Showing posts with label Blackrock. Show all posts
Showing posts with label Blackrock. Show all posts

Tuesday, June 2, 2020

The Intersection of ESG & Covid-19, Lana Feteiha, Impact Investing Intern

COVID-19 has forever altered standard business practices.

Prior to recent events, Environmental, Social, and Governance efforts have been an afterthought. But the global pandemic demonstrates the fundamental role that ESG plays in corporate investments. The presentation focused on three main points: corporations’ social responses and disclosures to stakeholders regarding ESG factors, how investors incorporate ESG factors into business decisions, and how this crisis will affect what happens next.

The first speaker, Martin Whittaker, is the CEO of Just Capital; a non-profit organization that strives to create a more just market in America through the collection of data. Whittaker discussed the importance of corporate social responses in today’s climate by addressing the Environment and Social aspects of the crisis. COVID-19 has resulted in hazardous working conditions, so companies should be prioritizing the wellbeing of their employees. According to Whittaker, the proper treatment of workers is pivotal for investors. Therefore, companies that protect the health and wellbeing of their employees are more resilient. Whittaker applauded the corporate social response of some, stating that the humanity of business has shone through during the crisis, as companies continue to support stakeholders as we slowly start to reopen.

The head of International and Corporate Strategy for BlackRock, Mark Wiedman, spoke next. He detailed the importance of implementing sustainable business strategies, citing that this year, 90% of them have outperformed their conventional counterparts. This statistic is significant because it notes a distinct correlation between ESG efforts and a company’s success. Moving forward, Wiedman believes that corporate strategy, risk management, and human management will be the long-term focus of businesses. Therefore, improved and accurate disclosure of ESG efforts should be a priority.

Katherine Collins, the head of Sustainable Investing at Putnam Investments, expanded on the importance of ESG reporting and data. She acknowledged that the improvement of data has allowed companies to provide more real time data. However, there is still a gap between businesses reporting ESG, and businesses that are not. This gap not only exists because companies are at different points in making their operations sustainable, but also because some companies are disclosing irrelevant information. For the purpose of investing, Collins recommended that ESG reports be tailored to each corporations’ main function. In doing so, ESG reports will more accurately reflect on the efforts of each individual business. This is important because companies shifting to sustainable outlines will attract larger groups of investors. As we shift away from crisis mode, Collins recommends financing sustainable practices and decision making as a long-term solution. Although these efforts are not typically noticeable on a surface level, these types of investments payoff overtime.

The last speaker was John Goldstein, the head of the Sustainable Finance Group for Goldman Sachs. He spoke about ESG as a whole, claiming that some may get caught up in which letter of the acronym is more important. Goldstein sets the record straight by declaring Environmental, Social, and Governance of equal significance since all three components determine the financial performance of a business. He predicts that the key focus of sustainability will be strategic clarity, data, and making information accessible and relevant.

The COVID-19 crisis brought the foundational cracks in certain corporations to the forefront,
emphasizing the importance of ascertaining ESG requirements in order to remain resilient.

Friday, February 23, 2018

If you own these mutual funds and ETFs, you own guns...

CNBC recently noted that:

"Major funds invested in gun stocks include the Vanguard Total Stock Market ETF, iShares Russell 2000 ETF and Schwab U.S. Broad Market ETF."

They went on to state that:

"Last week's mass killing of 17 people at a public high school in Parkland, Florida, has caused some major pension funds and institutions to investigate the extent of their investments in gun makers.

Some of Wall Street's largest exchange-traded funds are currently invested in American Outdoor Brands — formerly Smith & Wesson — and Sturm, Ruger & Co., designers, makers and retailers of firearms for domestic buyers.

Fierce scrutiny has pushed New Jersey state lawmakers to restrict the state's public pensions from investing in the stocks of gun manufacturers, while the world's largest asset manager, BlackRock, said it would 'engage' with (gun) companies on their response to the shooting." 

We have come to expect large investment funds, like Blackrock, to issue self serving statements about their ownership of gun manufacturers. This is the "we are investors, not statesmen or policy makers" claim. It is false. Blackrock and others are deeply involved in every policy issue of consequence, from debates on taxing carried interest to discussions concerning financial reform. They are involved in the gun control debate, too, through their PAC and campaign contributions, as we stated in 2012, following the Newtown shooting.

You will recall that the CEO of Blackrock recently wrote that:

"Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders. It will succumb to short-term pressures to distribute earnings, and, in the process, sacrifice investments in employee development, innovation, and capital expenditures that are necessary for long-term growth."

It looks like Mr. Fink and company may be succumbing to the very pressure they warn others about. (Far be it for me to give any more free advice to Blackrock, a firm we helped when we developed the first targeted Mortgage-backed Security pool backed by loans from Black financial institutions and Blackrock put our investments in a portfolio they managed for Washington Gas Light.) Or, it may be that your perspective depends upon just how true you are to your purpose: "Many faith based pension funds and other socially responsible investors do not invest in firms like American Outdoor Brands and Sturm, Ruger & Co. specifically because they do not want to profit from human bloodshed. Blackrock is empowered to make the same choice, but wants to "engage" instead.

Of course.... 

Their children may not face the same risks yours do.