ESG

Asset managers expressing more concern over climate change risk

Do hedge fund strategies lend themselves to ESG?

Putting the Trump Executive Order on ESG Into Perspective for ERISA Fiduciaries

Much was made of the President’s April 10th Executive Order that directed the Secretary of Labor Alex Acosta to re-examine the DOL’s guidance on proxy voting. The Executive Order was focused on energy production, so a reasonable inference is that the DOL could tighten the screws on how ERISA fiduciaries engage in proxy voting and other forms of shareholder engagement when taking into account ESG risks. Our initial description and analysis of the Executive Order can be found here. Today, Pensions & Investments published an op-ed of mine, which seeks to put the Executive Order into context for ERISA fiduciaries, particularly those who are taking ESG factors into account when they vote proxies on behalf of plans. I note, for instance, that adding a more rigorous test for including ESG factors into proxy voting decisions “could not be so onerous as to make divestment preferable to engagement, as that would seem to undermine the executive order’s very purpose.”

The benefits of shareholder engagement can be captured, but will they be near-term enough to address DOL concerns?

According to the Wall Street Journal, “there are signs that companies are becoming more responsive to investor demands before annual meetings, especially as consumers engage more on environmental and social topics.” As an example of this development, the article points to the recent decision by Mondelez International Inc. to have all of its Oreo cookie wrappers recyclable by 2025. Though the Mondelez decision is the fruits of many years of discussions, the article acknowledges that “[i]t is difficult to measure the effect of closed-door conversations between shareholders and companies.” This is the tension: even with company boards showing greater receptivity to engagement, how does one gauge measurable outcomes of these meetings? This conundrum will probably surface with likely new guidance from the Department of Labor on proxy voting and shareholder engagement this year. One should expect the guidance will call for a greater articulation of the costs spent on these activities, as well as some indicator that any such engagement is in the best interests of the retirement plan investor in light of those costs.

DC plan sponsors and consultants remain wary of ESG funds in lineups

ESG from a Fiduciary Perspective

ESG from a Fiduciary Perspective – Click to view portfolio

“We simply don’t see ESG going away anytime soon”

PLANADVISER, in a recent article entitled, The Best Case for ESG Under ERISA Is Long-Term,” highlighted our recent analysis that says that we think ESG issues will confront fiduciaries for the long term and that terminology of the myriad ESG factors remains a challenge. We also note that ESG has evolved and “is much more driven by data linking one or more ESG factors and investment performance—an ESG factor can now be a material risk.”

 

Jackson calls for greater disclosure of index fund voting patterns

Underpricing of climate change risk

Potential effect of this week’s shareholder engagement Executive Order