Tag: ESG

BlackRock’s Red-State Woes Continue as Florida Divests

Mary Pat Campbell

Link: https://www.ai-cio.com/news/blackrocks-red-state-woes-continue-as-florida-divests/

Excerpt:

State Chief Financial Officer Jimmy Patronis announced Thursday that the Florida Treasury will begin divesting $2 billion worth of assets currently under management by BlackRock.

BlackRock managed $1.43 billion of Florida’s long duration portfolio, which includes investments such as corporate bonds, asset-backed securities and municipal bonds. Additionally, BlackRock managed $600 million of Florida funds in a short-term treasury fund, which invests in short-term and overnight investments.

Patronis cited efforts by BlackRock and its CEO, Larry Fink, to embrace environmental, social and governance investment principles as the reason Florida will pull the funds from the manager.. In the wake of the announcement, the state will freeze the $1.43 billion in long-term securities at its custodial bank.

….

“It’s my responsibility to get the best returns possible for taxpayers,” Patronis said in the statement. “The more effective we are in investing dollars to generate a return, the more effective we’ll be in funding priorities like schools, hospitals and roads. As major banking institutions and economists predict a recession in the coming year, and as the Fed increases interest rates to combat the inflation crisis, I need partners within the financial services industry who are as committed to the bottom line as we are – and I don’t trust BlackRock’s ability to deliver. As Larry Fink stated to CEOs, ‘Access to capital is not a right. It is a privilege.’ As Florida’s CFO, I agree wholeheartedly, so we’ll be taking Larry up on his offer.”

Author(s): Dusty Hagedorn

Publication Date: 2 December 2022

Publication Site: ai-CIO

Hong Kong Watch gives evidence to the Canada-China Relationship Committee on ESG investment & country risk analysis

Mary Pat Campbell

Link: https://www.hongkongwatch.org/all-posts/2022/12/1/hong-kong-watch-gives-evidence-to-the-canada-china-relationship-committee-on-esg-investment-amp-country-risk-analysis

Excerpt:

On Tuesday, Hong Kong Watch’s co-founder and trustee, Aileen Calverley, and Director of Policy and Advocacy, Sam Goodman, gave evidence to the Special Committee on the Canada–People’s Republic of China Relationship on the exposure of Canadian pension funds to Chinese stocks and bonds.

Hong Kong Watch has previously written extensively on the question of ESG, business, human rights, and Canadian pension funds exposure to Chinese companies linked to gross human rights violations, including the internment camps in Xinjiang.

In his remarks, Sam Goodman, discussed why China should be considered an ESG investment risk, recommending that:

  • Lawmakers consider sensible regulations to define ESG, label China as an ESG risk, and introduce a blacklist like the USA to restrict investment in Chinese firms with questionable human rights, environmental, and governance credentials.

In her remarks, Aileen Calverley discussed the risk of pension fund investments in China in the event of sanctions, recommending that the Government:

  • Include a China Country Risk Analysis in the Indo-Pacific Strategy.
  • Encourage publicly controlled pension funds to avoid exposure in China.

The full committee hearing can be watched here.

Publication Date: 1 Dec 2022

Publication Site: Hong Kong Watch

Analysis: Money before climate; market downturn spurs ESG fund exodus

Mary Pat Campbell

Link: https://www.reuters.com/business/cop/money-before-climate-market-downturn-spurs-esg-fund-exodus-2022-11-11/

Graphic:

Excerpt:

Funds adhering to environmental, social, and corporate governance (ESG) principles have been hit by unprecedented outflows in the market downturn, as investors prioritize capital preservation over goals such as tackling climate change.

ESG, a classification applied to fund assets currently worth an estimated $6.5 trillion, is being tested by a drop in market values fuelled by concerns that central banks hiking interest rates to fight rampant inflation will trigger an economic recession.

Investors souring on ESG funds could pose a challenge to governments seeking to enlist them in the fight against climate change. Policymakers at the COP27 climate talks in Egypt are trying this week to secure more financing from the private sector to help lower carbon emissions.

Data from research service Refinitiv Lipper shows that funds of equities, debt and other asset types dedicated to responsible investing posted net outflows globally of $108 billion this year to the end of September, the first time investors withdrew money from them over such a long period since Refinitiv started tracking them in late 2017.

