Broker Check


| March 05, 2019

October 5, 2018
Last week US-SIF released their "2018 BIENNIAL REPORT ON US SUSTAINABLE, RESPONSIBLE AND IMPACT INVESTING TRENDS."  I find the report gives me great insight on trends that I'm not yet seeing and ways that the industry is changing.  While the report is a little long for a non-ESG geek like myself, here are a few of the highlights:

  • Sustainable, responsible and impact investing (SRI) assets have expanded to $12.0 trillion in the United States, up 38 percent from $8.7 trillion in 2016.
  • Much of this growth is driven by asset managers, who now consider environmental, social or corporate governance (ESG) criteria across $11.6 trillion in assets, up 44 percent from $8.1 trillion in 2016.
  • The top three issues for asset managers and their institutional investor clients are climate change/carbon, tobacco and conflict risk.
  • From 2016 through the first half of 2018, 165 institutional investors and 54 investment managers controlling $1.8 trillion in assets under management (AUM) filed or co-filed shareholder resolutions on ESG issues.

October 31, 2018
One of the biggest issues my clients are concerned about is Climate Change.  We have many ways we work with them in order to have their portfolio match their values.  Often it is excluding the big oil producers and sometimes it's just picking the ones we think are doing the best to head their corporation to a non-carbon future.  The Union of Concerned Scientists just had their latest report on 8 major fossil fuel creators and how they've done to realize that things much change.  "THE CLIMATE ACCOUNTABILITY SCORECARD (2018)" compares these companies on 28 metrics to see how they've progressed over time.  While not a reason alone to buy or not to buy any of these firms, I find it interesting to look for trends, the sad truth is that it doesn't look like things are getting better yet.

October 18, 2018
The article is a little old, but I was just referred to it. Many old school managers will tell you that putting ESG criteria into the investment process can only hurt returns as you limit the choice of investments.  But more recent studies have shown that ESG investing can increase return and/or reduce risk.   "THE FINANCIAL PERFORMANCE OF SUSTAINABILITY: ESG AND RISK" gives a nice brief summary of some of these research reports with links to read more about how ESG can help in portfolio building.

October 16, 2018
With the Intergovernmental Panel on Climate Change (IPCC) report about a week and a half ago, explaining the risks if we do nothing about climate change in the next dozen years, I've had many discussions with clients and friends on what can an individual do to make a difference.   While the discussion can get long and go in many directions, I think one of the most succinct arguments about what one group is doing comes from Calvert.  No individual or company can tackle these problems alone, but I think their piece "WHAT INVESTORS CAN DO IN THE WAKE OF IPCC CLIMATE CHANGE REPORT" goes over some of the steps anybody can take and the mindset one must take to make a difference.

September 18, 2018
There are many companies that provide ESG ratings for companies which allows for money managers and individuals to quickly and cheaply create a portfolio of highly ranked companies.  Most people would argue that this is a simple way to get the best-in-class companies without too much research and work.  But, the rating systems aren't always as straightforward and simple as they seem.  In today's Wall Street Journal article "IS TESLA OR EXXON MORE SUSTAINABLE? IT DEPENDS WHOM YOU ASK" James Mackintosh goes over some of the quirky ratings that companies are given.

The caption under the photo reads "Electric-car maker Tesla is ranked at the top of its industry by one firm that grades environmental, social and governance practices. But another grader puts Tesla at the bottom. "  Later on he writes "The problem here isn’t the ESG ratings, but that they are used as though they were some sort of objective truth. In reality they are no more than a series of judgments by the scoring companies about what matters – and investors who blindly follow their scores are buying into those opinions, mostly without even knowing what they are."

We discuss two main points with clients.  First that there is always give and take.  None of these companies are perfect and very few don't do at least some things well.  Second, spending the time to understand the issues that are most important to you can help us find the companies that best match your values.

September 12, 2018
Newsweek just published a full report entitled "GOING MAINSTREAM: THE FUTURE OF ESG INVESTING".  There are many articles in the report, but below is the start of the executive summary:

"Over the past decade, a quiet revolution has been taking place in the world of investment; now, Environmental, Social and Governance (ESG) investing is going mainstream. At the end of 2016 around a quarter of all professionally managed assets were under ESG investment strategies and our research suggests that figure is only going to grow.

