Category Archives: ESG

ESG Strategies on the Rise

Environmental, social, and governance (ESG) risks have taken a strong hold in the developed investing space. Previously, the concept had resided in the domain of “do gooders” and “tree huggers” seeking to make a better world. So what has changed so much that it is now taking root in mainstream investing? By and large, ESG Read more […]

Responsible Investor Europe 2018 Conference: ESG Grows Up

The 11th annual Responsible Investor (RI) Europe Conference, held June 5-6, 2018, showed a marked departure in ESG themes and focus from previous years. Compared with prior sessions, there was a strong shift and a coming of age in the ESG movement. For example, the title for the keynote plenary of the RI 2018 Conference Read more […]

The Next Frontier in Footprinting: Carbon Accounting for Sovereign Bonds

Sovereign bonds remain largely unanalyzed by investors from a carbon risk and reporting perspective. This is despite clear acknowledgement in the Paris Agreement that governments have a critical role in curtailing global warming,[1] and the Financial Stability Board’s warning that climate change could affect all asset classes and the stability of the broader financial system.[2] Read more […]

The Department of Labor and ESG Guidance: Is the Pendulum Shifting?

In late April 2018, the Department of Labor’s (DOL) Office of Regulations and Interpretations issued the Field Assistance Bulletin No. 2018-01, clarifying guidance on how investment managers should interpret the DOL’s prior Interpretive Bulletins (IBs) issued in 2015 and 2016. Issued during the Obama administration, the IBs detail the exercise of shareholder rights, written statements Read more […]

How an Industry Reduced Its Carbon Pricing Risk by 922%

Companies that act now to invest in low carbon technologies have the chance to maintain their license to grow and avoid carbon pricing costs that would significantly reduce profits. For example, in 2020, the technology sector’s investments in energy efficiency for their U.S. data centers could avoid over USD 6.9 billion in carbon costs and Read more […]

Integrating Carbon Risk With the Quality Factor

In a prior blog, we demonstrated that a sector-relative, carbon-efficient portfolio was superior to a sector-unconstrained one when forming low-carbon portfolios. In this blog, we explore the integration of carbon risk in quality factor portfolios. High-quality companies seek to generate higher profitability and enjoy more stable growth than “average” companies. Equally important, high-quality companies seek Read more […]

Starting on the Right Foot: Preparing Accurate ESG Disclosures

As part of a series of articles on ESG disclosure, Trucost describes the importance of accurate ESG disclosure for reporters and readers. By the time this blog is up, some seasoned ESG reporters in Southeast Asia will have published their sustainability reports; another group will be finalizing their reports; while the rest will still be Read more […]

Reweighting ESG: Does Changing the Component Weighting Matter?

In a prior blog series,[1] we explored the relationship between environmental (E), social (S), and governance (G) scores and future stock performance. In all three cases, the results showed that top quintile portfolios outperformed the bottom quintile portfolios. However, a deeper analysis revealed that the spread between Q1 and Q5 portfolios was the highest for Read more […]

Exploring the G in ESG: E & S and Performance – Part 3

In a previous blog, we explored the relationship between corporate governance and stock performance. The results show a wide variance between the top quintile and the bottom quintile, particularly over a long-term horizon (17 years). We applied the same analysis to the RobecoSAM environment (E) and social (S) scores. To do so, we formed hypothetical, Read more […]

Exploring the G in ESG: The Relationship Between Good Corporate Governance and Stock Performance – Part 2

Year-to-date, Facebook (FB) was down 7.13% as of April 12, 2018, compared to its 53% total return in 2017. What started as a data breach issue has expanded to encompass management structure, procedures, and safeguard concerns—issues that are all related to corporate governance. Market participants have a tendency to only care about corporate governance when Read more […]