Author(s): Isla Bennie, Ross Kerber

Publication Date: 11 Nov 2022

Publication Site: Reuters

Chicago Teachers’ Pension Fund to Reorientate Portfolio to Fully Offset Fossil Fuel Investments

Mary Pat Campbell

Link: https://www.ai-cio.com/news/chicago-teachers-pension-fund-to-reorientate-portfolio-to-fully-offset-fossil-fuel-investments/

Excerpt:

The Chicago Teachers’ Pension Fund trustees in October voted to engage with fossil fuel companies to encourage them towards clean renewable energy sources and investing in viable clean and renewable energy sources to offset the fund’s fossil fuel investments. The fund plans to achieve this goal by the end of 2027.

In a statement shared to Chief Investment Officer, the fund’s CIO Fernando Vinzons wrote, “the fund will approach divestiture from a multi-pronged approach, engaging with current companies to encourage them toward a path of clean renewable energy sources, while working toward the longer-term goal of divesting from publicly traded fossil fuel holdings and investing. Divestment does not attract consensus among institutional investors. Many public pension funds are engaging with companies that produce fossil fuels, some are divesting those companies, and some, as the case with state funds from the state of such as Louisiana, are allocating away from managers perceived to be harming the domestic energy sector by endorsing programs like the Net Zero campaign.

According to a press release from the Chicago Teachers’ pension fund, Carlton W. Lenoir, Sr., executive director at CTPF, commented on the vote saying, “as fiduciaries, our trustees must invest consistent with our mission to protect and enhance the present and future economic well-being of members, pensioners, and beneficiaries, and we are confident that this action fulfills that responsibility.”

Author(s): Dusty Hagedorn

Publication Date: 7 Nov 2022

Publication Site: ai-CIO

Republicans ride ESG backlash to state financial offices

Mary Pat Campbell

Link: https://rollcall.com/2022/11/17/republicans-ride-esg-backlash-to-state-financial-offices/

Excerpt:

Republicans picked up state financial officer positions during the midterm elections amid a campaign against environmental, social and governance investing.

Five positions — in Kansas, Iowa, Missouri, Nevada and Wisconsin — flipped from Democratic to Republican in races for state auditor, controller or treasurer. Of the 50 directly elected positions, Republicans won 29 and Democrats won 19, according to an analysis from Ballotpedia. Two races remain uncalled.

A handful of Republicans’ campaigns for state financial officers focused on ESG, echoing sentiments from GOP officials at statehouses across the country and in Congress who say ESG investing is harming capital markets and domestic energy production and reject the case made by Democrats, major investors and other proponents.

At stake is a suite of legislation and rules that would curb ESG as a material consideration, along with other financial factors, for investors. The proposals include policies for states’ pension funds to divest hundreds of millions of dollars from financial institutions that incorporate ESG — and especially climate — in their investment decisions.

Author(s): Ellen Meyers

Publication Date: 17 Nov 2022

Publication Site: Roll Call

Backlash Against ESG Investment Of Taxpayer Money Grows, But Illinois And Chicago Carry On – Wirepoints

Mary Pat Campbell

Link: https://wirepoints.org/backlash-against-esg-investment-of-taxpayer-money-grows-but-illinois-and-chicago-carry-on-wirepoints/

Excerpt:

But those scorned sectors have been the better investments this year, and tech companies have been hammered. Only 31% of actively managed ESG equity funds beat their benchmarks in the first half of 2022, compared to 41% of conventional funds, according to Refinitiv Lipper, as Reuters recently reported. So far this year, 19 of the 20 best-performing companies in the S&P 500 are either fossil-fuel producers or otherwise connected with fossil fuels.

Consequently, ESG funds “have been hit by unprecedented outflows in the market downturn, as investors prioritize capital preservation over goals such as tackling climate change,” wrote Reuters.

Predictably, the issue has become political since state and local officials invest trillions of dollars owned by taxpayers. Republican candidates generally oppose ESG investment of public funds, and five positions — in Kansas, Iowa, Missouri, Nevada and Wisconsin — flipped from Democratic to Republican in recent races for state auditor, controller or treasurer. Of the 50 directly elected positions, Republicans won 29 and Democrats won 19, according to a recent Roll Call report.

Illinois Treasurer Michael Frerichs, however, is among the Democratic officials not backing off on ESG. “We are in it for the long term” is the title of an open letter he recently signed along with 13 other Democratic state financial officers criticizing efforts to stop ESG use of taxpayer money. The letter is astonishingly hypocritical. It says those who want to ban ESG investment of public money are “blacklisting financial firms that don’t agree with their political views.” That, of course, is precisely what ESG does.

