Archiv der Kategorie: Voting

Engagement washing is illustrated with a money laundering wash maschine with a picture from mohamed hassan from pixabay

No engagement-washing! Opinion-Post #207

Engagement-washing as a term, according to my research, was first used by Kunal Desai in an interesting study in early 2022 (see Active-Engagement-thought-piece-final-2.pdf (gibam.com)). Engagement-washing means pretending that shareholder engagement can create a significant positive real-world impact when it probably can’t. That is different from impact-washing which typically is used to describe overambitious product marketing claims to make the world better.

Impact investing and engagement-washing

Impact investing is clearly on the rise. With impact investing, investors want to improve the world through their investments in equity capital or through credits. Impact investing with secondary-market listed equities or bonds is especially difficult. With those products, one security holder buys the security from another one. With such a transaction, issuers of the securities do not receive any additional funds. Therefore, providers of listed products which want to create impact typically use shareholder voting and shareholder engagement to change the issuers of the securities they are invested in.

Limitation of shareholder voting

Shareholder voting is typically only possible at annual shareholder meetings. Votes can only be used regarding the proposals on the agenda. In most cases, corporate management proposals are supported by the majority of votes. Investors can try to put own proposals on the agenda, but even the largest shareholders alone typically do not have enough votes to get them through.

Shareholder (or bondholder) engagement can be exercised at any time and regarding every topic. If investors can convince the top management of companies to adopt their proposals, they may have impact.

So far, so good. But the reality may not be that simple (data see Kunal Desais paper which refers to ESG Shareholder Engagement and Downside Risk by Andreas G. F. Hoepner, Ioannis Oikonomou, Zacharias Sautner, Laura T. Starks, Xiaoyan Zhou :: SSRN):

7 limitations of ecological and social shareholder engagement

  1. Although engagement becomes more popular, the majority of investors most likely does not engage at all.
  2. Even if investor engage, engagements typically are undertaken only for a minority of investments. That is not surprising, because most institutional investors own very many securities and only have limited resources for engagement.
  3. The majority of engagements involves only one interaction with the targeted companies. Since changes at companies typically take some time, one interaction does not seem enough to change much.
  4. Governance topics typically dominate engagements whereas impact-relevant environmental and social topics are the minority of topics addressed during engagements.
  5. ESG-ratings cover dozens if not hundreds of topics. Engagement typically only focus on one or very few topics. Even very well managed companies have many and sometimes also huge improvement potential in several social and ecological issues. The typical share of actual shareholder engagement topics compared to potentially relevant social and ecological engagement topics therefore is very low.
  6. It is very unclear how many engagements are successful since so far there is no good system to measure engagement success. If anything, shareholders measure engagement activity and not success. Often, marketing only repeats the same case study of a successful corporate engagement over and over. Shareholders for Change (see SfC-ENGAGEMENT-Report2022-1.pdf (shareholdersforchange.eu) page 6) proposes an evaluation scheme but it does not allow to quantity the aggregate success of shareholder engagements.
  7. Mostly, companies do not state clearly what the consequences are, when their engagements are not successful. I assume that there are no divestments or even reductions in investments after most unsuccessful engagements. The reason is the low openness to divestments and benchmark deviations of institutional investors. Most try to stay very close to their selected benchmarks, even though divestments typically would reduce their portfolio diversification only marginally.

Conclusion: No engagement-washing but investing as good as you can

Conclusion: Social and ecological shareholder engagement is the most important tool to create impact with listed companies. But investors should not pretend to be able to significantly change the engaged target companies. Calling listed equity or bond funds “impact” funds does not sound right to me (impact-aligned is somewhat better, though). And reliance on investors to change listed companies is insufficient.

Engagement-washing seems to be a real risk which, if revealed, would hurt the “washer” but also potentially the whole segment of responsible investments. Investors nevertheless should invest as responsibly as possible. They should also try to engage as much as they can afford to. And that should include engagements with industry associations, NGOs, politicians etc. to advance responsible investing in general.

