Impact of Climate Change and Extreme Weather on Essential Services
Utilities have found themselves in the literal and metaphorical eye of the storm over the last year as hurricanes, floods and wildfires of increasing frequency and strength have wreaked damage on their assets. In late August, Storm Ida made landfall in Louisiana, USA and devastated the power grid lines. Entergy, the utility operating in Louisiana, supplying most of New Orleans, restored 90% of the supply only by mid-September, with 87,000 customers still without power.
The circular way forward could be the key to reducing food waste
Indications that a food crisis is imminent are clear. Fundamental changes in the global food system are required to address these challenges. This decade is a watershed moment for urgent efforts to close the loop, and companies and investors can play a pivotal role. Despite being closely connected to issues such as climate change and basic human rights, food waste has attracted comparatively less attention from companies, investors, and other stakeholders.
ESG Risks of Aging Pipelines for U.S. Energy Infrastructure Investors
Pipelines play a critical role in the U.S energy infrastructure transporting natural gas, crude oil, natural gas liquids, petroleum, and petrochemical products. While these pipelines play a vital role in supporting the U.S economy, investors are increasingly scrutinizing pipeline operators' long-term economic profitability and sustainability practices. A closer look into the status of pipelines reveals a particular issue that investors need to consider.
ESG Risk Exposure from COVID-19 Vaccine Transportation and Distribution
As mass vaccination against the coronavirus started, a key challenge has been to keep millions of doses of vaccines at the right temperature. An increase in temperature inside a truck or aircraft, by half a degree, for half an hour, would reportedly result in a 'defrosted' vaccine which has then to be discarded.
New Draft Disclosure Rules Change Timelines and Scope of EU Taxonomy
In recent months, a lot has been said and written about the EU Taxonomy, the green classification system of economic activities that aims to drive capital flows to sustainable investments supporting the EU’s policy goals on climate and the environment. Political, corporate, and civil society lobbying reached its peak when the EU published draft rules last December, which deviated substantially from expert recommendations. However, the latest draft delegated act with rules on Taxonomy reporting published by the European Commission on May 7th has received far less attention even though some of the proposed changes affect the practical implementation timelines as well as the scope and ambition of the regulation.
ESG Disclosure and Performance in Southeast Asia
Strategically located at the centre of Asia Pacific, with a young population of more than 675 million across 11 countries, Southeast Asia is an economic block with one of the world’s fastest GDP growth rate. In recent years, the region has been attracting the attention of global investors. At the same time, in the context of responsible investing moving from a niche activity to the mainstream, research on the environmental, social, and governance (ESG) performance of Southeast Asia companies is limited. In this article, we have a deeper look at the ESG disclosure and performance of major Southeast Asia countries, focusing on the ASEAN-6 countries (Singapore, Malaysia, Thailand, Vietnam, Indonesia, and the Philippines).
Unwritten Risks – The True Costs of Mispriced Climate Change
Research shows that Property & Casualty insurance underwriters are not accurately pricing climate risks, and US government policy and program decisions are proving to be unsustainable. In our most recent blog, Justin Cheng talks about the resulting premium pricing corrections in the wake of intensifying extreme weather events. With this trend, a significant number of US homeowners are unable to obtain property insurance while taxpayers take on the increased cost of climate risk.
Bringing Investors and Companies Together to Address the Climate Change Crisis
As Earth Day is around the corner on the 22nd of April, the Biden Administration is to convene a global climate summit. Following a historical precedent for several such events, since its inception in 1970, including signing the landmark Paris Agreement . We have seen positive developments since the Paris Agreement; societal actions to address some of the root causes of climate change have yet to suppress the negative trends . Historically, active ownership on climate change has focused on direct emissions from highly exposed sectors, such as fossil fuel and utility companies. However, the more complicated, less direct aspects of climate change have seen limited progress. Tackling such issues will see a strong need for collaboration from both countries and other key sectors, in particular, banking and finance. Banks are key to support this transformation; facilitating economic activity for positive change throughout the entire value chain is key.
