Our monthly spotlight on the latest in values-aligned investing across Wall Street and the world.
ESG IN THE NEWS
Show Me The Standards. Through its Sustainable Finance Disclosure Regulation, the European Union continues to hone its final rules for how asset managers disclose their approach to integrating sustainability in their investment process. Meanwhile in the U.S., the SEC has announced they will propose rules by the end of the year, targeting not only how investment products properly advertise any of their ESG attributes but how corporations disclose their own operational risk exposures related to climate change.
Al Gore Gets Optimistic. In a recent interview, Generation Investment Management chairman Al Gore said he’s getting more optimistic on climate change, thanks to growing investment in solar and wind, falling costs for electric vehicles, growth of clean technology investments, political support for climate action, and a boom in ESG investing. Mr. Gore also warned against corporate greenwashing of long-term targets set decades into the future and well past the tenure of management teams or political leaders.
Corporate Earnings Calls Turn Green. ESG mentions on earnings conference calls rose from 5% in 2019 to 19% in May 2021, according to a recent report by PIMCO. The rapid increase is attributed to increased institutional and retail investor demand for ESG investment options, leading to higher accountability for company behavior related to earth, people, and corporate integrity issues.
VALUES IN ACTION
Earth: Nucor Pledges to Cut Greenhouse Gas Emissions. Nucor is the largest steel producer, with annual production exceeding 25 million tons. In its recently filed sustainability report, Nucor pledged to cut GHG emissions 35% by 2030. This is the company’s first emissions reduction target. At this time, Seeds has no direct exposure to the steel industry.
People: Ralph Lauren To Link Pay With Progress. Ralph Lauren recently announced plans to tie executive pay to sustainability goals. In addition to environmental and product sustainability goals, the company is targeting 20% of its global leadership from underrepresented racial and ethnic groups by 2023. NKE, which is targeting 45% women in leadership positions by 2025, is held in certain Seeds portfolios.
Corporate Integrity: Jeff Bezos Steps Down. On July 5,Jeff Bezos stepped down as CEO of Amazon as part of a planned succession process. Bezos will continue to lead strategic initiatives as “Executive Chair.” In his final letter to shareholders, Bezos said, “We are going to be Earth's Best Employer and Earth's Safest Place to Work." Amazon has recently been under scrutiny for the treatment and pay of its 1.3 million employees. Seeds does not own AMZN stock because of concerns over employee welfare and the company’s large carbon footprint.
Denmark-based Ørsted (OTC-DNNGY) is the largest developer and operator of offshore wind projects. Seeds added Ørsted to certain portfolios in February 2021. The company has 11.3 gigawatts (GW) of installed renewable energy capacity, including 7.6 GW of offshore wind. Ørsted is targeting 15 GW of offshore wind capacity by 2025. Ørsted is building 2,200 MW of offshore wind capacity along the New Jersey coastline. Additional project awards to build more windfarms may be a catalyst for DNNGY shares. The company’s carbon emissions total 17-18 million metric tons per year, but the company plans to be carbon neutral in its operations by 2025. In addition, Ørsted is driving gender equality with a goal to reach 22% women in executive leadership by 2023 (up from 20% in 2020).
The financial services industry is embracing diversity and inclusion practices as both better for business performance and to reach their diverse consumers. Today, only 1 in 5 financial advisors is a woman, though we expect this number to grow going forward. In the near future, advisory firms may be required to disclose gender and racial diversity in their workforce, according to potential new regulation from the SEC’s Asset Management Advisory Committee (AMAC). Firms that have already embraced the need to build diverse and inclusive workforces have an advantage in the market.
- Seeds CEO Zach Conway is featured on Get Real! TV about how advisors can use Seeds to simplify and integrate ESG strategies into client portfolios.
- As the World Opens, Crypto, Board Changes, And Company Actions Capture Investor Attention in Seeds Investment Quarterly Report.
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