Further reading regarding engagement-washing

Shareholder engagement: 21 science based theses and an action plan – (prof-soehnholz.com): The 21 theses already contain many of my arguments above and show my engagement topics which include leveraged or stakeholder engagement approaches. The article also refers to additional relevant research papers.

Stakeholder engagement and ESG (Special Edition Researchposting 115) – Responsible Investment Research Blog (prof-soehnholz.com)): Current research on shareholder ESG engagement

Active or impact investing? – (prof-soehnholz.com): Explains my engagement approach with a 100% engagement target for invested companies

Divestments bewirken mehr als Stimmrechtsausübungen oder Engagement | SpringerLink: approx. 20 pages with long literature list

Voting picture by Gerd Altmann from Pixabay

ESG voting, climate WTP and more new research: Posting #119

ESG voting: 14x new research on corporate ESG nudges, 3x WTP for climate, ESG strategies, green bonds, greenwashing, ESG ratings, climate stress tests, bad award effects, mental accounting and PE issues

Social and ecological research: ESG voting

Corporate ESG nudges: Not Only for the Money: Nudging SMEs to Promote Environmental Sustainability by Manuel Grieder, Deborah Kistler, Felix Schlüter, and Jan Schmitz as of Feb. 9th, 2023 (#36): “This paper reports the results of a field experiment in Switzerland investigating behavioral economic interventions for promoting an environmental consulting program to SMEs. … The results indicate that loss frames are not more effective than gain frames. Unlike suggested by previous approaches, appealing to the environmental benefits of sustainability measures is just as effective as underlining the financial benefits for the SMEs. Evidence from two surveys with SME decision makers corroborates this latter result: SMEs indicate that personal motivations of owners or managers and long-term environmental impact—rather than potential financial benefits—are the most important factors determining whether they are willing to implement additional environmental sustainability measures” (abstract).

Some WTP: Willingness to Pay for Clean Air: Evidence from the UK Prepared by Giorgio Maarraoui, Walid Marrouch, Faten Saliba and Ada Wossink as of Feb. 23rd, 2023 (#10): “Our results show that 1 percent higher levels of NO2, PM10 and PM2.5 significantly decrease the odds of the log of happiness by 9, 9.5 and 10.7 percent respectively … Evaluated at the mean income level, households are willing to pay £62.5, £60 and £103 per month to abate 1 mikrogram/cubic meter of these pollutants respectively and remain equally happy, with urban dwellers paying less than this amount and highly educated individuals paying more than that (except for PM2.5)” … Our results show that 1 percent higher levels of NO2, PM10 and PM2.5 significantly decrease the odds of the log of happiness by 9, 9.5 and 10.7 percent respectively” (p. 24/25).

Advert for German investors: “Sponsor” my research by investing in and/or recommending my article 9 mutual fund. The fund focuses on social SDGs and midcaps, uses separate E, S and G best-in-universe minimum ratings and broad shareholder engagement. The fund typically scores very well in sustainability rankings, e.g. see this free new tool, and the performance is relatively good: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T, also see Artikel 9 Fonds: Sind 50% Turnover ok? – Responsible Investment Research Blog (prof-soehnholz.com)

… continue on page 2 (# indicates the number of SSRN downloads on March 2nd, 2023):

Seiten: 1 2
Greenium research: Picture from Pixabay shows forest with sun in the background

Greenium research and more: Researchposting 117

Greenium research: 25x new research on green subsidies, nature investing, populism, financial crime, ESG regulation, climate agreements, ESG scandals, transition, institutional investors, greenium, CDS, green loans, voting, multi-assets, gold, commodities, real estate, and private equity