Deforestation and Biodiversity Loss Highlight the Need for a Better Normal
The world is aching for a return to normality after a year (and still counting) of news bulletins being dominated by the COVID-19 pandemic; Earth Day 2021 should serve as a stark reminder that we cannot go back to business-as-usual. We must address the vast environmental challenges facing humanity, such as climate change, loss of biodiversity, extreme weather and issues related to water.
Personal Products and the New Ethics of Product Naming
Over recent years, personal product (PP) companies have faced an increasing demand for more inclusive product governance – from formulations to labels – and marketing that reflects the diversity of consumers. To grow sustainably within their communities and stay relevant for their target customers, such companies need to create value for society proactively. Some of the major players in this industry have already started paving the way for others.
Investing in Companies with Positive Momentum in ESG Risk and Economic Moat Development
In Sustainalytics’ paper, Combining ESG Risk and Economic Moat,[i] we examined the effect of combining the two metrics, showcasing the benefits of higher returns and lower downside risk. More specifically, investing in companies with negligible/low ESG risk and wide economic moats was advantageous for creating alpha over the past four years.
Five Commonly Asked Questions About Sustainalytics’ Approach to Impact
We launched our new Impact Metrics product to support investors’ growing need for more robust data that can be used to demonstrate how ESG-focused strategies can deliver real-world social and environmental outcomes. Since the launch, I have connected with many enthusiastic institutional investors eager to make sense of the rapidly evolving world of impact, excited to dive into impact data, and cautiously optimistic about supporting their clients’ Sustainable Development Goal (SDG) and impact needs.
Corporate ESG in Focus: An Overview of ESG and its Impact on Companies
With climate change and social justice concerns increasingly dominating headlines, environmental, social, and corporate governance (ESG) factors are no longer treated as trivial issues confined to a company’s CSR department. ESG is now central to a company’s financial performance and reputation.
10 for 2021: Investing in the Circular Economy
This report aims to support investors interested in gauging environmental, social and governance (ESG) risks and opportunities in the global food value chain. We survey key subindustries – from agrochemicals, agriculture and aquaculture to packaged food, food retail and restaurants – in search of solutions that may support the principles of the circular economy (CE). These principles include minimizing waste and pollution, extending the use-phase of products and ecosystem regeneration. Some of the key insights found in the report are:
Lessons Learned from 926 Engagement Meetings in Emerging Markets
When Sustainalytics (GES) initiated the Emerging Markets (EM) Engagement program as a pilot project in 2009, the scale, scope and impact were undetermined factors. Based on the successful execution of the program methodology in the African and Middle Eastern regions during the pilot stage, the full program launched in 2010 to cover all major emerging markets. After the project close in July 2020, the program accounts for 926 meetings with companies in emerging markets.
Is Natural Gas a Cleaner Energy Solution?
While Oil and Gas (O&G) operations are responsible for roughly 15 percent of global energy-related GHG emissions, some energy companies have pledged the role of natural gas (NG) as a transitional fuel. At the same time, NG energy use is increasing globally, and shale-gas extraction is booming at an unprecedented rate. One factor that is often overlooked is the methane emissions across the NG value chain.
Combining ESG Risk and Economic Moat
In this report, we look at the potential synergies between Sustainalytics’ ESG Risk Ratings and Morningstar’s Economic Moat Rating. As a part of our research, we constructed a back-testable investment strategy and portfolio by segmenting stocks with low ESG risk and a wide moat. While both metrics worked independently, they performed exceptionally well in combination.
Corporate ESG Ratings: How businesses are leveraging their ESG Risk Ratings
Good environmental, social and governance (ESG) performance is not just about meeting investor demands. From revenue generation and raising capital to talent acquisition and employee retention, strong corporate ESG performance can influence key aspects of a company’s operations.