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Why the sustainable investment Craze is flawed – Livemint

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ESG funds, as they are known, promise to invest in companies with better environmental, social and governance attributes, to save the planet, improve worker conditions or, in the case of the US Vegan Climate ETF, prevent animals from being eaten.

Money has poured into ESG funds as noisy lobby groups push pension funds, university endowments and some central banks to shift their investments. The United Nations-supported Principles for Responsible Investment says signatories have $121 trillion of assets under management; even assuming lots of double-counting, that is most of the world’s managed money.

Over the next few weeks, Streetwise will explore the explosion of ESG investing and why I think it is mostly—but not completely—a waste of time. I will also offer up some solutions and discuss how to use your money to make a difference, while understanding the inevitable trade-offs.

ESG supporters can point to what look like successes: Their pressure has encouraged many companies to sell off dirty power plants, mines and, in the case of Anglo-Australian miner BHP, its oil business. It has even forced board changes at Exxon Mobil.

Sadly, selling off assets or shares by itself does nothing to save the planet, because someone else bought them. Just as much oil and coal is dug up and burned as before, under different ownership. And there are plenty of people out there to buy the assets, because never before in history has there been so much private capital operating without the public reporting requirements brought by stock markets.

Rich people who want to make the world greener could make a difference, by buying and closing dirty businesses even when they are profitable. So far, though, this hasn’t happened in any significant way. The pitch from Wall Street fund managers is the exact opposite—that by going green investors can change the world and make more money, not less.

“A lot of [clients] only really get enthusiastic if they get comfortable that they are not sacrificing return,” says Valentijn van Nieuwenhuijzen, chief investment officer at fund manager NN IP, which is being bought by Goldman Sachs.

Someone has to take a loss somewhere if fossil fuels are going to be left in the ground rather than extracted and sold. ESG investors’ hope is that the losses will fall on other people. The problem is that less environmentally-minded investors buying those shares, oil wells or power plants are absolutely not going to shut them down unless they stop being profitable.

It might make sense for an investor or company to sell out of fossil fuels early if they think the retreat from coal and oil is inevitable—indeed, that was the pitch by the activist who took on Exxon—but that is simply to invest according to a political prediction, not a way to fight climate change.

Some of the biggest sources of fossil fuels are immune to shareholder pressure anyway. Much of the world’s oil is pumped by government-controlled companies, led by Saudi Arabia and Russia. Exxon can be forced to change its approach, but the global supply of oil is still determined by OPEC, as President Biden’s appeal to the cartel to pump more to keep fuel prices down has demonstrated.

There are three big pro-ESG arguments, which sound reasonable, but have major flaws.

First, if companies treat the environment, workers, suppliers and customers better, it will be better for business. This could work where companies have missed something to boost profits, such as add solar panels on a sunny roof or create a better employee retention program. Early ESG activists plucked the low-hanging fruit here, but management has become painfully aware of changing customer and employee expectations, so there is less opportunity ahead.

Adding costs to reduce a company’s carbon footprint, or paying staff more, should only help the stock price if it also raises revenue or reduces other costs, by say generating more loyalty from carbon-conscious consumers, lowering staff turnover or improving relations with regulators.

Otherwise profits can only be maintained by passing the higher costs through into higher prices, and—unless the firm has monopoly power—eventually customers who don’t care will go elsewhere. The alternative is to reduce profits, but ESG investors are almost universally against this.

The second ESG point is that by shunning stocks or bonds of dirty companies, and embracing those of clean companies, it will direct capital away from bad things and toward good ones. After all, a lower stock price or higher borrowing cost in the bond market should make it less attractive for dirty companies to expand, and vice versa for clean companies.

In practice, there has been a very weak link between the cost of capital and overall corporate investment for at least a couple of decades. Small changes in the cost of capital pale in comparison to the risk and return projections of a new project.

That is not to say there is no link. Tesla, with extremely expensive shares, has repeatedly taken advantage of its ability to issue new stock to invest in factories and research. The high prices earlier this year for clean-energy stocks might encourage similar corporate investment. The flip side of course is that buying wildly overpriced shares isn’t a good way to make money, as losses of a third or more from this year’s peaks for clean-energy stocks shows. Shifting the cost of capital just might help save the planet, but after the short-term shift in valuations is over, it should lead to underperformance.

