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Figuring out how you should invest your money is no simple feat.
Now, there’s an extra wrinkle to take into consideration, with growing concern over “greenwashing” in the financial world.
The term is used to describe misleading information about a company’s environmental performance, and it has come into focus as people and governments pay more mind to the impact businesses have on the environment and society.
Corporations and investors are also increasingly considering risks associated with a company’s operations through an environmental, social and corporate governance (ESG) framework.
ESG-related risks range from the carbon footprint of a company, to its labour practices, to the diversity of its workforce.
“Interest in ESG factors, as part of investment decision-making, has clearly been increasing significantly over time,” said Alexander Dyck, a professor of finance at the University of Toronto.
But as authorities, too, turn more attention to ESG ratings and disclosures, debate is bubbling around whether these investments are exactly what they claim to be.
On May 31, German police raided Deutsche Bank as part of a probe into suspected greenwashing by its asset management firm. And more recently, the U.S. Securities and Exchange Commission began investigating similar accusations linked to Goldman Sachs.
In both cases, there are suspicions they overstated the extent to which their investments were driven by ESG principles.
The increasing interest in ESG is evidenced by the rapidly growing number of organizations who have become signatories of the Principles of Responsible Investing (UNPRI), a United Nations’ supported organization.
More than 4,000 investors have signed on to the UNPRI, with more than $120 trillion US in assets under their management. The UNPRI advocates for six principles of responsible investing, with the first being a commitment to “incorporate ESG issues into investment analysis and decision-making processes.”
There’s also a growing interest in sustainable investing among the public, and young people specifically.
According to the Royal Bank of Canada, their InvestEase business has seen a 56 per cent year-over-year growth in the number of “responsible investing” accounts. More than 50 per cent of the account holders are under the age of 35.
Sustainable investing is an umbrella term used to describe the different ways of taking into account non-financial factors in investment decision-making.
The most common approach is an integration approach, where ESG factors are taken into consideration in the decision-making of a company or the composition of an investment. This approach may tilt a portfolio in favour of investments that score higher on ESG.
Socially responsible investing (SRI) takes things one step further by excluding certain types of investments altogether, such as alcohol, tobacco or fossil fuel companies.
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Then there’s impact investing, where the goal of an investor is to maximize social good through their investment.
Taking an ESG-integration approach is the most common of the three, said Dyck, noting there’s usually a financial cost to excluding sectors or industries from a portfolio.
“[The] exclusion criteria is, I think, a little bit of a tricky path for most investors to fall on, because there’s almost inevitably a cost that you don’t fully understand,” he said.
One of the main controversies around ESG investments is how they are assessed.
Typically, investment managers decide which components of ESG to emphasize and those preferences will drive decision-making, said Diane-Laure Arjaliès, an associate professor at Western University’s Ivey School of Business.
“There’s a range of green and so … something that is ecological for you, may not be ecological for someone else,” she said.
Investment managers will often use ESG data that are developed in-house or by ratings agencies to make their decisions. But the ratings from one agency to another can differ, depending on the weighting of different ESG criteria, which is sometimes another point of controversy.
People often mistakenly assume that the purpose of using ESG criteria is to maximize social good, when, in reality, it’s a framework of assessing risk to a company, says Alexandria Fisher, a sustainable finance expert who has worked for institutional investors and government on ESG.
“There is a fundamental misunderstanding of what ESG ratings are — and I think that’s causing the tension,” she said. “They don’t provide an indication of really how the company is impacting the broader world.”
Last month, for example, Elon Musk called ESG a “scam” after Tesla ranked lower than ExxonMobil on ESG by S&P Global.
Exxon is rated top ten best in world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list!<br><br>ESG is a scam. It has been weaponized by phony social justice warriors.
But Fisher said Tesla’s low rating was no surprise for those from the ESG ratings field, because of concerns related to its overall social and governance performance.
“There’s a lot more discussion around climate risk right now and the environmental side, when governance and social are equally important to a company with such an extensive supply chain,” said Fisher.