"Though responsible investing has been gathering momentum since the financial crisis in 2008, two landmark accords marked a turning point for the movement: the signing by world leaders of the UN Sustainable Development Goals (SDGs) in September 2015, followed by the Paris Climate Agreement later that year. These ambitious charters that aim to tackle humanity’s most pressing concerns – among them climate change, acute hunger and poverty -- require investments of upwards of USD 7 trn per year (or twice the US Federal Budget) – mostly in developing countries.

"Increasingly, and encouragingly, private finance is stepping up. In the period following the adoption of these agreements the volume of assets covered by the Principles of Responsible Investment (PRI) expanded by 40%. Institutional investors – among them the world’s leading sovereign wealth funds, pension funds and insurance companies – are boosting their ESG- focused investments. Philanthropic foundations are now linking their investments to the SDGs, and in the US, while the current administration has pulled out of the Paris Agreement, close to 2,000 investors and companies have said ‘We’re still in’."

September 1, 2018
Finished skimming The U.S. Government Accountability Office 63 page study on "RETIREMENT PLAN INVESTING: CLEARER INFORMATION ON CONSIDERATION OF ENVIRONMENTAL SOCIAL AND GOVERNANCE FACTORS WOULD BE HELPFUL"  The paper focuses on how some plans are using ESG factors in the US, now those plans compare to those in other countries and what would be helpful to allow more plans to use these tools to help their participants. 

August 9, 2018
The current edition of GreenMoney celebrates their 25th year by publishing their "BEST ARTICLES ISSUE – 25 YEARS IN THE MAKING".  They narrow down the hundreds of articles over the years to what they think is their most impactful 15.  What I noticed is that most of the articles are within the last few years.  I believe that this space is changing so quickly that what was cutting edge a few years ago has already been built upon and improved.  To me the article "THE RESILIENT INVESTOR: A PLAN FOR YOUR LIFE, NOT JUST YOUR MONEY" resonates the most as it mirrors a lot of the issues we discuss with our client.

July 18, 2018
One of the toughest things in ESG investing is understanding the values of our clients and matching them with the right investment vehicles and managers.  The problem is that doing good means so many things to different people.  When talking to clients we try to figure out exactly what they're looking for and it isn't easy.  The CPA Journal recently published the article "ICYMI | ARE SUSTAINABILITY RANKINGS CONSISTENT ACROSS RATINGS AGENCIES?"  The article shows that a pure number rating on sustainability can mean very different things depending on who is counting.  While having a "Good number" in sustainable practices is fine for many clients, others want more specific needs met.

July 2, 2018
The Wall Street Journal posted a column last week entitled "IF YOU WANT TO DO GOOD, EXPECT TO DO BADLY" discussing reasons the author believes ESG investing is foolish.  The response from US-SIF was not published from what I can tell, but feel it is important enough to share:

James Mackintosh’s June 28 article, “If You Want To Do Good, Expect To Do Badly: Investors need to choose between backing their beliefs with dollars, or being profit-minded capitalists” misses the mark and is out of touch with the latest studies, data and trends from BarclaysDeutsche BankMorgan StanleyMorningstarMSCI,Nuveen/TIAA and UBS, among others. MacKintosh’s assertions simply aren’t supported by the facts

We at US SIF: The Forum for Sustainable and Responsible Investment know that the weight of substantive evidence shows that investing using ESG factors does not lead to worse results. US SIF, the leading voice advancing sustainable, responsible and impact (SRI) investing, identified $8.72 trillion in total US-domiciled assets under management using SRI strategies at the start of 2016, an increase of 33 percent since 2014. A growing body of EVIDENCE indicates that ESG investments achieve comparable or even better financial returns than conventional investments. In 2017, Nuveen/TIAA Investments, after assessing the leading SRI equity indexes over the long term, “found no statistical difference in returns compared to broad market benchmarks, suggesting the absence of any systematic performance penalty. Moreover, incorporating ESG criteria in security selection did not entail additional risk.”

A 2015 report by the Morgan Stanley Institute for Sustainable Investing found that "investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments." This is on both an absolute and a risk-adjusted basis, across asset classes and over time, based on its review of US-based mutual funds and separately managed accounts.

Addressing ESG issues in investment provides additional data to help manage risk and avoid companies that may be affected by major scandals. VOLKSWAGEN’S CHEATING on carbon dioxide emissions testing and BP’S 2010 OIL SPILL in the Gulf of Mexico are two high profile examples of how mismanagement of sustainability issues can have financially material consequences.