The third claim from some ESG investors is that they are just trying to make money, and that involves shunning firms that are taking unpriced risks with the environment, workers or customers. Since they call themselves “sustainable” or use “ESG integration,” funds doing this look very like the rest of the ESG industry. The selection principle of the most popular ESG indexes, for instance, those from MSCI, involves identifying only risks that are financially material.

I would say, sure. If you think the government is going to, say, raise fuel taxes, don’t buy manufacturers of gas-guzzlers. If you think the government will impose more restrictions on coal plants, then coal generation will be an even less attractive investment.

Equally, if you think customers will be willing to pay more for brands that cut their carbon use, by all means bet on their shares. Just don’t fool yourself that you are making much difference to the world with your investment decision. Red-blooded capitalists chase these profits just as much as any green-minded investor. There is no need to try to persuade capitalists to have a conscience; they will do what you want if you make it profitable via customer demands or government intervention (or, if we are lucky, new technology).

There is one way that ESG investing does, sort of, work. Shareholders can push companies to stop lobbying governments in favor of fossil fuels. Conceivably this might help push customers and governments to do the things that would really make a difference.

My big concern about ESG investing is that it distracts everyone from the work that really needs to be done. Rather than vainly try to direct the flow of money to the right causes, it is simpler and far more effective to tax or regulate the things we as a society agree are bad and subsidize the things we think are good. The wonder of capitalism is that the money will then flow by itself.

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UK says energy bill support package must not deter investment – Financial Post

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LONDON — Britain must pay for increased support to households in a way that does not deter investment, Cabinet Office minister Steve Barclay said on Thursday ahead of an expected announcement of new measures to cope with rising energy bills.

Facing intense political pressure to provide more support for billpayers coping with what opponents and campaigners have called a cost-of-living crisis, finance minister Rishi Sunak will give a statement to parliament setting out details of the government’s response.

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“In terms of paying for that, as we look at the balance between how much is done through debt, and how much is done through revenue raising, we need to do that in a way that doesn’t deter investment,” Barclay told Sky News.

Sunak’s announcement is expected to include a 10 billion pound ($12.6 billion) package of support, an energy industry source said, funded in part by a windfall tax on oil and gas producers companies.

Barclay said the government had decided to act after an announcement by the energy regulator earlier this week that a cap on gas and electricity bills was set to rise by another 40% in October.

“What we do recognize … is the government needs to have targeted support, particularly for those most affected by those higher bills,” Barclay told the BBC.

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Global gas prices soared last year when the reopening of world economies from pandemic lockdowns caused demand to return sharply and supply could not keep up. The war in Ukraine has pushed up prices further in 2022.

The government has previously said it is opposed to a windfall tax on energy suppliers because it would deter them from investing in new energy projects.

But that position has shifted as political pressure for action has mounted, with the highest inflation among G7 nations and rising bills pushing many household budgets to the limit.

Prime Minister Boris Johnson is also keen to move the conversation away from a damning report detailing a series of illegal lockdown parties at his Downing Street office.

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The opposition Labour Party has campaigned for a windfall tax on oil and gas companies to raise around 2 billion pounds ($2.5 billion), with opinion polls showing public support for such a move.

Asked about a windfall tax, Barclay said he disagreed with the Labour proposal, but declined to give any further details of the government’s new plan, saying it was for Sunak to set out the package to parliament later.

Sunak is expected to speak around 1115 GMT.

INFLATION RISK

Inflation reached a 40-year peak of 9% in April and is projected to rise further, while government forecasts last month showed living standards were set to see their biggest fall since records began in the late 1950s.

In February, the government announced a 9 billion pound support package, including a targeted tax rebate worth 150 pounds per year for 80% of households in England and a 200 pound discount on electricity bills, repayable over five years.

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Media reports said that discount could be increased in Sunak’s package, and the need to repay it dropped.

The Institute for Fiscal Studies (IFS) economic think tank said any support needed to be aimed at the poorest households, warning that a universal giveaway, including for those who did not need the extra cash, could fuel inflation.

“We do need to be careful,” IFS director Paul Johnson told BBC radio. “Putting … tens of billions into the economy at a time of high inflation could stoke additional demand and make the inflation much more permanent.” ($1 = 0.7963 pounds) (Reporting by Muvija M, writing by William James, editing by Hugh Lawson and Frank Jack Daniel)

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Julien Roman: The Personal Investment Specialist | Mint – Mint

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Julien Roman is a specialist in the field of personal investment. Over the years, he has helped countless people grow their wealth and reach their financial goals. His experience in crafting investment and risk management strategies is second to none, and he has the track record to back it up. From short-term investments to long-term opportunities, Julien provides unique strategies that suit the needs and goals of his followers. But where did it all begin for Julien? Here’s his story.