Author(s): Mark Glennon

Publication Date:19 Nov 2022

Publication Site: Wirepoints

A Coalition of Republican Attorneys General Targets Banks for Net-Zero Alliance Membership

Mary Pat Campbell

Link: https://www.ai-cio.com/news/a-coalition-of-republican-attorneys-general-target-banks-for-net-zero-alliance-membership/

Excerpt:

Republicans have seized upon the issues of net-zero and environmental, social and governance investing to call attention to what they claim are negative effects of so-called ‘woke’ orthodoxy on portfolio performance, and harm the U.S. energy industry.

They have also raised the potential for a lapse in fiduciary duty by arguing that allocating towards long-term ESG goals may create short-term underperformance, harming plan beneficiaries.

The attorneys general of 14 states – Arizona, Arkansas, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Tennessee, Texas, Virginia, and five more that have joined but can’t be named due to state laws or regulations regarding confidentiality –have sent civil investigative demands to the six U.S. banks the investigation targets

The six banks did not respond to requests for comment.

The coalition argues that the banks’ membership in the Net-Zero Banking Alliance is damaging U.S. energy companies. The CIDs, similar to subpoenas, are legally enforceable requests for information related to state or federal investigations.

Author(s): Dusty Hagedorn

Publication Date: 25 Oct 2022

Publication Site: ai-CIO

CalSTRS’ board sets science-based emissions goal for 2030 and commits to additional net zero actions

Mary Pat Campbell

Link: https://www.calstrs.com/calstrs-board-sets-science-based-emissions-goal-for-2030-and-commits-to-additional-net-zero-actions

Excerpt:

The board set four initial measures for integrating the net zero strategy across the portfolio, with a specific focus on emissions reductions:

  1. Interim science-based goal. Reduce greenhouse gas emissions across the investment portfolio by 50% by 2030, consistent with the latest findings of the United Nations’ Intergovernmental Panel on Climate Change.
  2. Systematic decision-making process. Adopt processes to incorporate greenhouse gas emissions into investment decisions as part of traditional risk-and-return analyses and their potential impacts on the CalSTRS Funding Plan.
  3. Reduced emissions. Target a 20% allocation of the Public Equity portfolio to a low-carbon index to significantly reduce portfolio emissions while managing active risk.
  4. Integration of climate scenarios. Incorporate future climate-related scenarios into CalSTRS’ asset-liability modeling framework to help guide CalSTRS’ investment allocations.

These actions reflect increasing global momentum toward achieving a net zero economy. CalSTRS will review its net zero goals and strategy annually to adjust for the latest available data, market fluctuations and related scientific advancements.

“CalSTRS’ net zero pledge is rooted in its century-long promise to deliver a secure retirement for California’s hard-working educators and their families,” said Board Chair Harry Keiley. “Taking these interim actions to reduce emissions in our portfolio is a profound step forward and underscores our commitment to considering the impacts of climate change fully and systematically as we manage our fund on every level.”

Author(s): Rebecca Forée

Publication Date: 31 August 2022

Publication Site: Calstrs

New York Announces Historic Fossil Fuel Divestment Plan

Mary Pat Campbell

Link: https://www.nrdc.org/experts/rich-schrader/new-york-announces-historic-fossil-fuel-divestment-plan

Excerpt:

As part of the plan, the Comptroller announced an aggressive schedule of divestment activity over the next four years. This year already, the Common Fund has divested from 22 coal companies. In the next few months, it will divest from companies with tar sands investments. After that, over the next several years, it will divest from these subsectors of the fossil fuel industry:

  • Shale oil and gas firms;
  • Integrated oil/gas majors like Exxon and Chevron as well as smaller integrated companies;
  • All oil/gas exploration and production firms;
  • Fossil fuel service firms, like Schlumberger;
  • And finally, fossil fuel transportation and pipeline companies like Kinder Morgan and Williams.

In addition, the Common Fund is moving forward with two key steps, both supported by the 2018 Decarbonization Panel that was jointly appointed by Governor Cuomo and Comptroller DiNapoli. First, the Fund will hire new staff trained in financial analysis of climate impacts and dangers. And second, the Common Fund will actively vote against board directors of non-fossil fuel companies that do not prioritize climate concerns in alignment with the Fund’s decarbonization goals.