When it comes to individual investors, greenwashing is a big concern, Fisher said, because it’s difficult to do your own research and financial advisors aren’t always well-trained on sustainable investing.
“The biggest change we need is more transparency around the [ESG] information, as well as standardized information,” she said.
Standardized information might be on the way.
On Wednesday, the formation of the Canadian Sustainability Standards Board (CSSB) was announced, with plans to be operational by April 2023. The CSSB will work with the International Sustainability Standards Board to develop international sustainability disclosure standards.
These international standards will be voluntary, said Lisa French, vice-president of sustainability standards at the Auditing and Assurance Standards Oversight Council, one of the two groups that approved the CSSB. Whether they become mandatory would be up to securities regulators and legislators.
“What it does is it ensures that all companies are applying the same set of standards,” said French. “So they’re all asked to — or required to, if they become mandatory — report on the same elements and to use the same methods, metrics and methodologies.”
The development of disclosure standards would be beneficial for companies, ESG ratings agencies and investors, said French, as they would develop a level playing field.
“Having a structured way to approach sustainability considerations, particularly climate change — this is all good news for us as regular citizens.”
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TORONTO, June 23, 2022 (GLOBE NEWSWIRE) — On June 22, 2022, Starlight Capital Investments LP (“Starlight Capital“) issued a press release announcing that as of yesterday’s date, Stone Investment Group Limited (“SIG” or the “Corporation“) had not yet satisfied the closing condition (the “AUM Condition“) to maintain a minimum of $630 million of assets under management (“AUM“) in its public mutual funds (the “Stone Funds“) and managed accounts as required pursuant to the arrangement agreement dated April 7, 2022 between SIG, Starlight Capital, Stone-SIG Acquisition Limited, 13613429 Canada Inc., and 13909841 Canada Inc., as amended May 6, 2022 (the “Arrangement Agreement“). Starlight Capital went on to state that if the AUM Condition is not satisfied prior to June 30, 2022, it does not currently intend to complete the transactions pursuant to the Arrangement Agreement unless at least 10,500 of Stone’s outstanding 9.0% senior unsecured debentures (the “Debentures“) are irrevocably deposited by 5:00 pm on June 24, 2022 to the offer launched on November 29, 2021, as amended, by Stone-SIG Acquisition Limited for $800 per Debenture (as amended on December 15, 21, 22 and 27, 2021, and January 28, March 31 and May 19, 2022, the “Stone Offer“).
As the Corporation has previously announced, the Stone Offer remains open for acceptance until June 30, 2022.
The Corporation wishes to clarify that the decline in AUM is a function of the sharp decline in global capital markets over recent weeks and is not a reflection of the relative performance of the Stone Funds and managed accounts. Stone Asset Management Limited, portfolio manager of the Stone Funds and managed accounts, together with all of the subadvisors, remain confident that the investment portfolios are being managed appropriately in the circumstances.
Richard Stone, President and CEO of the Corporation, said: “Everyone knows the global capital markets are in a period of precipitous decline. When we signed the Arrangement Agreement on April 7, we were comfortably over the AUM threshold. It is unfortunate that the collapse of the global markets began just weeks before our scheduled closing date. Given the timeline for approval from shareholders, the court and the regulators, there was nothing we could do to accelerate the transactions. Despite this challenge, the firm, its managers and subadvisors remain steadfastly dedicated to the best interests of the investors in the Stone Funds and our managed account clients. While the circumstances are certainly less than ideal at the moment, we remain optimistic that the transaction with Starlight Capital will be completed and we continue to work toward merging our operations. We are doing everything we can to get this done.”
To demonstrate his own commitment to completing the transaction, Mr. Stone has executed and delivered a letter of transmittal to deposit under the Stone Offer all 728 Debentures that he beneficially owns, subject to acceptance in conjunction with the closing of the transactions pursuant to the Arrangement Agreement. He added: “I firmly believe that this is the right transaction for the company. I am prepared to do what I can to see it through to successful completion.”
