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Top Recent ESG Papers: Dec 2020

ESG topics book-end an eventful year

In this latest Savvy Investor blog, we've included some top recent environmental, social, and governance (ESG) related papers, most of which just missed the deadline for this year's awards.

In case you missed it, the winning and commended papers for all 13 categories in the 2020 Savvy Investor Awards were announced on December 7th. The link that appears below the "Savvy Investor Awards" sub-heading in the paper list takes you to the Best ESG Paper category where you can view the winning ESG paper by CFA Institute, plus other high quality pieces.

 

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FEATURED PAPERS


AIQ: The climate change edition (Aviva Investors, 2020)

For compliance reasons, this paper is only accessible in certain geographies

Aviva's AIQ magazine tackles some of the big issues associated with climate change, including changing land-use patterns and how big data might be able to help in meeting many of the challenges the world now faces.

New EU Sustainable Finance Regulation – Common FAQs (Candriam, Dec 2020)

In a series of briefing notes, Candriam informs investors of the wave of EU regulation concerning sustainable investing that is coming their way.

Water Disruption: Investment risk from multiple angles (Franklin Templeton)

For compliance reasons, this paper is only accessible in the EMEA region

Franklin Templeton argues that investors should be taking account of water risk now rather than in 2050, believing that information gaps currently exist in the areas of pricing, risk and markets.

Sizing the Green Economy: Green revenues and the EU taxonomy (FTSE Russell)

This paper by FTSE Russell explores the rationale for green taxonomies, and explains the differences between the EU Taxonomy and the FTSE Russell Green Revenues Classification. It suggests that the data model used in the Green Revenues approach may potentially be useful as a stepping stone to compliance with the full EU taxonomy regulation.

A Transformational Framework for Water Risk (DWS, 2020)

DWS highlights the significant economic opportunity (spending estimated to be $670 billion p.a. until 2030) that exists if the UN SDGs associated with water are to be met. As one of six systemic risks identified by the World Economic Forum, turning it into a sustainable opportunity is the challenge.

New Order: Navigating the energy transition (Federated Hermes, 2020)

For compliance reasons, this paper is only accessible in certain geographies

Federated Hermes explores ways in which oil and gas companies plan for survival as the world moves towards low-carbon technologies and away from fossil fuels. They also note that elements of the energy sector have been galvanized into action and are further ahead in tackling the existential crisis than many might assume.

The Aspirational Case for Integrated Energy (Wells Fargo AM, 2020)

For compliance reasons, this paper is only accessible in certain geographies

In this contrarian piece from Wells Fargo AM, the authors argue that the US integrated oil sector deserves another look after its market cap has fallen significantly in recent years. They suggest that the industry may not end up being a collection of stranded assets.


SAVVY INVESTOR AWARDS


Best ESG Papers of 2020 (Savvy Investor)

The winner of the Savvy Awards Best ESG paper in 2020 was CFA Institute. For more information about their paper as well as the other Highly Commended papers recognised in the Awards, click on the link above.


OTHER RECENT CONTENT


Facts and Fantasies about the Green Bond Premium (Amundi, 2020)

For compliance reasons, this paper is NOT accessible in the United States

Amundi looks at the huge imbalance that exists in the green bond market between limited supply and the insatiable demand for green paper by institutional investors. The paper argues that any green yield premium or 'greenium' is likely to be a market anomaly, given that there is no real difference between a conventional or green bond.

Video: The need to integrate ESG into the investment process (Robeco, 2020)

Robeco's second digital forum highlighted that the integration of ESG information is far more than just a simple overlay. It should become structurally embedded in all aspects of the investment process including portfolio construction.

A Closer Look at SRI Investing (Metlife Investment Management, 2020)

MIM notes the continuing interest in socially responsible investing, driven mainly by so-called end-user stakeholders. The paper authors see significant interest in the subject from institutional investors (often in the form of passive investment) while increasing levels of regulatory scrutiny will continue to drive capital allocation.

ESG in Strategic Asset Allocation: Practical implementation (DWS, 2020)

DWS investigates the lack of research into the impact of ESG research at both a strategic asset allocation level and at a total portfolio level. They address the potential impact of ESG integration on risk-adjusted returns and suggest ways to best minimise it.

EURO STOXX 50 ESG Index: Liquidity and tradability characteristics (Qontigo)

In this paper, Qontigo evaluates the EURO STOXX 50 ESG Index’s liquidity and tradability characteristics when compared to its benchmark. It also estimates the execution costs of switching from the benchmark to the index, given the recent introduction of derivatives on the EURO STOXX 50 ESG Index.

ESG Investing: Practices, progress and challenges (OECD, 2020)

This OECD report conducts quantitative analysis across a range of concepts relating to ESG investing. The authors acknowledge the wide range of metrics, methodologies and approaches used by ESG investors. While these remain valid, in the main, they do not lead to anything consistently observable across several high-performing funds.