Investment

There's $35 Trillion Invested in Sustainability, but $25 Trillion of That Isn't Doing Much – BNN

Published

3 years ago

August 18, 2021

(Bloomberg) —

Sustainable investment assets grew to $35.3 trillion globally last year amid mounting concerns about societal inequities and climate change. That’s about $1 of every $3 managed globally seeking out a profit from environmental, social and governance concerns, according to Global Sustainable Investment Alliance’s report last month.

It’s an impressive number. But the bulk of that money—some $25 trillion—is in a strategy called “ESG integration,” also known as “ESG consideration.” In theory, this means that managers are including ESG data in their financial models, according to GSIA.

In practice, money managers may be “aware of” and “take into account” ESG factors when making investment decisions, said Rob Du Boff, an analyst at Bloomberg Intelligence. But they’re not necessarily compelled to act on that information, he said.

Nicolette Boele, an executive for policy and standards for the Responsible Investment Association Australasia, agrees that ESG integration doesn’t always translate into action. Unless it’s paired with things like proxy voting and corporate engagement, that alone won’t necessarily “deliver better sustainability outcomes for a better world,” she said.

Many large fund managers are saying they’re integrating ESG across their holdings in a bid to attract assets from pension plans and other investors amid the boom in sustainable investing. Since ESG lacks definitions, it can often mean different things to different people, said Lisa Sachs, who heads Columbia University’s Center on Sustainable Investment. And because ESG integration is often conflated with other responsible investment strategies such as impact investing and negative and positive screening, it’s helping to create a false impression that the world of money management is directing capital towards helping solve societal ills.

“The major risk is that finance is purporting to solve social and environmental problems through ESG and that there’s no need for government action,” Sachs said. “But we need rigorous policy to address the big issues.”

Some regulators are trying. European sustainable investments shrank by $2 trillion between 2018 and 2020 as policymakers tightened the parameters for what can be considered a responsible investment, GSIA said. In March, the EU implemented a set of rules known collectively as the Sustainable Finance Disclosure Regulation, which require fund managers to classify and disclose the ESG features of their products. Those that promise to actively promote ESG goals have a higher bar to clear on transparency.

In Australia, the finance industry is relying on its own voluntary rules rather than regulators. The Responsible Investment Association Australasia has a certification program and a responsible investment-leaders scorecard that rely on publicly disclosed policies and reporting on processes to help reward responsible investing, according to Boele.

“The requirement of this transparency is key to industry accountability,” she said.

Sustainable finance in brief

JPMorgan—the world’s largest underwriter of green bonds—is putting the ESG label on derivatives.
A quant firm adjusted its models for ESG and found some “crazy” pricing.
Shareholders are calling on the world’s top miner, BHP Group, to abandon its divestment plans in favor of better management.
Bloomberg Opinion: Biden’s child-care plan may wind up raising costs for parents.
Bloomberg Opinion: A statewide “stability stipend” under consideration in New Mexico may be a proof of concept for universal basic income.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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