The Top Stories in ESG this week are about the annual global climate meetings in Egypt – COP 27 (the Conference of Parties), convened by the United Nations. These meetings of about 200 sovereign nation’s leaders and other influentials began in Rio de Janeiro in 1992 (President George H.W. Bush was in his last year in office). The position of the United States has seesawed over the years in terms of exerting leadership or not. The welcome news for 2022 is that the U.S. is back at the table.
The United States of America is “in” the world and “of” the world. Where do we stand on global issues – where should we stand on policies and practices (and what should the U.S. “stand for”)?
As the COP 27 gathering nears (the Conference on Parties / U.N. climate talks), what are the concerns of the citizens of the U.S. – and what are the concerns of citizens of other nations about the U.S.? Most important, what should our top line domestic concerns be so that the U.S. is well positioned to continue to project influence abroad?
We were thinking the other day about the enormous challenges posed by climate change to our society -- and the resulting challenges of meeting ambitious goals being set by governments, the private sector, and investors to achieve a "net zero economy” by mid-century. That is not far away. And the pumping of millions of gallons of oil every day to meet the insatiable demands of society is not helping.
Is the SEC moving forward on expanding corporate sustainability disclosure rules, or standing still with no real change to existing rules, or perhaps moving backwards on the initiative to expand ESG information for investors? Any day now we may find out when the proposed Climate Disclosure Rule’s fate is announced. Will that be before or after the mid-terms? Stay Tuned.
The showdown continues: on one side we now see attorney generals in 19 states putting pressure on asset management firms that embrace “sustainable investment” or “ESG” policies that influence the various states’ public employee pension systems. The AGs claim that “an emerging trend of political initiatives [that address climate change] sacrifice their states’ pension plans from accessing “high quality” investments. (Read: the equities and fixed income securities of fossil fuel companies.)
Consider the influence of the public sector employee retirement systems in the capital markets: the almost 6,000 pension plans (of states, cities, municipalities, etc.) cover about 15 million workers and families and manage about $4.5 trillion in assets of various classes.
A comprehensive legislative proposal designed to address climate change challenges and threats to the U.S. posed by global warming was passed by the U.S. Senate on August 7. The bill, called the Inflation Reduction Act, is awaiting a vote in the House of Representatives and an expected signing into law by President Biden. The Inflation Reduction Act also contains provisions for additional spending on healthcare, infrastructure, job creation, and vocational training for workers.
Many companies are setting ambitious “Net Zero” GHG emissions goals to be reached by the Paris Climate Accord’s goal of 2050 (and some setting their goals even earlier). Are these widely-promoted goals realistic for the corporate sector to achieve in such a short timeframe?
What is it about an investable product – a mutual fund, an exchange traded fund (ETF) –that would qualify it as an “ESG,” “green” or “sustainable” investment offering to retail or institutional investors? That’s a question getting much more attention recently.
No regulatory agency’s draft rule to address important issues can be expected to sail through and be warmly welcomed by all involved stakeholders. In March, the Securities and Exchange Commission released its draft rule for corporations to disclose climate-related information such as Greenhouse Gas Emissions (GHG). Some pushback by opponents of the rule is expected.