This Week in ESG and Impact Investing

The Responsible Business Summit West will challenge 250+ CEOs, sustainability leaders, Investors, Government representatives and NGOs to show how they’re going to leverage new technologies and investments to deliver the blueprint for the future economy – over two days you will learn how to move from dialogue to action on the key opportunities that lie ahead. Grasping the chance presented whilst simultaneously responding to investor demand to be more transparent on ESG related risks is no straightforward task.  Keynote speakers include: o       Assistant Secretary-General, UN Environment o    President & CEO, Oxfam America o    President & General Counsel, DSM North America o    President, CDP North America o    President & CEO, Fairtrade USA o    Executive Vice President and Group President, Sempra Energy o    Chief Environment Officer, Microsoft o    Chi...

On July 9, the IRS held the second hearing on Qualified Opportunity Funds following the second tranche of proposed guidance on Opportunity Zones issued on April 17. The first hearing in February followed the initial regulation issued on October 19. The panelists of Internal Revenue Service and Department of the Treasury employees asked speakers to discuss problems and examples of possible solutions that can help them clarify the regulation. The panel emphasized that they are governed by the language within Opportunity Zone legislation. They are not legislatures themselves. They stressed that their job is to work within the guidelines of the laws congress passes.  The 19 speakers each discussed what they thought would help improve the legislation. The initial hearing covered an array of issues and clarifications for the Treasury Department to address. During this second hearing, speakers had a narrower list of issues to address, largely technical and tax related.  This ...

On June 18, Facebook released it’s white paper on the new digital currency, Libra.   The news led David Marcus, Chief Executive Officer of Calibra, to appear before the House Financial Services committee on July 17 - a day after appearing before the Senate Banking Committee. House Financial Services Committee members questioned whether Facebook would have overwhelming control over   the Libra Association’s 27 other members and if they were to be trusted with 2.7 billion users’ financial data, given past privacy violations.   Facebook’s trustworthiness has been in question since the 2016 Cambridge Analytica data scandal.   Most recently, charges brought in March by the Department of Housing and Development concerning Facebook's alleged violations the Fair Housing Act have not helped the firm gain favor with the public. Last month, Facebook was removed from the S&P ESG 500 index because of privacy concerns and a lack of transparency as to why cer...

Last week the House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets held a hearing on “Building a Sustainable and Competitive Economy: An Examination of Proposals to Improve Environmental, Social, and Governance Disclosures.” Several pieces of legislation, or bills, have been proposed, (but not filed yet) in the US House of Representatives regarding Environmental, Social and Governance (ESG) reporting by large corporations. ● HR ___: ESG Disclosure Simplification Act of 2019 (Rep. Vargas) ● HR ___: Shareholder Protection Act of 2019 ● HR ___: Corporate Human Rights Risk Assessment, Prevention, and Mitigation Act of 2019 ● HR ___: To require issuers required to file an annual or quarterly report under the Securities Exchange Act of 1934 to disclose the total amount of corporate tax such issuer paid in the period covered by the report, and for other purposes ● HR ___: Climate Risk Disclosure Act of 2019 (Rep. Casten) The US...

Last week, Chairman of the Federal Reserve, Jerome H. Powell appeared before the House of Representatives Committee on Financial Services to present the Semiannual Monetary Policy Report. Chairman Powell opened his remarks by stating that “the economy performed reasonably well over the first half of 2019 and the current expansion is now in its 11 th year.” Inflation has run below the FOMC 2% objective, trade tensions and concerns about global growth have weighed on economic activity." The Current Economic Situation Labor Market: job gains remain healthy, with the unemployment rate falling to 3.7% in June. Employers are increasingly willing to hire and train workers with fewer skills.   Unemployment for African Americans and Hispanics remain well above the rates of whites and Asians. Urban employment rates are higher than those in rural communities. Labour force participation by those in their prime working years is lower in the US than in comparable nations. G...

The Federal Reserve Act (FRA) requires the Chairman of the Federal Reserve System  to testify before the House Financial Services Committee and the Senate Banking Committee twice a year, in February and July, on how the Board handles monetary policy and its observations on economic developments. In keeping with that requirement, the current Chairman of the Federal Reserve, Jerome Powell, testified before the House on July 10th. He indicated as follows: Economic activity increased at a solid pace in the first part of 2019. The labor market has continued to strengthen: unemployment fell from 3.9% (Dec) to 3.6% (May), wage gains remained moderate.  Inflation has been running below the Federal Open Market Committee’s ( FOMC ) longer- run objective of 2 percent.  In June, the FOMC judged that current and prospective economic conditions called for maintaining the target range for the federal funds rate at 2 1⁄4 to 2 1⁄2 percent.  Inflation: Consumer Price I...

The 2017 Tax Cuts and Jobs Act (TCJA) provided new tax incentives for investments made through qualified Opportunity Funds in targeted communities around the United States. These tax advantaged investment areas, known as Opportunity Zones (OZs), were authorized to promote economic development in 8700 disadvantaged communities, selected by state governors and certified by the United States Treasury Department. The rationale behind OZs is simple: giving tax breaks to investors will spur economic growth in impoverished communities. However, it is important to consider the context in which this program was created. The TCJA was passed by a Republican House, Senate, and President. OZs are not a new idea and they have been tried and tested by conservatives for decades, as in Margaret Thatcher’s “enterprise zones.” Versions of OZs were then adopted in the United States at the state level, ultimately culminating in the 2017 TCJA. However, as uplifting as the OZ program seems on its face, ...

Facebook’s recently announced cryptocurrency pilot, Libra, claims it will “transform the global economy.” The company hopes that anyone would be able to send Libra through platforms like Facebook messenger and WhatsApp to act as an intermediary for transferring traditional currencies. The ultimate goal is to have this currency accepted as a (general) form of payment. And other financial services will be built on top of its blockchain-based network, called the Libra Blockchain, a “proof of authority" permissioned blockchain system. See:  https://www.americanbanker.com/opinion/regulating-libras-a-waste-of-time

The House Financial Services Committee Subcommittee on Diversity and Inclusion held a hearing on Tuesday June 25, 2019 to explore the challenges minority- and women- owned (MWO) firms face competing in the asset management industry. According to Bella Research Group’s Diverse Asset Management Project Firm Assessment, MWO firms account for approximately 8.6% of all asset management firms but only manage 1.1% of all assets under management, $785 billion out of $71.4 trillion, and are underrepresented as managers in every asset class but over-represented in the top quartile of fund performance. False assumptions harm opportunities for MWO firms. Bella’s concluded that compared to peers who manage similar asset classes, 25% of women-owned and 28% of minority-owned asset management firms fall in the top quartile on average for fund performance. Studies have shown that minority and women-led investment firms invest in more diverse entrepreneurs and businesses, enriching...