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Top Recent ESG Content: Dec 2021

ESG and Climate Indexation, Renewables and Other ESG related Topics

As the money flow continues unabated into ESG and climate change-related strategies and potential solutions, commentators continue to offer new insights and solutions designed to help investors better manage the potential challenges associated with climate transition, net-zero and the demand for more responsible investing.

Amid the plethora of recent ESG content, Wellington Management considers the evolving role of alternatives and how climate awareness needs to be integrated into capital market assumptions, and how these may impinge on future asset allocations. Several commentators look at how indices might be designed or adapted to better serve investors with ESG or climate-awareness requirements. The role of renewable sources of energy in the early transition phase and the opportunities that may exist in several emerging market renewable markets is explored in some detail. Finally, an interesting academic study looks at returns generated by impact investing funds.   

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Investors and Corporate Carbon Footprints: A study (EDHEC-Risk Institute, 2021)

EDHEC-Risk Institute looks at the role and impact institutional shareholder engagement and voting patterns have had on corporate carbon emissions in 68 countries between 2007-2018.

Applying ESG Factors to Government Bond Indices (FTSE Russell, Nov 2021)

FTSE Russell’s paper examines the issues involved in integrating an ESG investment approach to global sovereign portfolios. Trade-offs must be considered and addressed between a number of components before investors are likely to achieve significant ESG improvements relative to the relevant benchmark.

The Unintended Consequences of a Net-Zero Portfolio (M&G Investments, 2021)

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

M&G suggests that investors who want to play a more progressive role in the transition to a low carbon economy need to consider the decarbonisation challenges faced by every asset class in the portfolio. Merely divesting carbon-intensive assets is not enough.

Changing Patterns in Alternatives and Climate (Wellington Management, Nov 2021)

Wellington Management's Multi-Asset Strategist Adam Berger looks at the evolving role of alternative assets in portfolios and how weather patterns and climate events are raising issues that affect many aspects of investing. Capital market assumptions will need to factor in climate risk exposure, which may affect strategic asset allocation.

Can Taking a Big Picture View of ESG Bypass ESG Data Pitfalls? (Intech, 2021)

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

Intech’s eBook examines and frames current ESG challenges with data and suggests ways to counter and mitigate risks from imperfect data. An examination of ESG data from a leading provider offers insights into how investors can seek more reliable ESG traits leading to more dependable outcomes at a portfolio level.

A New World of Renewables: Part I (BlackRock, 2021)

For compliance reasons, this paper is only accessible in the United States and Canada

In the first part of this two-part paper, BlackRock assesses the context, opportunities, and priorities in emerging markets for renewable power investments.

A New World of Renewables: Part II (BlackRock, 2021)

For compliance reasons, this paper is only accessible in the United States and Canada

In the second instalment of this two-part paper, BlackRock takes a closer look at emerging market trends and opportunities.

Responsible Investment Survey: ESG in a pandemic world (RBC GAM, 2021)

RBC GAM’s Responsible Investment Survey highlights key trends among the investment community in their attitude towards ESG investing. More investors place a greater emphasis on ESG considerations post Covid-19, with almost all European investors integrating ESG into their investment approach. U.S. investors continue to be more sceptical, with just 64% of respondents using an ESG-led approach.

ESG Indexing with Exclusions (PGIM Quantitative Solutions, Dec 2021)

PGIM Quantitative Solutions suggests that exclusion criteria – using as example the exclusion of energy stocks – can be incorporated into an ESG Index solution which potentially demonstrate not only improved ESG metrics but also improved performance and risk characteristics when referenced against a standard index benchmark.

Transition to Net Zero with S&P PACT Indices (S&P Dow Jones Indices, Dec 2021)

S&P DJI update their paper on the Paris Aligned Climate Transition indices, suggesting that they might help providers of investment products not only make the transition to a 1.5°C world, but achieve other climate related objectives, whilst using an open index solution.

The Risk and Return of Impact Investing Funds (2021)

In this paper the authors offer insights and analysis into both impact investing funds and those funds with dual financial and social goals. They suggest that when market risk is accounted for, these types of funds underperform the wider market, but are comparable in performance to many private market funds.

The opportunities in LatAm renewables (PGIM Fixed Income blog, Nov 2021)

PGIM Fixed Income investigates the opportunities available to bond investors in the solar and onshore wind renewables markets of South America.

The Impact of Climate Change on Investors (Society of Actuaries, 2021)

This Society of Actuaries paper looks at the impacts of climate change that matter to investors, and the risks that they might face. Insurance companies face increasing scrutiny as potential climate gatekeepers. However, while significant risks are identified, they also see opportunities in infrastructure and services that may be part of a long-term solution.

Renewables: Analysis and forecast to 2026 (IEA, 2021)

This IEA paper contains both historic data and forecasts for renewable electricity capacity and power generation. The paper also includes forecasts for biofuel consumption and production within the transport sector.