Add the pandemic to that mix, and what you have is an acceleration of industry and investor interest in the use of ESG criteria that takes material, non-financial risks into account, said a speaker panel during this week’s virtual Conference of Montreal, called Bridging a Disconnected World, organized by the International Economic Forum of the Americas.
The panel, which discussed the use of ESG factors and more, included: Marc-André Blanchard, executive vice-president and head of CDPQ Global; Kunal Kapoor, CEO of Morningstar; and Kristi Mitchem, CEO and head of BMO Global Asset Management.
To understand responsible investment, investors need interest and time, Mitchem said. And one effect of the Covid-19 outbreak is “it’s really changing the consciousness of people because they have personally experienced the pandemic,” she said.
Based on how families and communities have been impacted, “what it’s increasingly allowing is for people to make that connection between the challenges that we’re facing as a society, and the economic and financial impact that not addressing [those issues] can have,” Mitchem said.
Kapoor noted that a separate but related trend has also contributed to RI growth this year.
As firms invested more heavily in digital innovation, in part to overcome social-distancing hurdles, they also moved closer to their goal of further personalizing investment tools.
“We’re sitting here and saying that ESG can have many cuts, and that your values can be different than mine, and most investment strategies these days don’t get into that level of detail,” he said.
“But technology is enabling a very meaningful change in how wealth and asset management services are delivered; it’s very possible that in the future there will be a very personalized delivery for each of us,” leading to greater investor engagement and reflection of their values.
As people focus more on their values and individual needs, the ESG versus non-ESG performance debate will also fade, Kapoor said.
So much of the discussion around whether ESG strategies should be used is based on its potential to under- or overperform, he said, “but we should get past that. The constant debate actually clouds the ability to really have a deeper look at preferences and building portfolios around impact.”
Generally, “when companies start to take on better corporate governance principles, they start to do better,” he said, noting that looking for good governance “has never been controversial.”
What will change going forward, Kapoor said, is “we’ll think of E and S [factors] the same way.” And, just as the measurement of investment risk became an industry staple several decades ago, so too will the use of ESG data.
The largest hurdle is that the industry “is only in the infancy [stage] on data,” said Blanchard, particularly when it comes to social and diversity issues.
“I see critics who talk about greenwashing and who say we should be skeptical of everything that is not measured properly,” he said, and that’s why so many initiatives are aimed at data standardization.
“We’re only at the outset of what measuring [social issues] really means. Coming out of this pandemic, the S is still a struggle,” Blanchard said.
However, companies are trying to clarify their practices around compensation and diversity, and governments, companies and institutional investors are already working together to foster better conditions.
“You’ll see that more and more, and [solutions] will take the form of very surprising partnerships as we look at risk like never before,” Blanchard said.
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.
