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16 Feb 2024

The ESG Backlash on Wall Street Spurs a Jump in ETF Closures

The dwindling demand is evident in the Americas from the slowdown in sales of new exchange-traded funds and the pickup in fund closures and outflows, according to senior ESG strategist at Bloomberg Intelligence. In 2023, the region saw just 48 new ETFs introduced, down from 104 in 2022 and 125 in 2021, data compiled by Bloomberg Intelligence show. A net $4.3 billion was pulled last year from ESG-focused ETFs in the US, marking the first-ever annual outflows. The $13 billion iShares ESG Aware MSCI USA ETF (ticker ESGU), the largest ESG-focused ETF, is seeing continued outflows this year, with $809 million yanked from the fund after a $9 billion exodus last year. Meanwhile, 36 ESG-labeled ETFs were liquidated in the Americas during 2023, more than double the prior year, data from Bloomberg Intelligence show. Almost 60% of the funds that were closed were actively managed. source : yahoo!finance, bloomberg

23 Jan 2024

Low-Cost carriers are world's least-polluting airlines

The low-cost business model that democratized air travel in recent decades has now become an unlikely template for reducing pollution. That’s because budget airlines’ obsession with lowering weight in order to save fuel also happens to produce the best emissions metrics in the skies.

Source Bloomberg, Envest Global

19 Dec 2023

ESG ETF Inflows Increase 55% to $3.08B last week, most in at least a year

Net inflows totaled $38.6 billion year-to-date
Net inflows totaled $40.5 billion over the last year

Source: Bloomberg

11 Dec 2023

Goldman, Citi ready Trading Desks for new wave of Carbon deals

As the carbon offset market gets a new lease on life from the COP28 climate summit in Dubai, bankers from Wall Street and the City of London are positioning themselves to get a chunk of the dealmaking they say is coming.
Banks that have been building up carbon trading and finance desks include Goldman Sachs Group, Citigroup, JPMorgan Chase and Barclays.
Source: Bloomberg

27 Sep 2023

What’s the BIG SHORT right now? ESG Stocks.

Hedge funds are calling out fake green claims and overblown valuations boosted by stimulus. Blackrock & State Street are shutting down some ESG funds. Liquidation of ESG funds in 2023 is already larger than the last 3 years combined, And the year is not over.... Source: Genevieve Roch-Decter, CFA, Bloomberg

1 Sep 2023

EU watchdog monitors surge of cash going into biodiversity funds

The surge in money going into biodiversity funds is the "next frontier" of ESG investing and warrants increased monitoring to avoid greenwashing, the European Union's securities regulator said.

The cumulative flow of money into biodiversity funds reached 854 million euros ($931 million) in the two years to June 2023, with 73% of the funds launched since 2022.
Source: Reuters

11 Aug 2023

"Companies with good ESG scores pollute as much as low-rated rivals". The finding holds true even when researchers looked only at the environmental part of the metric.

Companies rated highly on widely accepted environmental, social and governance metrics pollute just as much as lowly rated companies, research has found. This perverse lack of correlation holds even if companies’ carbon intensity — their carbon emissions per unit of revenue or market capitalisation — is compared purely to their environmental rating, according to Scientific Beta, an index provider and consultancy. “ESG ratings have little to no relation to carbon intensity, even when considering only the environmental pillar of these ratings,” said Felix Goltz, research director at Scientific Beta. “It doesn’t seem that people have actually looked at [the correlations]. They are surprisingly low.” “The carbon intensity reduction of green [ie low carbon intensity] portfolios can be effectively cancelled out by adding ESG objectives.” The findings come amid strong demand for ESG investment, with “sustainable” funds globally attracting net inflows of $49bn in the first half of this year, according to Morningstar, while the rest of the fund industry saw outflows of $9bn. Goltz and his colleagues looked at 25 different ESG scores from three major providers: Moody’s, MSCI and Refinitiv. They found that 92 per cent of the reduction in carbon intensity that investors gain by solely weighting stocks for their carbon intensity is lost when ESG scores are added as a partial weight determinant. Even just using environmental scores, rather than the whole panoply of ESG, “leads to a substantial deterioration in green performance”, they found. Worse still, mixing social or governance ratings with carbon intensity typically creates portfolios than are less green than the comparable market capitalisation-weighted index, the researchers noted. “On average, social and governance scores more than completely reversed the carbon reduction objective,” Goltz said. He offered a simple explanation for this, namely that “the correlation between ESG scores and carbon intensity is close to zero [at 4 per cent]. The two objectives are unrelated and are therefore hard for investors to simultaneously achieve.” “It can very well be that a high-emitting firm is very good at governance or employee satisfaction. There is no strong relationship between employee satisfaction or any of these things and carbon intensity,” Goltz argued. Source: FT

8 Aug 2023

Record green bond sales lift outlook for ESG debt

Green bonds issuance globally hit a record $380 billion in the first half of 2023, rebounding from $261 billion during the prior six months.
Governments and financials are the main contributors. Germany, Italy and Hong Kong governments in combination sold $52 billion green bonds, 150% more than each half of 2022.
Source: Bloomberg

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