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The SEC’s Climate Disclosure Rule: A Step in the Right Direction
“Material climate-related disclosures will be required for SEC registrants (which comprise approximately 10,000 companies) as part of their annual filing, allowing investors to look at audited, temporally aligned financial and climate disclosures for the same period, at the same time. “ [COMMENTARY] These are the type of regulations I’ve been advocating for — for about fifty years! I particularly…
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The Impact of ESG Risk on Stocks
“This article examines the impact of ESG risk on US stocks through the lens of Sustainalytics’ ESG risk-rating measure over the past decade… stocks with low ESG risk ratings… not only have higher realized returns but also provide better tail-risk protection than stocks with high ESG risk ratings… especially during the COVID-19 crisis.” The Impact of ESG Risk on Stocks, by James X. Xiong, January…
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Morningstar refuses to take responsibility for how its “responsible investment” methods have targeted Israel, after yet another confusion between Social Justice and Anti-Zionism.
Though Morningstar portrayed the report as proof that it was not engaged in BDS, White & Case highlighted numerous areas of concern. Particularly problematic was Sustainalytics’ reliance on deeply flawed, anti-Israel sources. For example, the report noted that Sustainalytics enjoys a special relationship with Who Profits, a pro-BDS research organization founded in response to Palestinian calls to boycott Israel.
And according to Sustainalytics’ “Occupied Territories” document, merely operating in disputed territories can contribute to human rights abuses. This stands in stark contrast to international law and the United Nations’ non-binding principles on corporate social responsibility, which allow for investing in disputed territories. Seventy percent of companies Sustainalytics flagged for involvement in conflict zones were related to Israel.
What’s more, Sustainalytics’ ESG screening punished Israel for defending its citizens against terrorism. The firm placed companies on a watchlist for helping build and maintain Israel’s West Bank security barrier, providing Israel with surveillance equipment or supplying Israel with arms.
This past June, upon the report’s recommendations, Morningstar made minor fixes to its ESG tools to counter accusations of anti-Israel bias. The firm discontinued its Human Rights Radar product because it “exhibited bias in its outcomes by overrepresenting firms linked to the Israeli-Palestinian conflict.” The company also committed to other token steps aimed at combating bias, such as increasing transparency in its source usage and ratings methodology and eliminating biased terminology.
Then Morningstar kicked up its feet. It touted the Illinois Investment Policy Board’s decision at its June meeting not to place the company on the state’s “prohibited investment list” as proof Morningstar had eliminated the problem. However, according to a meeting attendee, the board’s decision was contingent upon the investment firm’s implementation of far-reaching reforms recommended by White & Case and others. The board will meet again in September.
Even now, Morningstar refuses to take responsibility for how its “responsible investment” methods have targeted Israel. The investment firm had hoped that minor reforms would prevent unwanted scrutiny, but 19 states have now made clear they see through this window dressing.
Arizona treasurer says investment firm Morningstar violates state anti-BDS law
Arizona treasurer says investment firm Morningstar violates state anti-BDS law
Significant changes are needed in how Morningstar’s subsidiary Sustainalytics rates companies doing business in Israel and Judea and Samaria, writes the treasurer to Morningstar’s CEO. BY MIKE WAGENHEIM (August 24, 2022 / JNS) Arizona’s state treasurer put investment firm Morningstar on notice that it is violating the state’s anti-BDS law. Last week, Arizona State Treasurer Kimberly Yee wrote…
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A senior executive at the ratings giant Sustainalytics—who spent years working at an anti-Israel advocacy group—announced last week that she is stepping down amid scrutiny of the company's reliance on sources that critics say lead to bias and discrimination against Israeli companies.
Heather Lang, a onetime official at the anti-Israel activist organization B'Tselem, announced last week her departure as a senior vice president at Sustainalytics, a subsidiary of the corporate-ratings giant Morningstar, after 18 years at the company.
"Tomorrow is my last day at Sustainalytics after an incredible 18-year journey!" wrote Lang in a social media post last week. "It's been an absolute privilege to work with such wonderful colleagues and friends."
The news comes as Sustainalytics—one of the major ratings agencies that score companies based on their environmental, social, and governance practices—has faced allegations that its scoring system is biased against Israel and that it downgrades companies that help the Jewish state's national security operations. Prior to joining Sustainalytics, Lang worked at B'Tselem, a self-described human rights group that asserts that "Israel's regime of apartheid and occupation is inextricably bound up in human rights violations," according to its website. NGO Monitor, a watchdog group that monitors Middle East organizations, describes B'Tselem as "part of a network of NGOs that promote artificial and manufactured definitions of apartheid to extend the ongoing campaigns that seek to delegitimize and demonize Israel."
Morningstar enlisted law firm White & Case to conduct an internal investigation into potential anti-Israel bias at Sustainalytics. This came after the Illinois Investment Policy Board, a state commission, launched a probe into whether the company was in violation of Illinois laws against anti-Israel boycotts.
