September 14 2020
By Hank Boerner – Chair & Chief Strategist, G&A Institute
This has been a strange summer in the northern climes, as the corporate sector and capital markets players meet the challenges of the Big Three crises — Corona virus pandemic, economic downturn, and widespread civil protests.
In times of crises (and as we have at least three major crisis situations occurring all at once to deal with this summer) certain actions may take a back seat. Not so with forward movement of corporate sustainability and ESG/sustainable investing in summer 2020.
We bring you brief updates on some of these trends that continue to shape the interactions of companies and their providers of capital.
First –– worldwide, ESG/sustainable investing index funds reach a record of US$250 billion, with the crises appearing to accelerate investors’ moves into these passive and actively managed investment instruments.
- Before COVID-19, sustainability funds were already experiencing major growth, with assets doubling over the past three years.
- Actively-managed ESG mutual funds continue to attract the lion’s share of dollars and represent a much larger portion of the sustainable investing landscape. Combined inflows into both active and passive ESG-focused funds reached $71.1 billion during the second quarter — pushing global AUM above the $1 trillion mark for the first time.
- In the USA, sustainable index funds still make up less than 1% of the market – lots of room for growth here!
- According to a recent survey conducted by Morgan Stanley’s Institute for Sustainable Investing, nearly 95% of Millennials are interested in sustainable investing, while 75% believe that their investment decisions could impact climate change policy.
On the corporate sustainability side, Goldman Sachs shares the view that oil & gas enterprises could lead the way into a lower-carbon economy. Perhaps. Will take leadership and action – very soon.
The sector’s leading equities players limped in value this summer and there are many challenges still ahead – but, says a Goldman Sachs report, a new European Union rule in 2021 could accelerate the oil & gas companies’ shift into more sustainable activities. The industry leaders can leverage their brands and trading capabilities to acquire power customers, thinks GS analysts. And exert leadership.
And the “octopus” that many retailers see encircling their businesses, Amazon, is pushing ahead with The Climate Pledge (founded by Amazon and Global Optimism in September 2019) with an important commitment: meeting the Paris Agreement goals a decade early!
Mercedes-Benz is the latest signatory to the pledge. And look at what these moves can mean in practical business terms: Amazon will add 1,800 electric Mercedes-Benz vans to its delivery fleet in Europe in 2020! Other big-name corporate signatories include Verizon, Infosys, and Reckitt Benckiser.
Not quite a quiet summer in the corporate sector and capital markets, we would say!
On to Fall now in the Northern climes and a most welcome Spring season in the Southern Hemisphere, 2020 into 2021.
These are the Top Stories picks for you this week – and there are important items in the categories as well. Happy Welcome to Autumn and Spring, wherever you are from the G&A Institute team.
- ESG Index Funds Hit $250 Billion as Pandemic Accelerates Impact Investing Boom (Source: CNBC)
- Unloved, Dirty Oil Companies Could Lead Low-Carbon Transformation, New Goldman Report Says (Source: Market Watch)
- Amazon Makes Waves in Sustainability as Mercedes-Benz Signs the ‘Climate Pledge’ (Source: Forbes)