April 2022

ESG, SRI, Impact Investing: What Are They, How to Get Started, and How Funds Have Performed

What is ESG, SRI, and impact investing, and how have ESG funds performed? ESG, SRI, and impact investing may seem like last decade's buzzwords, but they now have enough capital and data behind them for investors to pay attention to. ESG stands for environmental, social, and (corporate) governance. ESG investors look for companies that lead in those areas in addition to strong financial returns. Broadly speaking, ESG investors, socially responsible investors (SRI), and impact investors invest in companies that are both financial...

Swedish regulator to screen funds for ‘green painting’

Sweden's financial regulator said it will start reviewing funds to enforce new sustainable regulations and to prevent "green painting." The Swedish Financial Supervisory Authority, or Finansinspektionen, said it will review "whether the information provided about the funds that are classified as most sustainable meets the strict requirements" of sustainable finance disclosure regulation rules implemented in March 2021. In a notice on its website Tuesday, FI said that as demand for green and sustainable funds increases rapidly, "this entails the risk of...

UK. Can retirement savers make their pension greener?

Pension savers are apparently turning their attention towards environmental, social and governance factors amid the increasing prevalence of ESG investing. Two-thirds (67 per cent) of consumers believe it is important to consider ESG factors before investing, rising to seven in 10 (72 per cent) for those with a pension, according to a survey from Aviva last year. When it comes to defined benefit pension funds, it will be down to the trustees who take advice from a consultant to decide what...

Retirement Plan Participants Want Their Investments to Make a Difference

Retirement Plan Participants Want Their Investments to Make a Difference

Plan sponsors might consider building an investment lineup to meet the growing demand for sustainable options from defined contribution retirement plan participants. Nearly three-quarters (74%) of retirement plan participants said they would increase their contribution rate if offered sustainable investments, compared to 69% in 2021, according to the Schroders 2022 U.S. Retirement Survey. They said they want their investments to be aligned with their values (87%), and that they see environmental, social and governance investments as a driver of performance...

The Association between Mandated Environmental Liability Recognition and Voluntary ESG Disclosure Quality

By Daniel A. Bens, Cai Chen & Peter R. Joos We examine the association between mandated Asset Retirement Obligations (ARO), i.e., environmental clean-up costs of normal operations estimated on the balance sheet, and the quality of voluntary ESG disclosures. We hypothesize that when firms recognize larger AROs with higher accuracy that this effort will spillover into enhanced voluntary disclosure of a broad range of ESG outcomes. Empirical evidence supports this hypothesis. In a sample of environmentally sensitive industries, we find...

US. Window opens to increase ESG investments in DC plans

US. Window opens to increase ESG investments in DC plans

Retirement plan service providers are betting that demand for ESG investments in plan menus — until now muted — is set to grow. Take, for example, Morningstar Inc. In October, the company's investment management arm announced it had teamed up with Plan Administrators Inc., a retirement plan administrator and record keeper, to launch a pooled employer plan this year featuring an investment menu made up almost exclusively of ESG funds. Five months later, Transamerica Corp. followed suit with the launch of...

ESG and Private Market Assets: Pension and Insurance Investors Shifting the Trillions (2022 – 2026)

ESG and Private Market Assets: Pension and Insurance Investors Shifting the Trillions (2022 – 2026)

By M. Nicolas J. Firzli, Nick Sherry & Guan Seng Khoo The co-authors of the article, are amongst the original coiners of term such as “infrastructure as an asset class” and “pension superpowers.” They also predicted, at the onset of the Covid Crisis, that a “historic realignment on the asset allocation front is happening precisely at the moment when ESG is moving centre stage: even in once staunchly neoliberal jurisdictions like Texas, Alaska or Switzerland, the smart money is betting...

US. Conservative Group Wants to Stop State Pensions From Pursuing ESG Initiatives

US. Conservative Group Wants to Stop State Pensions From Pursuing ESG Initiatives

State pension funds should be barred from considering social and environmental factors in their investment decisions, a conservative association said in a push for new state legislation that would clash with the financial industry’s efforts to focus on greener investments. American Legislative Exchange Council, an association of state legislators, on Wednesday put forward model legislation that provides states a template for laws to keep pension funds from following so-called environmental, social and governance trends. “Politically motivated investing, by definition, takes rates...

UK. How to think about sustainable investing for the long term

UK. How to think about sustainable investing for the long term

Although funds that broadly fit within the environmental, social and governance universe have grown rapidly in recent years – to the point where they now account for around 5 per cent of the total assets of UK retail funds – in a world of exceptional volatility, can an adviser really think long term about sustainable investing? For Kate Elliot, head of ethical, sustainable and impact research at Rathbone Greenbank Investments, the regulatory outlook for providers is unlikely to look radically...

GPIF asigna $ 6.2 mil millones al nuevo índice de acciones ESG Japan

GPIF allocates $6.2 billion to new ESG Japan equity index

Japan's Government Pension Investment Fund allocated ¥760 billion ($6.2 billion) to a new ESG index, the FTSE Blossom Japan Sector Relative index, GPIF President Masataka Miyazono said Wednesday. Read also AIG shifting $150 billion to BlackRock The Tokyo-based pension fund, the world's largest with ¥199.3 trillion in assets, said in a news release that FTSE Russell's ESG ratings as well as evaluations of company management's "attitude toward (the) risks and opportunities of climate change" will be considered when selecting constituents for...