Lang's presence at Sustainalytics raises questions about the neutrality of its executives, a week after the Missouri attorney general launched an investigation into allegations of anti-Israel bias at the ratings giant.
Galata Wind, ESG Risk Derecelendirmesinden Başarıyla Geçti
Galata Wind, ESG Risk Derecelendirmesinden Başarıyla Geçti
Alanında dünyanın lider ESG derecelendirme kuruluşu Sustainalytics, Galata Wind A.Ş’yi 19,9 notuyla “Düşük Risk” kategorisinde derecelendirdi. Rüzgâr ve güneşten yüzde yüz temiz ve yenilenebilir elektrik enerjisi üreten Galata Wind Enerji A.Ş., ESG (Environmental, Social and Governance- Çevresel, Sosyal ve Yönetişim) risk derecelendirilmesi alanında uzman, dünyaca ünlü bağımsız denetçi kuruluş…
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NAREIT Leader in the Light Working Forum: ESG Perspective on the Real Estate Industry
Speaker: Doug Morrow, Sustainalytics
Written by: Daniel Horton and Kelly Hagarty
Institutional investors are steadily increasing their allocation to real estate
“Average” allocation moves from 5% in 2000s to 9% (2014)
Preferred vehicle is private real estate funds, despite advantages of REITS
US REITS increased from 34 in 1971 to 216 in 2014 with a total market capitalization in excess of USD 900bn
Influx of capital has been mirrored by an increase in housing and rental prices
Prices are growing more quickly than household income in many major economies
Prospect of millennials as a generation of life-long renters is increasing
Surge in demand for multi-residential properties and mixed-use developments
The green building trend continues to accelerate, driven by policy and fundamentals
Market recently valued at USD 260bn with 325 million square meters of new floor space added in 2013
In many markets, most new construction is green
Slow shift from green to sustainable building, focusing on occupant productivity, health and well-being
WELL Building Standard
Three Key ESG Issues: For real estate industry investors
Of the eleven ESG issues we find relevant for real estate industry investors, three are of primary significance
Energy Use and GHG Emissions
Product Sustainability
Business Ethics
US Perspective
Relative to their peers, US REITS are average ESG performers
Some of this is a disclosure issue, some of it is a performance issue
Energy Use an GHG Emissions is relevant due to the industry’s large energy footprint
Buildings account for 40% of global primary energy consumption
Tightening regulations
Market failure worth USD 130bn per year in US alone
Conflicting interest of owners and occupants
Energy efficiency projects: NPV positive and short payback periods (1-2 years)
Over one third of real estate companies do not have a GHG reduction program
2016 LEADER IN THE LIGHT WORKING FORUM GETTING STARTED
Highlights from 2016 NAREIT Leader in the Light Working Forum
1. REIT Investor Perspective:
Hans Op’t Veld and John Robertson from PGGM and Deutsche Asset Management provided valuable insight on the role ESG plays in their investment processes, data collection, and engagement processes with firms. They discussed the relationship between ESG efforts and good management and described how essential ESG programs are becoming in order to stay competitive.
2. GRESB Overview and GRESB Update:
Chris Pyke and Dan Winters from GRESB reviewed 2015 as a banner year and announced changes to expect in 2016. In 2015, GRESB had more participants than ever before and expects even more in 2016. The green building industry continues to grow, breaking boundaries in every category. Looking forward, GRESB and investors alike seek higher data quality.
3. US Building Energy Policy Update:
Cliff Majestic from IMT reviewed new benchmarking legislation and policies that have been enacted across the United States. He discussed the importance of green leases and recommended ways to overcome the strenuous relationship between owners and tenants when it comes to costs and benefits associated with sustainability initiatives. Finally, he discussed steps going forwards on streamlining the barriers to benchmarking buildings.
4. Real Estate and Sustainability Reporting:
Sustainability Disclosure in Real Estate:
Lenora Suki and Morgan Tarrant from Bloomberg reported on the progression of sustainability data and disclosure in 2015. Sustainable investment, green bonds, and disclosure is on the rise while the standardization of reporting is still evolving.
Sustainability Accounting Standards Board:
SASB is an independent 501(c)3 non-profit whose mission is to develop and disseminate sustainability accounting standards that help public corporations disclose material, decision-useful information to investors. SASB is working to standardize sustainability disclosure topics and requirements for publicly traded companies. With an overwhelming dissatisfaction from investors on current sustainability reporting and a quickly growing desire to see sustainability data, SASB is working tirelessly to fill current gaps.
ESG Perspective on the Real Estate Industry:
Doug Morrow from Sustainalytics presented on the growth and evolution of the green building industry since the 1970s. He provides an overview on REITs, green buildings, rental prices, and market capitalization.