In addition to Mr. Stone’s Debentures, the Corporation has also received a firm commitment for the deposit of a further 336 Debentures on the same terms as Mr. Stone’s deposit. Management and the board are hopeful that other Debentureholders, particularly significant Debentureholders, will support the transaction and follow Mr. Stone in depositing additional Debentures to the Stone Offer.
About Stone Investment Group Limited
The Corporation is an independent wealth management Corporation. The Corporation, through its wholly owned subsidiary, Stone Asset Management Limited, structures and manages high quality investment products for Canadian investors.
For more information:
Stone Investment Group Limited
Chief Executive Officer
416 867 2525
Disclaimer for Forward-Looking Information
Certain information contained in this press release may contain forward-looking statements within the meaning of applicable securities laws. The use of any of the words “continue”, “plan”, “propose”, “would”, “will”, “believe”, “expect”, “position”, “anticipate”, “improve”, “enhance” and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this document contains forward-looking statements concerning: the acquisition of the Corporation by Starlight Capital; the completion of the transactions contemplated in the Arrangement Agreement, the Debentures, the Stone Offer, whether further Debentures will be tendered to the Stone Offer, whether the AUM Condition will be satisfied under the Arrangement Agreement and whether Starlight Capital will complete the transactions contemplated under the Arrangement Agreement.
Forward-looking statements necessarily involve risks, including, without limitation, risks associated with the ability of the parties to the Arrangement Agreement to satisfy their closing conditions, general business, economic and social uncertainties; the ability of the Corporation to continue as a going concern; the ability of the Corporation to continue to realize its assets and discharge its liabilities and commitments; the Corporation’s future liquidity position, and access to capital, to fund ongoing operations and obligations (including debt obligations); the ability of the Corporation to stabilize its business and financial condition; the ability of the Corporation to implement and successfully achieve its business priorities; the ability of the Corporation to comply with its contractual obligations, including, without limitation, its obligations under debt arrangements; the general regulatory environment in which the Corporation operates; the tax treatment of the Corporation and the materiality of any legal and regulatory proceedings; the general economic, financial, market and political conditions impacting the industry and markets in which the Corporation operates; the ability of the Corporation to sustain or increase profitability, fund its operations with existing capital and/or raise additional capital to fund its operations; the ability of the Corporation to generate sufficient cash flow from operations; the impact of competition; the ability of the Corporation to obtain and retain qualified staff, equipment and services in a timely and efficient manner (particularly in light of the Corporation’s efforts to restructure its debt obligations); and the ability of the Corporation to retain members of the senior management team, including but not limited to, the officers of the Corporation.
Events or circumstances may cause actual results to differ materially from those predicted, as a result of the risk factors set out and other known and unknown risks, uncertainties, and other factors, many of which are beyond the control of SIG. In addition, forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect and which have been used to develop such statements and information in order to provide stakeholders with a more complete perspective on SIG’s future operations. Such information may prove to be incorrect and readers are cautioned that the information may not be appropriate for other purposes. Although the Corporation believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Corporation can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of competition and the general stability of the economic and political environment in which SIG operates. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Furthermore, the forward-looking statements contained herein are made as at the date hereof and SIG does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
LONDON, June 23 (Reuters) – The UK government’s development finance institution British International Investment (BII) plans to invest $200 million in a joint project with Norway’s Norfund to construct at least three hydroelectric power projects in Africa, BII said on Thursday.
The two institutions will equally split a 49% shareholding in a joint venture with Norway’s Scatec ASA (SCATC.OL) for the projects, BII said in a emailed statement.
These will include the planned 205 megawatt (MW) Ruzizi III hydroelectric plant to supply electricity to Rwanda, Burundi and Democratic Republic of Congo, the 120 MW Volobe hydropower plant in Madagascar, and Malawi’s 350 MW Mpatamanga project, BII said.
Reporting by Rachel Savage; Writing by George Obulutsa; Editing by Nellie Peyton and Jan Harvey
Our Standards: The Thomson Reuters Trust Principles.
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