A Case for Impact Investing in Public Equities
As awareness around environmental and social issues has grown, so has the number of investors who deliberately seek to allocate capital to create positive social and environmental impact. Impact investing is as old as the sustainable investment industry, with the bulk of strategies to date having been executed through private equity and debt vehicles. However, as a more diversified pool of investors look to adopt impact investing strategies, fueled by the United Nations’ Sustainable Development Goals (SDGs) and the Paris Climate Agreement, a broader set of asset classes are being considered – here enters public equities.
Sustainable Finance and the EU Taxonomy: Developments from the Trilateral Negotiations
As global leaders meet in Madrid for the COP25 amid mounting concern over the international response to climate change, the EU Taxonomy experienced a setback with the UK and France blocking the plans. The new framework, intended to drive financial flows that will accelerate the shift to a low carbon future, will likely become a global standard affecting investors around the world. If enacted, it could cement the EU’s position as the world’s pace setter on climate legislation.
PFAS Sparks a Wave of Litigation in the U.S. Chemical Industry
In 2019, a wave of litigation related to per- and polyfluoroalkyl substances (PFAS) emerged in the United States, as several states filed lawsuits against PFAS manufacturers, including DuPont, Chemours and 3M. This legal action accompanies increased regulatory scrutiny of this potentially risky class of chemicals. In this article, we will focus on the risks chemical companies face related to PFAS contamination of drinking water in the United States and the ESG risks posed to chemical companies and their investors.
Death and Taxes are the Only Constants - But Not for Everyone
Major global companies such Google, Amazon, Facebook and Apple (known as “GAFA”) have come to dominate not just the tech industry but increasingly global commerce as well. The OECD estimates that companies like these avoid USD 100-240 billion in taxes annually, representing roughly 4-10% of global corporate income tax revenues. Attention paid to corporate taxation has also risen sharply in recent years, with increasingly heated debates on what constitutes “companies paying their fair share.”
Revising Mining Codes: Equality for Nations or Nationalization?
In recent years, an increasing number of nations, particularly in Africa, have been amending their mining codes. Governments likely view these amendments as a way of getting more for their people from their natural resources. But are these amendments slowly leading to the nationalization of the sector in some of these countries and how are the companies reacting?
Cybersecurity: A Pervasive Risk
In 2017, in the wake of the WannaCry ransomware attack, we argued that the event should be seen as a cybersecurity wake up call. Since then, cybersecurity risks have remained a source of uncertainty for most companies, driven by the increasing intensity, both in volume and impact, of cyberattacks. These risks are compounded by the continuous expansion of critical infrastructure (energy grids, utilities, hospitals) to digital platforms and the breadth of sensitive information that is housed in online servers. As a result, the pool of lucrative targets for malicious actors continues to grow. This is reflected in the notable rise in the number cyber insurance claims. According to a study by AIG, 2018 had the same number of cyber insurance claims as the preceding two years combined.[i]
Business Ethics and Economic Downturn - A Closer Look at China
In October 2019, China posted its lowest quarterly GDP growth rate (6.0%) in 30 years. While the country’s trade war with the US might have added to the economic headwind, the economic results are in line with a decade of cooling down following years of double-digital growth.
The Opioid Crisis and the Continued Uncertainty for Affected Companies
As the first National Prescription Opiates Multidistrict Litigation (MDL) cases are set to get underway in late October, we take a closer look company involvement in U.S. opioid crisis and how it has evolved since our first article on the topic in 2017. We also provide an overview of how the ESG risks highlighted in our initial article have materialized over the last two fiscal years (FY2018 and FY2019) for the companies involved.
Children’s Rights – the smallest things can have the biggest impact
Imagine there was a stakeholder group that formed a third of the global population and was pertinent to business in various ways: as customers, as employees’ family members, and as key participants in local communities and in society at large. These people would be guaranteed to run the world in the future. Almost everyone would know and be related to representatives of this network, and many would consider them the most important people in their lives. You would expect companies and investors to assess the impact they have on these powerful influencers and try to capitalise on the related opportunities, but that is rarely the case. This is because the group I’m talking about is children. When it comes to incorporating children’s rights and needs into business and investment strategies, there is still a long way to go given their number and potential.
