Even as attacks on environmental, social and governance (ESG) and impact investing continue to grab headlines, studies continue demonstrate that investors and executives alike recognize the importance of incorporating ESG considerations to appropriately manage risk and identify opportunities. Ongoing regulatory changes related to ESG practices and disclosures heighten the risks for companies who fail to comply with new regulations while offering investors increased transparency to better assess those risks.
As we reach the tail end of this year’s annual corporate meetings, we’re looking forward to sharing the results of our client-supported shareholder initiatives in our forthcoming Annual Shareholder Resolution Impact Report next month.
Bloomberg
Clean Energy Jobs Grew at Twice the Rate of U.S. Jobs Overall Last Year
Buoyed by Biden administration policies to fight climate change, employment in clean energy in 2023 rose by 142,000 jobs vs. 2022, or 4.2%, compared to economy-wide job growth of 2%. Those jobs account for more than half of new jobs in the U.S. energy industry, according to a Department of Energy report. The electric vehicle and renewable energy sectors, as well as transmission, distribution and storage, experienced “significant” growth, and solar and wind saw jobs grow by 5.3% and 4.5%, respectively. The 2022 Inflation Reduction Act helped spur a boom in EV and battery factories across the U.S., sparked major investments in renewable energy, and incentivized other approaches to lowering emissions, such as carbon capture and home energy efficiency. Idaho led clean energy employment in 2023 with a 7.7% growth rate, followed by Texas (6%) and New Mexico (5.9%).
Harvard Business Review
Despite Anti-ESG Attacks, New Study Shows Investors See Climate as Critical to Business Performance
Key takeaways from recent research among affluent and high-net-worth individual investors shows that, despite politically charged rhetoric, investors have clear expectations about the materiality of climate risk and the opportunities presented by the energy transition.According to the survey, three out of four investors (77%) explicitly[JL1] believe that “environmentally responsible companies are more likely to succeed financially.” Seventy percent of investors believe “there is a lot of money to be made in the clean energy transition” and 65% of investors expect “clean energy technology” to outperform the market over the next year. Investors also recognize that a changing climate increasingly poses significant risks to business and investment performance. Eighty-two percent of those surveyed believe that “publicly held financial services companies that better anticipate environmental risks are more likely to succeed financially.”
Bain & Company
Financial or Stakeholder Value? For Shareholders, Both Are Best
In a study of S&P 500 companies over a 10-year period examining those that created the highest value for stakeholders – customers, employees, suppliers and their communities – and those that created the highest financial value, management consulting firm Bain & Company found that, on average, those that outperformed on both dimensions also had the highest shareholder returns. While this is not the first research to indicate the benefit of creating value across stakeholders, it is another powerful reminder that the best strategies align the ambitions and desires of stakeholders to create value for shareholders, and vice versa.
Axios
ESG isn’t going away
Even as the practice of ESG investing comes under attack, it has become standard practice for many corporate and private equity leaders to evaluate potential acquisitions along ESG lines. Dealmakers and investors emphasize that looking at ESG isn’t about “do-gooderism,” it’s about achieving strong financial performance. All 500 global business leaders surveyed by Deloitte this year said that they look at how their ESG profile would be affected by a potential acquisition or divestiture and 57% said they have defined metrics for evaluating ESG. Across a range of industries, leaders told Deloitte that they had walked away from an acquisition because of an ESG concern, including 80% in private equity, 70% in financial services and 72% in consumer goods.
RBC Wealth Management
New RBC Wealth Management survey finds interest in responsible investing continues to grow
A recent survey conducted by RBC Wealth Management reveals more positive investor sentiment around responsible investing and evolving preferences toward impact investing. When asked about responsible investing strategies, impact investing – defined for the survey as investing in assets to create a measurable positive social or environmental impact – is more attractive to respondents than in previous years, with 63% being interested in applying impact investing to their current portfolios versus 49% in 2023. The vast majority (87%) agree investors should be able to consider ESG criteria without government limitations or restraints. Investment performance and transparency issues are their top two concerns as potential barriers to responsible investing.
Interestingly, there are three areas in which responses from men and women differed: Of surveyed women, 62% are likely to discuss responsible investing with advisors within the next year, as opposed to 47% of men. Women are more likely to say they will only invest in traditional energy companies with plans to reduce greenhouse emissions and address climate concerns (59% women vs. 41% men). Water, health, education and affordable/clean energy are the most popular themes amongst clients surveyed, driven by female respondents. Male respondents were more interested in investing in “industry, innovation and infrastructure,” which overall ranked fifth.