In 1970, Milton Friedman wrote that business has a responsibility to make as much money as possible “while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.” The world has changed a lot since then, but Friedman was right to point to the critical importance of those “basic rules of society.” We agree with BlackRock CEO Larry Fink that “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” If companies can deliver for their customers and their communities, in the long run, they will deliver for their shareholders.

April 16, 2018
For those of you who think ESG might only be a fad and/or not considered useful in the real world, please read "INVESTMENT GIANTS STEP UP GOVERNANCE OVERSIGHT" in Corporate Responsibility Magazine.  The article goes on to say how some of the world's biggest investment firms such as Vanguard, Blackrock and State Street "are putting the thousands of companies in their portfolios on notice that their governance practices and strategies will be more closely monitored by the funds in the future. And they’re not looking just for traditional governance—that the social relevance of their operations and missions will be evaluated, too." The article goes into looking at some of the steps the companies are taking and how they think it will effect the long-term bottom line.

April 9, 2018
I'm often asked by clients how I think they should vote on various proxy issues.  While I make it a point not to give direct advice, I try to help my clients look at the issues and try to figure out how they align.  For my clients who are into ESG integration in their portfolio, I recommend reviewing As You Sow's "PROXY VOTING GUIDELINES" each year during proxy season.  They have the most in-depth coverage I know about reviewing each proxy for ESG.

March 23, 2018
In addition to last month's quote in the Investment News on gun violence I was quoted in a much more in depth article in Financial Planning Magazine entitled "HOW ADVISORS ARE HELPING CLIENTS DUMP GUN STOCKS."  It is more from an advisor prospective, but I think an interesting read for anyone looking to use their values to drive their investing.

March 20, 2018
The G&A Institute just announced that 85% of the S&P 500 companies published sustainability reports in 2017.    This is up from roughly 20% in 2011.    While of course there is a lot of green-washing going on and one needs to look at each report carefully, it is a sign that companies are taking sustainability seriously and know that investors are grading them not only on current profits but on how well they are built to last.

February 16, 2018
The most common conversations we have with ESG clients are about the environment and fossil free investing.  But other topics come up and one that gets little attention but we try to emphasize is weapons.  After the shootings at Marjory Stoneman Douglas High School, the Investment News ran an article quoting me and some others.   "GUN VIOLENCE HITS INVESTMENT STRATEGIES, SPARKS POLITICAL DEBATES WITH ADVISERS"

February 12, 2018
The current issue of Investment News has an article entitled "IS ESG INVESTING GOING MAINSTREAM?"  Many advisors are featured talking about how the view on ESG investing has changed over the years.  I was quoted near the bottom of the article.

February 1, 2018
The arguement is often made from many people who are fighting to save the traditional power providers is that we need Nuclear and Coal because renewable resources are spotty.  The sun only shines certain hours and the wind isn't consistent.  The arguement goes that we need Nuclear and Coal to supply the base electricity our society consumes when the sun isn't shining and the wind isn't blowing.  The University of Pennsylvania's Knowlege @ Wharton counters that arguement with their article "IS A TRANSITION TO RENEWABLE ENERGY ON THE VERGE OF BEING UNSTOPPABLE?"

January 11, 2018
MSCI (who for 40+ years has been an independent provider of research-driven insights and tools for institutional investors) just released their study on has "HAS ESG AFFECTED STOCK PERFORMANCE?"  While their post is full of statistical terms (they do provide information for institutions) I think their email that announced the findings sums it up best:

"The Results: Our research shows that ESG has affected the valuation and performance of companies both through their systematic risk profile (lower costs of capital and higher valuations) and their idiosyncratic risk profile (higher profitability and lower exposures to tail risk), and that changes in a company's ESG characteristics (ESG momentum) may be a useful financial indicator in its own right.

Of course, don't forget that there is no assurance that sustainable investing companies will meet their objectives and investing involves risks including the possible loss of capital.

January 5, 2018
Harvard Business Review had a column on "THE TOP 10 SUSTAINABLE BUSINESS STORIES OF 2017."  Like the post below I think it's most interesting if you read the article and understand some of the rationale and details behind the choices made.  Only one of the ten had to do directly with ESG (4. Investors woke up about climate risk and benefits of sustainability).  But the other 9 are about choices individuals, companies and countries are making to change the world and knowing these issues will help investors make better choices.  While our government might be doing an about face, most countries and more and more companies are looking long-term.