Resource Center

The world is changing faster than it ever has. As a result, companies are increasingly facing numerous and complex challenges with both immediate and long-term impacts. Today, companies are facing a health crisis, a social justice crisis and a fallout economic crisis. The ongoing COVID-19 pandemic and the social justice crisis, calling for the end of systemic racism, have reinforced the need for more diverse boards.

“We are living in extraordinary times” seems to be these days’ mantra. It certainly reflects well the dynamics of global share markets, including Australia’s, as shown in the chart below.

Sustainable financial products are marked with an increasingly large list of tags, from green, sustainable, socially responsible to thematic ESG, water, carbon or impact funds, and not every investor might know how to make sense of these terms. Sustainable fund labels can be one way to signal to the market that the fund has a dedicated responsible investment strategy.

The COVID-19 pandemic is likely to further amp up the market’s interest in ESG investment research. It’s not just that ESG funds and indices have generally outperformed their non-ESG counterparts since the COVID-19 sell-off began in mid-February.[i] It’s also that the pandemic itself has drawn attention to ESG issues ranging from biodiversity and habitat loss to employee relations and supply chain management.

This year, we mark Earth Day under a pandemic. To date, casualties of the novel coronavirus include more than 170,000 deaths, ongoing disruptions to healthcare systems and a deep economic downturn. As we face the first global recession in a decade, Earth Day – the theme of which this year is climate action – serves as a reminder for investors to reflect on how their investment activities relate to social and environmental health concerns.

Since the World Health Organization declared the COVID-19 outbreak a pandemic on March 11, global stock markets have seen losses not experienced since the 2008 financial crisis.

The highly anticipated final report by the TEG (Technical Expert Group) on the EU Taxonomy was published in early March, followed by a stakeholder information session. You can read our blog post on last fall’s developments here.

The legal and regulatory foundations of Germany’s corporate governance system are being overhauled in the form of far-reaching changes to the German Stock Corporations Act (AktG) and the German Corporate Governance Code (Kodex). As a result, institutional investors should expect enhanced transparency from German issuers, as well as stronger rights enabling them to effectively exercise their stewardship responsibilities. The reform reflects both the transposition of the EU Shareholder Rights Directive II (SRD II) into domestic law and a corresponding Kodex revamp, both aiming to incorporate governance features that are more typically associated with Anglophone jurisdictions.

Monday’s rout of the global equity market has left investors reeling. Major benchmarks including the S&P 500, FTSE 100 and the DAX were down well over 7%. In Canada, the commodities heavy TSX Composite shed over 10%.

In this year’s edition of our 10 for series, we put an environmental, social and governance (ESG) lens on 10 investment themes that may offer investors an opportunity to create a positive social and environmental impact through the equity market. The trends we identify are driven by corporate initiatives to scale new technologies, improve social conditions, conserve ecosystems and mitigate climate change.

A Case Study On November 1, 2019 Moody’s cut its rating outlook for South Africa from “Baa3 stable” to “Baa3 negative,” putting the country’s bonds on the cusp of junk status after several harbingers of a potential downgrade.[i] Earlier this year, the World Bank and the International Monetary Fund cut their 2019 growth forecasts for South Africa to around 0.8%, while the Institute of International Finance warned that the country’s public debt could grow to 95% of Gross Domestic Product (GDP) by 2024.[ii] The other two big credit rating agencies (CRAs) – Fitch and S&P – downgraded South Africa’s credit rating to sub-investment grade back in 2017, citing a deterioration in the country’s public finances.[iii]

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.

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.

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.”

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.

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?

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.

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.

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.

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.