Social and ecological research

Good green subsidies? Environmental Subsidies to Mitigate Net-Zero Transition Costs by Eric Jondeau, Gregory Levieuge, Jean-Guillaume Sahuc, and Gauthier Vermandel as of Jan. 13th, 2023 (#298): “The implementation of a pure carbon tax policy to reduce CO2 emissions would result in substantial GDP losses because firms would divert resources to invest in environmental goods and services that are provided by an immature and low-competition sector. Mitigating the induced recession is possible through a massive subsidization of EGSS (Environmental Goods and Services Sector). By reducing labor costs for both entrants and incumbents operating in this sector, such a policy would accelerate its development and offer a large reduction in the selling price of abatement technologies. … Eventually, the GDP loss would be reduced from $266 trillion between 2019 and 2060 to $145 trillion. Importantly, reducing entry costs in EGSS would accelerate the transition and reduce the GDP loss mainly at the beginning of the transition” (p. 41/42).

More public spending? Nature as an asset class or public good? The economic case for increased public investment to achieve biodiversity targets by Katie Kedward, Sophus zu Ermgassen, Josh Ryan-Collins, and Sven Wunder as of Dec. 28th, 2022 (#671): “Financial instruments for attracting large-scale private finance into conservation often incur high transaction costs to ensure ecological effectiveness, which potentially conflict with institutional investors’ need for competitive returns, market efficiency, and investment scalability. … Strategies to mobilize investor involvement by using public funds to ‘de-risk’ nature investments may not be as promising as assumed, given the costly exercise required to render nature markets conventionally ‘investible’. … Public financing is often more suitable to incentivize the imminent bundled nature of ecosystem services provided” (abstract).

Money crimes (1): Financial Crime: A Literature Review by Monica Violeta Achim, Sorin Nicolae Borlea, Robert W. McGee, Gabriela-Mihaela Mureşan, Ioana Lavinia Safta (Plesa) and Viorela-Ligia Văidean as of Dec. 19th, 2022 (#52): “This chapter reviews the literature on some of the subfields of economic and financial crime. Among the topics discussed are tax evasion, bribery, money laundering and corruption in general. The determinants of financial crime are also identified. Several demographic variables are also examined to determine whether gender, age, education, income level, religion, geographic region, size of city, etc., are statistically significant. Nearly 150 studies are mentioned“.

Money crimes (2): Financial Crime: Conclusions and Recommendations by Monica Violeta Achim, Sorin Nicolae Borlea, Mihai Gaicu, Robert W. McGee, Gabriela-Mihaela Mureşan, and Viorela-Ligia Văidean as of Dec. 21st, 2022 (#14): “This chapter discusses the conclusions and recommendations resulting from the study. A series of infographs is included to summaries the results of the study …” (abstract).

Complex ESG compliance: EU Sustainable Finance: Complex Rules and Compliance Problems by Félix E. Mezzanotte as of Feb. 12th, 2023 (#100): “Complexity is first identified in MiFID II rules covering the legal definition of sustainability preferences and the suitability requirements applicable to asset managers and investment advisors. … complex rules have been found to promote noncompliance. The underlying rationale, supported by this article, is that complex rules amplify the compliance burdens faced by companies” (p. 2).

Advert for German investors: “Sponsor” my research by investing in and/or recommending my article 9 mutual fund. I focus on social SDGs and midcaps, use separate E, S and G best-in-universe minimum ratings and shareholder engagement. The fund typically scores very well in sustainability rankings, e.g. see this free new tool, and the performance is relatively good: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T

… continues on page 2 (# indicates the number of SSRN downloads on February 13th, 2023):

Seiten: 1 2
Several connected employees as picture for employee engagement

Stakeholder engagement and ESG (Special Edition Researchposting 115)

Stakeholder engagement: 18x (new) research on stakeholder engagement, human capital, employee activists, employee ESG surveys, ESG wage gap, CEO pay gap, customer alpha, CEO limits and more research which is important for my shareholder engagement activities (see e.g. my earlier blog posts Engagement test, Impact Investing mit Voting und Engagement? and Wrong ESG bonus math?).

