Sustainability Matters “Life’s most persistent and urgent question is: What are you doing for others?” — The Rev. Dr. Martin Luther King Jr. That’s not a question often asked of investors, but as we celebrate Martin Luther King Jr. Day, it’s one worth considering. A lot of work is needed to achieve racial justice in this country. What has been built up for centuries cannot be torn down quickly. Change must come from many directions, including those that may not seem obvious at first glance. Like investing. Investing may not be the primary way to effect change, but it’s one of the tools t ..read more

Sustainability Matters Adding sustainable funds will take some time, but could improve retirement readiness for many participants. The U.S. Department of Labor has just made it easier for American workers to invest in sustainable funds in their 401(k) plans. The new rule, finalized in November, makes clear that those who run 401(k) plans can consider environmental, social, and corporate governance factors and approaches, including climate-related risks. Employers who sponsor 401(k) plans need to start thinking about how ESG figures into their plan menu construction and how to address requests ..read more

Sustainability Matters Considering ESG factors is consistent with fiduciary duty The U.S. Department of Labor (DOL) finalized a rule last week that will remove barriers, real and perceived, to ESG investing in retirement plans governed under the Employee Retirement Income Security Act of 1974 (ERISA). Called “Prudence and Loyalty In Selecting Plan Investments and Exercising Shareholder Rights,” the new rule replaces two hastily drawn rules rushed to the finish line at the end of the Trump Administration. Those rules were widely interpreted as discouraging retirement plan fiduciaries from ..read more

End of Week Notes Why the anti-ESG campaign won’t work The massive Red Wave that threatened to swamp Democrats in the midterm elections turned out to be a trickle made possible by gerrymandering. If I may put my political science cap on for a moment, it never stood to reason that this would be a typical midterm because we are not living in normal times. We’ve never had an ongoing threat to democracy led by a former president and hundreds of his endorsed extremists on the ballot across the country. The Dobbs decision drove home the real-life implications of a conservative Supreme&nbs ..read more

Sustainability Matters Do you know the difference? One way to clear up some of the confusion surrounding environmental, social, and governance investing is to distinguish between ESG as part of an investment process and ESG as an investment product. ESG as Process Let’s start with ESG as process. Investors use ESG information and analysis in their investment processes to help them understand risks and opportunities that may be material but are not well illuminated by financial-statement-based analysis alone. Corporations have been doing the same thing. ESG is literally information ..read more

Sustainability Matters The 5 largest clean energy funds plus battery and EV funds The landmark climate legislation signed recently by President Biden is designed to spur investment in clean energy and electric vehicles. That will burnish the prospects of several exchange-traded funds that focus on those themes. They’re not identical, though. Keep reading to learn about your options. Since President Biden signed the bill into law, several major projects to build solar panels and make lithium batteries in the United States have already been announced. Beyond that, the climate bill sig ..read more

End of Week Notes Plus a trip to Bizarro ESG World https://medium.com/media/06ffc6f780cd63279c3bd682d7b3d314/href Leading off this week’s Notes is Larry Fink’s response to the “obnoxious, accusatory, misleading” anti-ESG letter sent to BlackRock by 19 Republican state attorneys general, as imagined by Fink’s self-appointed anger translator, Nell Minow: Larry Fink: Here’s Your Answer to the Despicable Letter from the GOP Attorneys General “I will begin with one key point: it takes a lot of chutzpah for a bunch of elected officials to claim — without any substantiation — that the ..read more

End of Week Notes Value-oriented ESG funds do exist. Some picks. It’s ironic that BlackRock, a chief proponent of sustainable investing, has cut back on the environmental, social, and governance exposure in its popular model portfolios. The widely used models are not ESG-only, but they have included significant allocations to iShares ESG Aware MSCI USA ETF (ESGU) and iShares ESG Aware MSCI EM ETF (ESGE). Both funds are relatively mild takes on ESG, hence the “ESG Aware” in their names, which is why BlackRock uses them in conventional models. Because of their inclusion in these model ..read more

Sustainability Matters Renewable energy funds already awash in inflows. How to position your portfolio. Democrats in Congress passed the Inflation-Reduction Act on Friday Aug. 11, 2022. The impending passage of the most significant climate legislation in U.S. history is spurring greater interest in clean energy investments. Equally important, the legislation makes it more likely that more investors will look at how to position their overall portfolios to account for climate risks and benefit from the inevitable transition to a low-carbon economy. In fact, since hearing the news that Democ ..read more

End of Week Notes Investment implications and more pushback on ESG critics On the day that Democrats in Congress are leveraging their thin majorities to pass the most significant climate legislation ever, let’s take a moment to savor it. Because beyond the specifics of this bill, its passage signals the point of no return for the federal government’s commitment to addressing the climate crisis. It may not be all we wish for, either today’s legislation or what may come in the future, but you can bet there will be more to come. The anti-climate lobby has narrowed to extremist Repu ..read more