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Daily ESG Briefing: US investors more wary of ESG’s ‘performance merits’, says study

The latest developments in sustainable finance

Roughly a quarter of US investors expressed “skepticism about ESG’s performance merits” during a poll by RBC Global Asset Management. “The majority of institutional investors in Canada (70%), Europe (72%) and Asia (71%) believe adopting ESG factors can help generate long-term sustainable alpha, while investors in the US are not as convinced, with nearly 60% saying they don’t believe or are not sure,” concluded RBC. “When asked about the ability of ESG integrated portfolios to mitigate risk, just over half (53%) of US investors believe it can help, while investors in Canada (87%), Europe (85%) and Asia (65%) are much more convinced." The study also found that corruption was the number one ESG concern for investors, followed by climate change and shareholder rights. The pandemic has also prompted investors to be more aware of supply chain risk, according to the Responsible Investment Survey.  

Tech giant IBM has partnered with The Climate Service to scale up climate risk analysis software. Climanomics has been designed by The Climate Service to “meet growing demands from financial institutions and corporations seeking to measure and quantify risks associated with climate change”. The firm said that the growing adoption of the Taskforce on Climate-related Financial Disclosures’ recommendations meant demand for the platform was increasing sharply. 

A study of 54 private markets investors showed that those that have adopted ESG considerations have begun to reap the rewards following the economic shocks of 2020, with stronger value creation as a result. Sustainability consultancy firm ERM’s Eyes on the prize: Unlocking the ESG premium in private markets said 53% of the participants admitted don’t use ESG frameworks like the UN Sustainable Development Goals or the Taskforce on Climate-related Financial Disclosures to identify opportunities at a tactical level. 

The French Sustainable Investment Forum’s working group has published a booklet on the integration of ESG-climate issues into strategic asset allocation decisions. The paper seeks to identify the motivations, methodological issues and challenges for burgeoning attempts to introduce ESG considerations into strategic asset allocation. Link: 

Most of the world’s largest food and beverage companies are failing to address forced labour in their supply chains, says campaign group KnowTheChain, which this week published its 2020 Food & Beverage Benchmark Findings Report. In the report, it says that the world’s four largest meat companies – WH Group, Tyson, Hormel and JBS – are notably poor performers when it comes to monitoring and transparency on the topic. Tyson and JBS, it said, “have continually worsened since measurement started in 2016”. Tesco overtook Unilever as the top scorer in the study. Both were praised for speeding up payments to small suppliers during the pandemic and regularly engaging with supply chain workers’ unions. This is KnowTheChain’s third benchmark report assessing the world’s 43 largest food and beverage companies against the International Labor Organisation’s core labour standards.

Clearer definitions, better data and more expertise are all needed to help UK pension funds more fully integrate climate change considerations into investments and strategies, according to the country’s Pensions and Lifetime Savings Association. The trade association has provided these recommendations, among others, following its virtual roundtable in the summer, through which it engaged with 60 funds directly and hundreds indirectly about the challenges and appetite for climate aware investing.