Stakeholder engagement overview

Stakeholder engagement studies: Exploring the antecedents and consequences of firm-stakeholder engagement process: A systematic review of literature by Avinash Pratap Singh and Zillur Rahman as of Oct. 31st, 2022 (#16): “… we pursued the vast body of literature on firm-stakeholder engagement and comprehensively examined over 170 research articles to accumulate precursors and outcomes of SE processes. … We used thematic analysis to provide evidence of the growing interest of academics and managers in firm-stakeholder engagement. The findings of this study suggest that shared benefits with a long-term perspective are valuable to both corporation and its stakeholders”.

Stakeholder engagement options: Stakeholder Engagement by Brett H. McDonnell as of Oct. 31st, 2022 (#88): “We have seen that the present reality of stakeholder engagement is fairly extensive, and sensible as far as it goes. As one would expect, employees are the most engaged group, followed by customers, and then by nonprofits, suppliers, and government regulators. The most used forms of engagement include meetings and surveys. Employee resource groups are near-universally used. Partnerships, social media, and councils are used less frequently, but still somewhat regularly. … And yet, the current reality falls well short of the future possibilities of stakeholder engagement. Current engagement mostly involves companies listening to what stakeholders have to say. It does not empower stakeholders to be more actively involved in corporate decision making” (p. 53/54). My comment: Very helpful paper for practitioners including reference to the AccountAbility Stakeholder Engagement Standard

Advert for German investors: “Sponsor” my research by investing in and/or recommending my article 9 mutual fund. I focus on social SDGs and midcaps and use separate E, S and G best-in-universe minimum ratings. The fund typically scores very well in sustainability rankings, e.g. this free new tool, and the performance is relatively good: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T

… continues on page 2 (# indicates the number of SSRN downloads on February 2nd, 2023):

Seiten: 1 2
Bank climate risks: earth with tornado as illustration

Bank climate risks and more (Researchblog 113)

Bank climate risks: >20x new research on CO2 bio-capture, ESG ratings, inflation, greenwashing, diversity, gender pay gap, shareholder engagement, investment consultants, ML and hybrid robo-advisors

Social and ecological research

CO2 bio-capture: Scalable, Economical, and Stable Sequestration of Agricultural Fixed Carbon by Eli Yablonovitch and Harry Deckman as of Dec. 28th, 2022 (#129): “We describe a scalable, economical solution to the Carbon Dioxide problem. CO2 is captured from the atmosphere by cellulosic plants, and the harvested vegetation is then salted and buried in an engineered dry biolandfill. Plant biomass can be preserved for hundreds to thousands of years by burial in a dry environment … Current agriculture costs, and biolandfill costs indicate US$60/tonne of sequestered CO2 which corresponds to ~US$0.60 per gallon of gasoline. The technology is scalable owing to the large area of land available for cellulosic crops, without disturbing food production. If scaled to the level of a major crop, existing CO2 can be extracted from the atmosphere, and simultaneously sequester a significant fraction of world CO2 emissions” (abstract).

Regulated innovation: The effects of environmental innovations on labor productivity: How does it pay to be green by Hannu Piekkola and Jaana Rahko as of Jan. 10th, 2023 (#6): “This paper adds to the literature by examining environmental innovations as part of overall firm innovation activity among Finnish manufacturing and energy sector firms … Our empirical analysis shows that regulation-driven environmental innovations enhance productivity … Introducing new environmental regulations increases environmental innovativeness, which in turn leads to improved firm performance that can apparently compensate for all of the costs of regulation. Nordic firms may have benefited from a first-mover advantage by becoming green in many industries … Many companies set targets for themselves that are even stricter than what the regulations require because they want to set a model for other companies and stakeholders” (p. 21/22).

Advert for German investors: “Sponsor” my research by investing in and/or recommending my article 9 mutual fund. I focus on social SDGs and midcaps and use separate E, S and G best-in-universe minimum ratings. The fund typically scores very well in sustainability rankings, e.g. this free new tool, and the performance is relatively good: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T

… continues on page 2 (# indicates the number of SSRN downloads on January 21st, 2023):

Seiten: 1 2
Nature picture as illustration for positive immigration blogpost

Positive immigration and more little known research (Researchposting 110)

Positive immigration: >20x new research on climate conflicts, inequality, immigration, gas price break, carbon pricing, solar sharing, cool cities, brown banks, greenwashing, biodiversity, analysts and consultants, voting and engagement and private equity by Christina Bannier, Lucian Bebchuk, Alexander Wagner et al.

