The vast majority of professional investors globally have put in place ESG investment policies over the past several years, with investors looking both to minimize sustainability-related risk and capitalize on opportunities, and citing factors including regulatory requirements, improved performance and talent attraction, according to a new study released by global professional services firm Deloitte and The Fletcher School at Tufts University.
For the study, Deloitte and The Fletcher School surveyed more than 1,000 asset owners, asset managers, and investment advisers, including CEOs, CIOs, Heads of Strategy and other senior investment executives across regions including North America, Europe, and Asia, and also conducted interviews with sustainability and investment leaders, between January and December 2023.
The study found significant growth in the proportion of investors establishing sustainable investment policies, with 79% of investors reporting having a policy in place, up from only 20% 5 years ago. Nearly all other investors report having a “loosely defined ESG investing policy” in place or have plans to develop a sustainable investment policy, with only 1% reporting no plans for a policy.
Despite highly visible anti-ESG campaigns ongoing in the U.S., the survey found that U.S. investors were actually more likely to have sustainable investment policies in place than their global peers, with 83% of professional U.S. investors reporting having ESG investing policies, up from 27% five years ago. European investors lagged their U.S. counterparts slightly, at 75%.
The study asked investors to list the top 3 drivers for integrating sustainability factors into their investment decision-making processes, with the most commonly cited reasons including regulatory requirements (39%), improved financial performance (36%) and stakeholder influence or pressure (34%). Interestingly, U.S. investors, while also reporting regulatory pressure as the most common driver for integrating sustainability factors (39%), were more likely to cite talent retention and attraction as a key driver, at second place at 37%.
Chris Ruggeri, a Deloitte Risk & Financial Advisory principal and sustainability, climate and equity leader, said:
“Many factors, including evolving regulatory requirements, financial performance pressures, and stakeholder expectations, are driving the U.S. movement toward integrating sustainability and ESG into investment decision-making. As such, company leaders and their boards have an important opportunity to take actions that can improve investor confidence and trust levels in those investments, such as making enhancements to the sustainability information, disclosures, and other sources that inform buy, sell, and hold decisions.”
Additionally, while more than 83% of investors reported either regularly or occasionally using sustainability information in their fundamental investment analysis, interviewed investors said that they did not believe that ESG factors are effectively incorporated into equity prices yet, according to the study.
The survey also assessed the key barriers inhibiting organizations’ ability to implement sustainable investing, with the most commonly cited challenges including a lack of clarity on how to integrate ESG information and inconsistency or incomparability of ESG ratings data, with other top factors including over- or under-regulation, cost constraints, and a lack of clear strategies by corporations to achieve their ESG goals.
The study also found a strong correlation between the trust investors have in ESG data sources and their use of those sources, with in-house proprietary data systems and audited or assured corporate disclosures reported as the top 2 trusted (70% and 69%, respectively) and most regularly employed (51% and 52%, respectively) sustainability data sources. Interviewed investors indicated that they expect that recently launched sustainability disclosure standards and regulations will address many of the ESG data challenges, with increased consistency and standardization.
Michael Bondar, a Deloitte Risk & Financial Advisory principal and global enterprise trust leader, said:
“There is considerable room for improvement in how organizations collect, measure, report on, and validate sustainability data to earn investor trust. But, more consistency and dependability in sustainability reporting for measurement and analysis purposes should help enhance confidence for stakeholders throughout the corporate ecosystem.”
Bhaskar Chakravorti, Dean of Global Business at The Fletcher School at Tufts University, added:
“The focus on sustainability data is growing globally. India’s Securities and Exchange Board requires top public companies to disclose ESG related activities, and the European Union now requires sustainability disclosures under the Corporate Sustainability Reporting Directive starting from periods beginning in 2024. And as of this month, rules were adopted in the United States as well.”
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