The Impact of Country ESG Risks on Company Operations
In this article we explore how operating in Peru affects the world’s second largest mining producer of precious metals, Barrick Gold. Based on analysis from our recently launched Country Risk Ratings, we discuss how the challenges facing Barrick’s mining operations in Peru are strongly influenced by the country’s ESG risks.
Tax Transparency in Australia
As Benjamin Franklin once said, “in this world nothing can be said to be certain, except death and taxes.” He was referring to the world in 1789. In today’s world, death remains a certainty. Taxes on the other hand, are less certain as companies, accountants and lawyers have found ways to reduce tax obligations.
Brazil: Deforestation in the Global Context - Part 2
In our previous blog post, we detailed the impact that the new Brazilian government’s policies have had on deforestation and could have on Brazil’s Indigenous Peoples. In this second article, we will explore how material recent developments in Brazil could be for the companies, communities and financial institutions involved. We will also take a closer look at Brazilian meat processing company JBS SA (JBS) and the consequences it may face due to international concern over deforestation.
Emerging market equities, ESG risk and sector tilts
The International Monetary Fund’s (IMF’s) recent downward revision to its projections of near-term global expansion reflects growing concerns about brewing market tensions. Central issues affecting capital markets include trade disputes between the US and China, Brexit and subdued investment and demand for consumer durables. According to the IMF’s latest outlook, global real GDP will grow 3.2% in 2019 and 3.5% in 2020 – a downgrade of 10 basis points (bps) for each year compared to the IMF’s previous outlook last April.[i]
The fairy-tale of Faroese fish farming
Aquaculture is the fastest growing food production sector in the past 20 years. It will become vital in meeting the rapidly increasing demand for seafood, and is expected to provide 50 per cent of total seafood consumed in the coming years.[i] Contributing to an increased protein supply and global food security, aquaculture also carries many risks. These risks include the potential spread of diseases and parasites, use of antibiotics and pesticides, and the escape of fish from fish farms which can jeopardize wild populations.
China’s Millennials and ESG
A country’s demographics has a strong influence on long-term social trends, including the development of ESG issues. With millennials becoming the dominant cohort among the workforce and consumers, we are witnessing the social transformations that come with a new generation. Although occurring globally, these transformations are particularly dramatic in China, due to the contrasting social environments experienced by China’s millennials and their parents.
Shareholder Rights Directive II gets transposed into local legislation - a look at say on pay
The newly updated European Shareholder Rights Directive (“SRD II”) (2017/828/EU) aims to promote long-term shareholder engagement at companies listed in EU-regulated markets. These changes were prompted by an almost decade-long conversation that arose in the wake of the 2008 global financial crisis. Since then, many market actors have flagged shareholder short-termism as a key contributor to the crisis, with long-term engagement conversely seen as a bulwark against similar failures in the future.
Brazil: Deforestation in the Global Context
On January 1, 2019, Jair Bolsonaro began his tenure as the president of Brazil. On his first day in office, he signed several decrees aimed at increasing power for the Ministry of Agriculture, at the expense of the Ministry of Environment. According to NGOs, this indicates a shift in government priorities away from environmental stewardship and protection of Indigenous rights towards bolstering the agricultural industry’s interests.
The business case against letting the well run dry
Do you believe climate change is a problem needing urgent attention? Have extreme weather events got you thinking about the personal or professional risks you face? Are you interested in how the global population will be fed in the future? Concerned about the mass migration of people in search for a better life? Worried about the outlook of energy production? If you answered yes to any of these questions, then you may also want to consider the vital element connecting all of the above: water.
The role of technology companies in technology addiction
As personal technology and social media platforms become ubiquitous in our personal and professional lives, we explore the role played by technology companies in technology addiction. The term ‘technology addiction’ is a catch-all phrase typically used to describe frequent and compulsive internet, smartphone, gaming and social media use.
Implications of the use of rare-earth elements in the wind energy market
Investors who are bullish on renewable energy are often drawn to the wind energy market. Alongside solar, wind energy has been rapidly adopted worldwide and continues to receive significant investments compared to other renewables.[i]