Social research: Positive immigration and more

Climate conflicts: Climate Shocks and Domestic Conflicts in Africa by Yoro Diallo and René Tapsoba as of December 29th, 2022 (#8): “We build on a broad panel of 51 Africa countries over the 1990-2018 period. We unveil key results with far-reaching policy implications. First, we find suggestive evidence that climate shocks, as captured through weather shocks, increase the likelihood of domestic conflicts, by as high as up to 38 percent. Second, the effect holds only for intercommunal conflicts, not for government-involved conflicts. Third, the effect is magnified in countries with more unequal income distribution and a stronger share of young male demographics, while higher quality social protection and access to basic health care services, stronger tax revenue mobilization, scaled up public investment in the agricultural sector, and stepped-up anti-desertification efforts appear as relevant resilience factors to this vicious climate-conflicts nexus” (p. 26).

Wealth inequality: Who Gets the Flow? Financial Globalisation and Wealth Inequality by Simone Arrigoni as of December 13th, 2022 (#14): “The main result points towards a significant positive link between the increase in financial globalisation (proxied with the IFI) and changes in the top 1% (the rich) and 10% (upper middle-class) wealth shares and a significant negative link with changes in the wealth share of the bottom 50% of the distribution (working class). … I find that the main driving components of this result appear to be portfolio equities and financial derivatives. … I find that the increase in inequality following the acceleration in financial globalisation is driven by the flow. The wealthy get richer due to an expansion of their portfolios rather than just a market value gain on their existing stock of wealth. … the main finding is strengthened in the event of a systemic banking crisis“ (p. 25/26).

Gender inequality gaps: Tackling Gender Inequality: Definitions, Trends, and Policy Designs by Baoping Shang as of Dec. 21st, 2022 (#27): “… gender inequality needs to be distinguished from gender gaps. … addressing gender inequality benefits everyone, not just women. … as gender inequality becomes more subtle and implicit, targeted gender policies will likely need to play an increasing role … The paper concludes by discussing gaps in the literature and policy challenges going forward” (abstract).

Advert for German investors: “Sponsor” my research by recommending my article 9 fund. The minimum investment is approx. EUR 50 and return and risks are relatively good: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T: I focus on social SDGs and midcaps and use best-in-universe as well as separate E, S and G minimum ratings. The fund typically scores very well in sustainability rankings, see this new tool for example.

… continues on page 2 (# indicates the number of SSRN downloads on January 7th, 2023):

Seiten: 1 2
Heidebild als Illustration für Green Research

Green research deficits: Researchblogposting #106

Green research: 15x new research on net-zero, healthcare, banking, m&a, ESG, voting, retail investors, private equity etc. by Sandra Nolte, Harald Lohre, Martin Oehmke, Marcus Opp et al.

Social and green research

Climate demographics: The Slow Demographic Transition in Regions Vulnerable to Climate Change by Thang Dao, Matthias Kalkuhl, and Chrysovalantis Vasilakis as of October 21st, 2022 (#7): “We consider how the demographic transition has been shaped in regions that are the least developed and the most vulnerable to climate change. Environmental conditions affect intra-household labor allocation because of the impacts on local resources under the poor infrastructural system. Climate change causes damage to local resources, offsetting the role of technological progress in saving time that women spend on their housework. Hence, the gender inequality in education/income is upheld, delaying declines in fertility and creating population momentum. The bigger population, in turn, degrades local resources through expanded production. The interplay between local resources, gender inequality, and population, under the persistent effect of climate change, may thus generate a slow demographic transition and stagnation. We provide empirical confirmation for our theoretical predictions from 44 Sub-Saharan African countries” (abstract).

