marketing & Communications. Connect with him on LinkedIn.

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