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.

ESG Ratings: A Rebuttal of Prevailing Criticisms

“No offence, but…”. This has become a common introduction to questions directed at environment, social and governance (ESG) rating providers and reflects a body of criticism centered on the premise that ESG research and ratings are fundamentally flawed.

Passive ESG Investing: Q4 2018 Sample Portfolio Analysis

The global equities market experienced substantial growth over the first quarter of 2019 as the FTSE All-World (AW) index returned 12.5%. But this growth spurt comes on the tail of a significant selloff during the preceding quarter; the total return of the FTSE AW over Q4 2018 sunk to -12.6%.[i]

How will ESG investing fare in a volatile or bear market?

Much has been written about the rise of responsible investing and environment, social and governance (ESG) integration over the past decade. From 2014 to 2016, assets that systematically considered ESG factors in the investment process grew from USD 7.5 trillion to USD 10.4 trillion, with continued momentum over the past several years[i]. However, recent commitments to ESG integration (vs. values-based strategies) have yet to be tested by a significant market downturn. The spike in market volatility experienced in late 2018 has led some to question whether the consideration of ESG factors by investors will continue to flourish in a market environment characterized by investor fear and valuation corrections.

The Royal Commission Report: a new path for the Australian finance industry?

On Monday 4 February, the final report from the Royal Commission inquiry into misconduct in the Australian financial sector was published. It contained a scathing review of years of misconduct and of the failures by regulators to appropriately supervise and hold companies accountable. The report also provided 76 recommendations to fix these issues.

Industry expert Jon Hale shares his views on attempts to discredit sustainable investing

In a new Medium article highly worth the read, Jon Hale, Global Head, Sustainable Investing Research at Morningstar, writes about recent misleading attacks on the credibility of ESG assessments and sustainable investing. He takes aim at a critical report from The American Council for Capital Formation, a Washington D.C. policy group financed by the National Association of Manufacturers, the fossil fuels industry and various other corporate lobbying organizations.

Celebrating a diversity of approaches to sustainable investing

I recently traveled from the US to Europe to learn about the major market differences in sustainable investing. For context, investors long rooted in sustainable investing practices have viewed the general US market as lagging compared to Europe. As it pertains to values-based investing, I agree. However, the US has embraced ESG integration in a very sophisticated and pioneering way as it relates to risk mitigation.

projected growth in genome editing market graph

ESG Spotlight | CRISPR: Adapting investment strategies to a biotech revolution

Having already attracted more than USD 1bn of venture capital and other sources of funding, CRISPR – a breakthrough technology in gene editing – is revolutionizing biotechnology.

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ESG Spotlight | ESG compatibility: a hidden success factor in M&A transactions

This report explores how environmental, social and governance (ESG) compatibility may contribute to the financial success of mergers and acquisitions (M&A). Although M&As can present synergistic opportunities, firms involved in such deals are prone to several risks.

UK ESG Market 2017 graph

ESG Risk in Default Funds

Default funds used by DC plan members in the UK are significantly exposed to a variety of ESG risks, including human capital, business ethics, product safety and data privacy and security.

Lake view

10 for 2017: Investment Themes in a Changing World

In this year’s contribution to Sustainalytics’ 10 for series we present ten investment themes for investors to consider in 2017.For each theme, we describe the key drivers, identify companies with upside exposure and present a profile of a company that we consider to be particularly well-positioned in the market.

ESG scores and CRA ratings chart

ESG Spotlight | Game of bonds: reassessing sovereign credit ratings

In this Spotlight report, we build on this interest by developing a new approach for connecting ESG and credit rating agency (CRA) data. The first part of our analysis looks at the correlation between ESG scores and CRA ratings,

Finding Value Through Thematic ESG Investing

On January 25th Sustainalytics published 10 for 2017: Investment themes in a changing world, the fourth installment in our 10 for series. As the title suggests, the report looks at thematic ESG investing.

Why Responsible Investing is in our DNA

– Celebrating Sustainalytics’ 25th anniversary. This year Sustainalytics turns 25. It is an important event to celebrate, but, for me, the true value of such milestones lie in the fact that they give you pause to reflect. While Sustainalytics is a success story, it doesn’t mean we didn’t have some peaks and valleys. At any rate, I ask myself how we were able to create a company that has built responsible investing into its very DNA.