Net zero challenges: Neutralizing the Atmosphere by Shelley Welton as of May 5th, 2022 (#151): “Net zero” has rapidly become the new organizing paradigm of climate change law. … To date, critiques have centered on what this Article terms “accounting” risks: that is, risks that pledges in action will fail to live up to pledges on paper. The Article argues that there are two broader normative risks with net zero that are underdiagnosed but may prove more intractable. First, the net zero framework presumes collective disinterest regarding the best way to neutralize atmospheric emissions, with every participating entity left to determine its own preferred strategy. In reality, decisions around how to reach net zero emissions are contested, impactful, and often politically explosive. … The second risk this Article identifies is the “collective achievement challenge”: if the world continues to pursue an atomized approach to net zero, it is likely that entities will over-rely on certain cost-effective strategies—like tree planting—at scales that cannot be collectively achieved, at least not without substantial collateral social consequences. Disjunctive efforts toward net zero thus threaten to undermine the legal, political, and physical foundations of the global project” (abstract).

Advert for German investors: “Sponsor” my research by recommending my Article 9 fund. The minimum investment is approx. EUR 50 and so far return and risks are relatively good: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T: I focus on social SDGs and midcaps and use best-in-universe as well as separate E, S and G minimum ratings.

Please go to page 2 (# indicates the number of SSRN downloads on November 30st):

Seiten: 1 2
Engagement test illustrated by picture of Hummingbird and water pipe by Pixabay

Engagement test (Blogposting #300)

The background

Engagement test: I am skeptical regarding the effectiveness of shareholder voting and engagements (compare Divestments bewirken mehr als Stimmrechtsausübungen oder Engagement | SpringerLink and Impact Investing mit Voting und Engagement? (Opinionpost #194) – Responsible Investment Research Blog (prof-soehnholz.com).

Nevertheless, I wanted to try an engagement myself. The starting point was a call with a Linkedin contact in April 2022. He mentioned a German engagement startup and introduced me to its founder, David Hamel. David and I talked on May 3rd, 2022 and David suggested to review the portfolio of my investment fund (FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T) for engagement opportunities.

My fund

For my fund, I select 30 stocks globally almost only according to sustainability criteria. I use strict activity and country exclusions and high requirements for environmental, social and governance (ESG) best-in-universe ratings. This means that I do not look for the best ecological, social and governance ratings in pre-defined industries (best-in-class approach), but for the best ESG rated stocks globally across all industries. In addition, I try to include only companies which are best aligned with one or more of the Sustainable Development Goals of the United Nations (SDG).

More focused and therefore often smaller companies can have a better fit with my approach than diversified companies. Unsurprisingly, the median capitalization of the stocks in my portfolio is only slightly higher than 10 billion USD, meaning that a significant part of my stocks are so-called small- or midcaps.

The targets and topics of my engagement test

David’s startup, DeRisk.earth, tries to identify existing engagements as well as potential new engagement topics for stock listed companies worldwide. When I sent David my portfolio, he found no current engagements on any of the stocks by major activists or asset managers. That was to be expected, though, since statistics from MSCI show that for more than 70% of the almost 9000 Stocks in the MSCI ACW IMI Index there are no known active engagements of large asset managers (Net-Zero Alignment: Engaging on Climate Change – MSCI). Also, I try to select the best stocks according to environmental, social and governance ratings. Therefore I did not expect to find many engagements for my portfolio companies.

Comparing different data sources, all of the stocks in my portfolio showed good ESG scores. Nevertheless, David recommended to start an engagement with an US water utility and infrastructure company to try to even further improve that company. The reason for this recommendation was that the company was subject to litigation claims due to a chemicals spill.

My subsequent own analysis of that company made me suggest CO2 improvement, too, and in addition the use of ESG criteria for supplier selection and a supplier ESG improvement program.

The first contacts

On May 30st, we wrote our first Email to the head of investor relations of American Water Works (Amwater) with our suggestions. I mentioned that through the German mutual fund which I advise I only held shares of approximately three hundred thousand US Dollars.

