Hello from Impact Delta. Enjoy our periodic newsletter, containing insights and news related to ESG and impact investing. In this edition, we look at the growing body of evidence that ESG correlates with better operational performance and better returns, and Vanguard’s exit from the Net Zero Asset Manager alliance, apparently to avoid confrontation with Republicans now controlling the House. Also, the UN Biodiversity COP 15 conference is underway, beginning a month after the COP 27 for climate. The data indicating good ESG choices are neutral-to-positive to returns is not entirely new - We'd start by saying that the historical data has tended toward ESG being positive, to at worst neutral. The real benchmark for this was a 2015 meta-study that sought to evaluate the impact good ESG choices had on returns. The paper looked

Hello from Impact Delta. Enjoy our periodic newsletter, containing insights and news related to ESG and impact investing. In this edition, we look at the upcoming COP 27 climate change summit from November 6-16 in Egypt. Last year participating countries made commitments to greenhouse gas reductions. This year, accountability will begin by checking in on progress. The other theme likely to be discussed is the damage and reparations for lesser developed countries bearing the brunt of climate change, despite not materially contributing to it.   The world remains off track for climate change mitigation targets - Last year's COP 26 in Glasgow was notable for getting more commitments from both private actors as well as government commitments. However, despite this promise, the increase in

After five years of positive flows into ESG-focused strategies in the public markets, it is unsurprising that sustainability-oriented investing (here, we use “ESG” and “sustainable” interchangeably) is coming under scrutiny. For example, the Jul 23, 2022 edition of The Economist ran a cover that said “ESG: Three letters that won’t save the planet.” Bloomberg, in June, reported on how ESG funds had fared less badly than the broader market in 2022 so far, despite owning relatively more technology names and relatively fewer energy stocks. Yet it also noted that over the last five years, Global, US and European ESG portfolios had each not kept up with their broader respective markets. (No extra information about how funds were categorized into either

Flows data suggest ESG assets are stickier. Hello from Impact Delta. Enjoy our periodic newsletter, containing insights and news related to ESG and impact investing. In this edition, we look at how the Biden administration is forced to balance short term inflation with long term climate impacts, how investors are valuing fast fashion and alternative proteins despite their opposite environmental profiles, and does the data indicate ESG investors are more patient than others? US SPR activity might encourage oil industry to develop more capacity - The US is in the process of selling 200 million barrels of oil from the Strategic Petroleum Reserve (SPR) in an attempt to reduce the inflationary pressures of higher oil and gasoline prices. A proposal to replenish these

Sourcing key metals directly can help with traceability. Hello from Impact Delta. Enjoy our periodic newsletter, containing insights and news related to ESG and impact investing. In this edition, the temporal impact of oil and gas vs renewable investment performance, continued momentum in electrification of transit, and earth day pictures from Google that underscore climate change. The tradeoffs of divest vs invest - The growth of investment in renewables over the past few years has led some investors to consider divesting from oil and gas, while others have chosen to remain invested, but engage with the companies through proxy voting. The divestment argument had gained momentum, as investors that were underweight oil and gas were outperforming with oil and gas lagging the broader

This paper explores the metrics that companies can use to measure the experience of women in the workplace more consistently. We take stock of the current state of measurement by evaluating the current parties involved in reporting: Governments, ESG Ratings Providers, Accounting and Disclosure Framework Boards, and Exchanges. We then present a robust suite of metrics that companies should strive to collect and report. This set of metrics, Four for Women, buckets metrics into Representation, Pay, Health, and Satisfaction and comes from Wharton’s Social Impact Initiative.

…and be cut by 45% by 2030 to stay sub-1.5 degrees. Hello from Impact Delta. Enjoy our periodic newsletter, containing insights and news related to ESG and impact investing. In this edition, we look at the link between E and S, more reports on ESG and investment performance, as well as the latest SEC and IPCC activity. IPCC Working Group II: Distinctions between 'E' and 'S' can be a false dichotomy - The IPCC released the Working Group II contribution to its Sixth Assessment Report on February 27. This looks at the impacts of climate change, and capacity of the natural and human world to adapt. In its summary for policy makers, it placed climate change in the context of a complex global

ESG factors can help explain downgrades. Hello from Impact Delta. Enjoy our periodic newsletter, containing insights and news related to ESG and impact investing. In this edition, we look at the latest research on how ESG factors are affecting pricing and returns of bonds, ratings and real estate. ESG is getting material -The adoption of ESG factors by investors has increasingly been influenced by the material impact it can have on financial performance. Adding further credence to this movement, a recent study found that bonds earmarked for a 'potential credit rating downgrade' because of environmental, social or governance (ESG) concerns were more than twice as likely to be downgraded during 2021 than bonds red-flagged for other reasons.  But positive ESG ratings do not mean

How much we have to remove to hit 1.5 degrees. Hello from Impact Delta. Enjoy our periodic newsletter, containing insights and news related to ESG and impact investing. In this edition, a nod to carbon capture and the growth in electric transit. Look to the air and water - The US Department of Energy has transitioned the department of Fossil Energy to include Fossil Energy and Carbon Management, with the core focus now on climate change. A recent emphasis of this work is to support R+D for carbon capture and storage from the air. This shift from solely focusing on reducing carbon from fossil fuels is in recognition that even with carbon emissions reductions, the planet will still require a removal of 5-15GT/year

Solutions for 50% of emissions are getting 10% of the capital Hello from Impact Delta. Enjoy our periodic newsletter, containing insights and news related to ESG and impact investing. In this edition, we look at the focus (or lack thereof) of capital to address climate after COP 26. Taking the long view -  Building on the massive increase in investing in artificial intelligence (AI) and machine learning (ML), Stanford University recently launched a Research Initiative on Long-term Investing. The concept behind this center is to help capital allocators better understand ESG metrics in financial risk terms. Traditionally investors have relied on backward-looking trends to identify and model risk; however, with no historical data on climate change, the traditional approach cannot work. By combining

The US defense establishment publishes ahead of COP. Hello from Impact Delta.  Enjoy our periodic newsletter, containing insights and news related to ESG and impact investing. In this edition, we prepare for COP26 in Glasgow next week, and look at who is driving progress in diversity, equity and inclusion. COP-ing a ride to Glasgow -  The annual climate conference starts in early November, after taking a pandemic-related break in 2020. In advance of that, the UN has been releasing its latest research on the climate. It is dismal reading.  Despite the rash of net zero commitments recently, "updated NDCs [nationally determined contribution] and announced pledges for 2030 have only limited impact on global emissions and the emissions gap in 2030, reducing projected 2030

Is an ESG label worse than nothing? How do you Fancy ESG? - Tariq Fancy, the former CIO of sustainability investing for Blackrock, has penned a lengthy essay with his perspective on the shortcomings of ESG investing.  His conclusion is that investing in ESG is almost worse than if it didn't occur, as investors and asset owners feel like they are making progress, when they really aren't. His principal concern is that incentive alignment will always put profit over social or environmental needs, and policy is the most important requirement to change this, not capital markets.   Et tu DWS? - In a similar vein, Desiree Fixler provides an in-depth look at her journey at DWS, where she was hired to be head