Post by Admin/YBB on May 5, 2021 5:51:26 GMT -6
ESG Investing. “E” stands for environment, “S” for social & “G” for governance considerations. ESG can be thought of as additional quality screens, so comparison should be made with other quality factors. There are ESG variations that tilt more towards “E” or “S” or “G”, with “S” being the fuzziest among the 3. There are still no standardized or widely accepted norms for ESG & the SASB [similar to FASB] expects those within 2 years; the UN has had guidelines since 2015. Some look at ESG differently in developed vs developing countries, i.e., they view ESG in an overall context and whether there is relative progress. Sustainalytics/ Morningstar [global fund rating firm] & others have ESG rankings for FUNDS but some funds with ESG in names &/or objectives rate poorly on ESG factors, while others that don’t explicitly mention ESG rate highly on ESG factors. IMPACT investing is more focused ESG & it uses quantitative measurements to assess results &/or effectiveness.
There is controversy over whether investing should or shouldn’t consider ESG. Several companies [BlackRock, Bank of America, Walmart, etc], proxy advisory firms [ISS, Egan-Jones, Glass Lewis, etc] & fund rating services [Morningstar, etc] have been moving towards incorporating ESG factors in their evaluations. On the other hand, in October 2020, the DOL issued regulations that only “pecuniary” factors should be considered in workplace retirement plans. An indirect implication was that some ESG factors could be “nonpecuniary” although ESG wasn’t mentioned in the formal text of the regulation. This DOL regulation is not being applied actively and may be revised again.
ESG has become more popular in Europe than in the US. The term ESG seems to be catching/sticking compared to the previous terms such as SRI [socially responsible investing], Green Energy, sustainable investing, diversity, CSR [corporate social responsibility], etc.
There is controversy over whether investing should or shouldn’t consider ESG. Several companies [BlackRock, Bank of America, Walmart, etc], proxy advisory firms [ISS, Egan-Jones, Glass Lewis, etc] & fund rating services [Morningstar, etc] have been moving towards incorporating ESG factors in their evaluations. On the other hand, in October 2020, the DOL issued regulations that only “pecuniary” factors should be considered in workplace retirement plans. An indirect implication was that some ESG factors could be “nonpecuniary” although ESG wasn’t mentioned in the formal text of the regulation. This DOL regulation is not being applied actively and may be revised again.
ESG has become more popular in Europe than in the US. The term ESG seems to be catching/sticking compared to the previous terms such as SRI [socially responsible investing], Green Energy, sustainable investing, diversity, CSR [corporate social responsibility], etc.