Three weeks later, we received an answer and started an exchange of Emails. To support our proposals we referred to two research studies: Do Scope 3 Carbon Emissions Impact Firms’ Cost of Debt? by Ahyan Panjwani, Lionel Melin, and Benoit Mercereau as of Oct. 17th, 2022  and Making supply-chain decarbonization happen | McKinsey).

Amwater informed us that the learnings from the chemical spill as well as employee education topics were already covered by their Environmental Policy and their educational activities for employees. Therefore, we focused on other points and made our proposal regarding CO2 emissions more concrete. We specifically asked for “clear GHG emission targets, including separately disclosed scope 1, 2 and 3 emissions and their alignment with the Paris Agreement” and “comprehensive ESG-evaluation … of all major suppliers and clear minimum ESG-standards for new suppliers and for retention of existing suppliers”. 

First results of my engagement test

On October 31st, Amwater publicly announced new targets: “By 2035, reduce absolute scope 1 and scope 2 emissions by 50% (2020 baseline). Achieve net zero scope 1 and scope 2 emissions by 2050. First time disclosure of scope 3 emissions”.

On November 9th, we had a videocall with two investor relations representatives, one of them focusing on ESG matters. In this call, we repeated our suggestion to set concrete scope 3 reduction goals. We also proposed to use water companies and not utilities overall as benchmarks. In addition, we suggested improved supplier codes of conduct, ESG evaluations especially for CO2-critical suppliers for fuels, energy and capital goods and supplier ESG audits.  We further exchanged views on topics such as ESG- and climate data and data providers and greenwashing risks. We also agreed to continue our discussions.

Engagement test conclusion

It is very likely that Amwater would have made these public announcements without our input. On the positive side, the direct exchange of information and opinion potentially helped us and perhaps also the company to better understand obstacles towards more sustainability.

In general, shareholder engagement can only focus on a very select number of topics out of the many, which could be improved by almost all companies. And to measure the effects of engagements and the attribution to any one investor seems to be very difficult.

It is probably much more effective to hope that (the leaders of) companies are intrinsically motivated to significantly improve their sustainability. Engagement can very likely be much more effective with such companies than with ESG-skeptics. Also, strict regulation for all market participants may lead to more sustainability. Nevertheless, this case encouraged me to continue testing further engagements.

Disclaimer

Diese Unterlage ist von Soehnholz Asset Management GmbH erstellt worden. Die Erstellerin übernimmt keine Gewähr für die Richtigkeit, Vollständigkeit und/oder Aktualität der zur Verfügung gestellten Inhalte. Die Informationen unterliegen deutschem Recht und richten sich ausschließlich an Investoren, die ihren Wohnsitz in Deutschland haben. Sie sind nicht als Verkaufsangebot oder Aufforderung zur Abgabe eines Kauf- oder Zeichnungsangebots für Anteile des in dieser Unterlage dargestellten Fonds zu verstehen und ersetzen nicht eine anleger- und anlagegerechte Beratung. Anlageentscheidungen sollten nur auf der Grundlage der aktuellen gesetzlichen Verkaufsunterlagen (Wesentliche Anlegerinformationen, Verkaufsprospekt und – sofern verfügbar – Jahres- und Halbjahresbericht) getroffen werden, die auch die allein maßgeblichen Anlagebedingungen enthalten. Die Verkaufsunterlagen werden bei der Kapitalverwaltungsgesellschaft (Monega Kapitalanlagegesellschaft mbH), der Verwahrstelle (Kreissparkasse Köln) und den Vertriebspartnern zur kostenlosen Ausgabe bereitgehalten. Die Verkaufsunterlagen sind zudem im Internet unter www.monega.de erhältlich. Die in dieser Unterlage zur Verfügung gestellten Inhalte dienen lediglich der allgemeinen Information und stellen keine Beratung oder sonstige Empfehlung dar. Die Kapitalanlage ist stets mit Risiken verbunden und kann zum Verlust des eingesetzten Kapitals führen. Vor einer etwaigen Anlageentscheidung sollten Sie eingehend prüfen, ob die Anlage für Ihre individuelle Situation und Ihre persönlichen Ziele geeignet ist. Diese Unterlage enthält ggf. Informationen, die aus öffentlichen Quellen stammen, die die Erstellerin für verlässlich hält. Die Erstellerin übernimmt keine Gewähr oder Garantie für die Richtigkeit und/oder Vollständigkeit dieser Informationen. Die dargestellten Inhalte, insbesondere die Darstellung von Strategien sowie deren Chancen und Risiken, können sich im Zeitverlauf ändern. Einschätzungen und Bewertungen reflektieren die Meinung der Erstellerin zum Zeitpunkt der Erstellung und können sich jederzeit ändern. Es ist nicht beabsichtigt, diese Unterlage laufend oder überhaupt zu aktualisieren. Sie stellt nur eine unverbindliche Momentaufnahme dar.