 

Starting young

Julien’s interest in investment started at a young age.  When he was just a teenager, he invested his own money in the stock market. He quickly learned about the ins and outs of the market and made a name for himself as a successful investor. Since then, Julien has continued to grow his knowledge of the investment world, and he now shares his expertise with others through his YouTube channel.

 

With more than 215,000 subscribers, Julien’s channel is one of the most popular investment-focused channels on YouTube. On this platform, Julien provides analysis of potential investments, discusses current events in the world of finance, and offers tips and advice for those looking to increase their ROI successfully.

 

Becoming an investment specialist

Julien became an investment specialist by reading books, watching tutorial videos, and following the news. He is now responsible for providing analysis of potential investments and advising clients on how to grow their portfolios best. In his role, Julien often meets with senior executives from companies to better understand their business strategies and financial goals. He then uses this information to recommend which investments will be most beneficial for his clients. Julien has been successful in his career thus far, and he plans to continue to help his clients achieve their financial goals in the future.

 

Working as a personal investment consultant

His stint as a personal investment consultant started years ago. Equipped with unparalleled experience, he has already managed to help individuals and families save for their future. He provides customized investment plans based on each client’s unique goals and circumstances, and he takes pride in helping his clients grow their wealth over time. Julien has worked with clients of all ages and levels of experience, and he feels passionate about helping everyone make money. Julien enjoys spending time with his wife and young children in his free time. He is also an avid traveler and enjoys exploring new places.

 

Julien Roman offers some valuable tips to get you started on the right track. First, he emphasizes the importance of setting realistic goals. It’s essential to have a clear idea of what you want to achieve financially, whether saving for retirement or buying a new home. He also recommends creating a budget and sticking to it. This will help you keep track of your spending and ensure that you’re putting your money towards your goals.

 

The personal investment specialist recommends investing in yourself by learning about financial planning. By educating yourself about personal finance, you’ll be better equipped to make intelligent decisions with your money and grow your wealth over time.

 

Disclaimer: This article is a paid publication and does not have journalistic/editorial involvement of Hindustan Times. Hindustan Times does not endorse/subscribe to the content(s) of the article/advertisement and/or view(s) expressed herein. Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the view(s), opinion(s), announcement(s), declaration(s), affirmation(s) etc., stated/featured in the same.

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Westboro Mortgage Investment Fund Announces Bonus Distribution to Unitholders – GlobeNewswire

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TORONTO, May 25, 2022 (GLOBE NEWSWIRE) — Westboro Mortgage Investment Fund has paid a bonus distribution of $0.065 per eligible Class F unit. The bonus distribution equals the excess income earned by the fund for the fiscal year ended December 31, 2021. The total distribution per unit for the 2021 fiscal year, inclusive of this bonus distribution, was $0.65/unit on a monthly basis, or an annualized return of 6.7%, on a monthly compounded basis. The strong performance of the Westboro Mortgage Investment Fund is a direct result of the following: a) long standing and strong broker client relationships b) best in class staff; and c) conservative and thorough underwriting practices.

“It was a record breaking year filled with a unique set of challenges posed by the pandemic. We will continue to be conservative in our underwriting and portfolio management while being competitive on interest rates and terms offered to our longstanding broker client network. In 2021 and early in 2022 we were fortunate to attract top industry talent to join our already dynamic team. We want to fund the best mortgages, not the most mortgages. Our focus is, and always will be, the preservation of investor capital and providing consistent risk adjusted returns to our mortgage fund investors,” said Nick Christopoulos, CEO of Westboro Mortgage Investment Fund.

About Westboro Mortgage Investment Fund

Westboro Mortgage Investment Fund was established in 2004 as a Mortgage Investment Corporation in the Ottawa region. Throughout the years, the fund has strategically expanded its lending region to include Central and Southwestern Ontario and the Gatineau regional area of Quebec. Today, the fund manages assets in excess of $300 million all while maintaining the primary objective of providing investors with a consistent and stable fixed income solution for their investment portfolio.

To learn more about the Westboro Mortgage Investment Fund, including investment opportunities and qualification criteria please visit www.westboromic.com or contact the Vice President of Fund Sales, Scott Roberts at sroberts@westboromic.com.

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