Author(s): Rich Schrader

Publication Date: 9 Dec 2020

Publication Site: NRDC

So Are ESG Investments Lousy, or Not?

Mary Pat Campbell

Link: https://www.ai-cio.com/in-focus/market-drilldown/so-are-esg-investments-lousy-or-not/?oly_enc_id=2359H8978023B3G

Excerpt:

One criticism of ESG investing is that, when it shows good returns, this might be because of temporary factors that have an outsize impact. Such superior returns are  often driven by climate-news “shocks,” declared Robert Stambaugh, a professor at the University of Pennsylvania’s Wharton School, and two other academics, in a recent paper. The reference is apparently to a spell of severe drought or destructive hurricanes. The professors expressed uncertainty as to whether any future ESG outperformance can be assumed.

Of course, with climate-oriented investing now a partisan issue, a welter of claims and counter-claims has appeared. To pro-ESG folks, science is on their side, hence the opposition is just blowing smoke to confuse people.

Anti-ESG politicians appear to be convincing the public that a “false equivalence” exists between their stance and the sustainability advocates, contended Witold Henisz, director of Wharton’s ESG Initiative, in a recent article in the Knowledge Wharton periodical. He wrote that “ideological opposition [is] cynically seeking a wedge issue for upcoming political campaigns — and, so far, it appears to be working.”

Whatever the outcome of the current debate over ESG-related bans and the like, the climate change question is not going away. Says CalSTRS’s Ailman, “It will be with us for the next 50 years.”

Author(s): Larry Light

Publication Date: 8 Sept 2022

Publication Site: ai-CIO

Princeton to ‘Dissociate’ Fossil Fuel Investments

Mary Pat Campbell

Link: https://www.ai-cio.com/news/princeton-to-dissociate-fossil-fuel-investments/

Excerpt:

Princeton University’s board of trustees has voted to dissociate from 90 companies as part of an administrative process established last year that focuses on companies involved in the thermal coal and tar sands segments of the fossil fuel industry, or that are engaged in climate disinformation campaigns.

Thermal coal, which is burned for steam and used to produce electricity, was made a priority because it emits significantly more carbon dioxide than alternative available fossil fuels, the university said. It also said that tar sands oil, which is derived from loose sands or sandstone, also produces much higher emissions than conventional crude oil, including in its extraction and production process. However, Princeton said thermal coal and tar sands businesses can be exempt from dissociation if they can prove they can meet a rigorous standard for greenhouse gas emissions.

And in a move to help the university reach its goal of eventually having an endowment portfolio that is net zero of greenhouse gases, the Princeton University Investment Company, which manages the university’s $38 billion endowment, will also eliminate all holdings in publicly traded fossil fuel companies. PRINCO said it will also ensure that the endowment does not benefit from any future exposure to fossil fuel companies.

Author(s): Michael Katz

Publication Date: 6 Oct 2022

Publication Site: ai-CIO

Louisiana Divests Nearly $800 Million from BlackRock to Protect Fossil Fuel Industry

Mary Pat Campbell

Link: https://www.ai-cio.com/news/louisiana-divests-nearly-800-million-from-blackrock-to-protect-fossil-fuel-industry/

Excerpt:

Louisiana Treasurer John Schroder is divesting $794 million worth of state funds from BlackRock because the world’s largest asset manager’s “blatantly anti-fossil fuel policies would destroy Louisiana’s economy.”

The divestment is in response to BlackRock’s sustainable investing philosophy, and for the firm calling on other companies to embrace net zero investment strategies that would harm the fossil fuel industry, which Schroder notes is a “vital part” of Louisiana’s economy.

“This divestment is necessary to protect Louisiana from actions and policies that would actively seek to hamstring our fossil fuel sector,” Schroder said in a letter to BlackRock CEO Larry Fink. “I refuse to invest a penny of our state’s funds with a company that would take food off tables, money out of pockets and jobs away from hardworking Louisianans.”

When asked to comment, a BlackRock spokesperson said the firm’s view is captured by a line in its Sept. 7 response to a letter it received from a group of 19 Republican state attorneys general saying environmental, social, and governance  investments weaken America’s national security.

Author(s): Michael Katz

Publication Date: 10 Oct 2022

Publication Site: ai-CIO