Diversification myths: Picture shows reduction of sustainability for more diversified portfolios

Impact Investing mit Voting und Engagement? (Opinionpost #194)

Impact Investing Vorbemerkung: Dieser Beitrag basiert auf „Divestments bewirken mehr als Stimmrechtsausübungen oder Engagement“ (Söhnholz 2020a).

Impact Investing ist trendy. Idealerweise können Anleger damit ordentliche Renditen erreichen und zugleich die Welt positiv verändern. Beim Kauf börsennotierter Geldanlagen werden Wertpapiere aber nur anderen Anlegern abgekauft und die Herausgeber der Wertpapiere erhalten kein zusätzliches Geld. Anbieter von liquiden Geldanlagen behaupten aber teilweise, dass sie Emittenten, also vor allem Unternehmen, durch Stimmrechtsabgaben und direkte Einflussversuche (Engagement) nachhaltiger machen können. Das sehe ich kritisch. Ich favorisiere die Konzentration liquider Investments auf die bereits nachhaltigsten Emittenten und die Suche nach Nachahmern dafür. Hier sind einige Argumente dafür:

Werbemitteilung: Kennen Sie meinen Artikel 9 Fonds FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T mit Fokus auf soziale SDGs und Midcaps, Best-in-Universe Ansatz, getrennte E, S und G Mindestratings? Erhältlich ab ca. EUR 50 für deutsche Anleger.

Weiter geht es auf Seite 2:

Seiten: 1 2
ESG regulation: Das Bild von Thomas Hartmann zeigt Blumen in Celle

ESG regulation and more (Researchblog #101)

ESG regulation: >15x new research on climate, regulation, (un)sustainable funds, SDGs, greenium, ESG reporting, voting, wealth, buy-and-hold, private equity, private real estate and AI by Roman Inderst, Andreas Hoepner et al.

Ecological and social and governance research: ESG regulation

Climate-heuristics: Harnessing the power of communication and behavior science to enhance society’s response to climate change: A white paper for comment by Edward Maibach, Sri Saahitya Uppalapati, Margaret Orr, and Jagadish Thaker as of October 5th, 2022 (#181): “… we provide an evidence-based heuristic for guiding efforts to share science-based information about climate change with decisionmakers and the public at large. … We .. also provide a second evidence-based heuristic for helping people and organizations to change their climate change-relevant behaviors, should they decide to. These two guiding heuristics can help scientists and other to harness the power of communication and behavior science in service of enhancing society’s response to climate change” (abstract).

Advert for German investors: “Sponsor” my free research e.g. by buying my Article 9 fund. The minimum investment is around EUR 50. FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T: I focus on social SDGs and midcaps and use best-in-universe as well as separate E, S and G minimum ratings.

For my approach to this blog see 100 research blogposts since 2018 – Responsible Investment Research Blog (prof-soehnholz.com)

For more current research please go to page 2 (# indicates the number of SSRN downloads on October 25th):

Seiten: 1 2