These days the comparisons of companies in sectors and industries and among investment peers (those companies chasing similar sources of capital) are continuing to gain momentum. There are numerous third party players busily analyzing, measuring and charting company ESG performance and producing scores, rankings, ratings and various kinds of comparisons (company-to-company, company to industry etc) for their investor-clients (asset owners and managers).
We should not have been surprised: in 2016 presidential candidate Donald Trump promised that among his first steps when in the Oval Office would be the tearing up of his predecessor’s commitment to join the family of nations in addressing climate change challenges. In 2015 in Paris, with almost 200 nations in agreement, the United States of America with President Barack Obama presiding signed on to the “Paris Agreement” (or Accord) for nations and private, public and social sector organization to work to prevent further damage to the planet.
This week we celebrated Earth Day. That first (1970) observance became a catalyst for action – soon after the first of a series of environmental-focused Federal legislation began to change dirty air to cleaner and then clean, and more laws to address a very unhealthy state of affairs in the U.S.A. (The Environmental Act, Clean Water Act, Clean Air Act, RCRA, etc.). But…the challenges for society have not gone away. The list of “hot ESG issues” grows by the week.
“Movements” – what comes to mind when we describe the characteristics of this term are 20th Century examples. The late-20th Century “environmental movement” was a segue from the older 19th and early 20th Century “conservation movement” that was jump started by President Theodore Roosevelt (#26), who in his 8 years in the Oval Office preserved some 100,000 acres of American land every work day (this before the creation of the National Parks System a decade later).
The FTI Consulting business advisory firm surveyed a set of 130 global institutional investors to gauge the depth and breadth of U.S. assets invested using ESG principles. This group of investors, contacted from May through July 2018, responded that their Assets Under Management totaling US$8.4 trillion was believed to have benefitted by the contribution of extra [corporate] value to a company with a high ESG rating.
Question: Does a corporate sustainability program “cost” (and thus shows up on the “expense” side of the ledger) or are there measurable “returns” on the investments that companies are making to develop or adjust strategies, assemble teams and launch sustainability programs? (Especially those that have set goals and where progress is measured and then publicly reported.)
Global faith leaders can directly and indirectly affect significant changes in our global society. One leader with high visibility and strong opinions on important societal issues is the Holy Father in Rome, Pope Francis. The Roman Catholic Church as a collective institution is one of the largest owners and holders of assets in the world, including pension systems of various orders, Catholic charities, healthcare systems, and more.
At the recent IBM Think 2019 Conference, fascinating artificial intelligence (“AI”) innovations were showcased; these are approaches in development to help meet the needs of global stressed food and water ecosystems.
Forbes’ contributor Lee Bell outlined the work of scientists and developers at IBM’s research unit, telling the story from the conference with a “crop-to-trash” theme. These innovations are:
The Digital Twin – AI helping to accurately forecast crop yields (helping farmers to establish critical data points for arranging farm credit).
The European Union adopted a Sustainable Finance Action Plan in May 2018; the package of measures included a proposal for a regulation to establish a framework to facilitate sustainable investment. The aim is to create a unified classification system or taxonomy on what could be considered to be “an environmentally-sustainable economic opportunity”.