In Brief

Franklin subsidiary rolls out more custom ESG tweaks for SMAs

Data visualization and country exclusions are new, O'Shaughnessy says

Franklin Templeton subsidiary O’Shaughnessy Asset Management has put more resources into the ESG investing feature within its Canvas custom indexing service, including options to avoid investments within Russia and other countries, the company announced today.

The Stamford, Connecticut-based firm added a new ESG portfolio construction interface to the system, allowing advisers to “establish a transition plan and lock-in tax specifications,” the company said. The service also has more data visualization now, providing “dynamic feedback such as expected return impact, position-level over and underweights, and thematic repositioning of the portfolio.”

It also has ESG-specific performance reporting and allows country exclusions.

“Canvas offers simple and efficient customization,” CEO Patrick O’Shaughnessy said in the announcement. “Do you want to build a custom ESG portfolio? Do you want to exclude Russia-based companies? Do you want to build a momentum-based portfolio? With Canvas, you can do all of this.”

Providing more transparency in allocations can show investors that their holdings reflect their values, the company said.

The service is used to build custom indexes within separately managed accounts. Advisers choose ESG themes including carbon intensity, community relations, gender diversity, alcohol and firearms, according to the firm. Canvas also allows users to overweight companies with high ESG scores, rather than relying on exclusions alone, with the interface having options to “exclude the worst” and “reward the best.”

Loomis Sayles hires ESG leader

Colleen Denzler was most recently at Smith Capital Investors

Loomis Sayles has hired industry veteran Colleen Denzler to lead its ESG efforts, the Boston-based firm announced today.

Denzler, who has been in the industry for 35 years, previously worked at Calvert Asset Management, Janus Henderson, American Century Investments, First Affirmative Financial Network and most recently Smith Capital Investors, where she led the company’s ESG integration work. At Loomis Sayles, she fills a role that was last held by Kathleen Bochman, who left last year to become managing director of research for ESG at Fidelity Investments.

Denzler reports to Loomis Sayles chief investment officer David Waldman and has responsibility to “advance the firm’s already well-established ESG initiatives, support sustainability efforts as part of Loomis Sayles’ own governance, ensure investment teams have access to ESG data and research and help to provide solutions for [its] clients’ increasing ESG needs,” the company said in the announcement.

“Good governance and sustainable business practices are inherent factors in our decision-making as long-term investors who seek to deliver superior long-term, risk-adjusted returns to our clients,” Waldman said in the announcement. “Colleen’s extensive background will be an asset as we strive to leverage ESG insights and data in our investment processes and to design products consistent with clients’ ESG objectives.”

Denzler is a member of ESG Clarity’s US advisory committee.

Climate disclosures should be mandatory, investors say

People trust climate data more often if companies are required to report it

Retail investors broadly like the idea of the SEC requiring public companies to disclose their climate risk data, according to the results of a recent survey.

Seventy percent of more than 2,500 current investors surveyed in March said they either somewhat or strongly supported the requirement, according to a survey published April 28 by Public Citizen and the Americans for Financial Reform Education Fund. Those groups commissioned the survey, which was conducted by Embold Research.

While 36% of people said they would trust the climate risk data in disclosures made voluntarily by companies — which is the current standard — 58% said they would trust that information if companies were mandated to report, the survey found. Further, 71% indicated they would trust the data if companies made disclosures to the SEC and the information was audited by a third party.

In March, the SEC unveiled a proposed rule that would require most public companies to report emissions data, including Scope 3, with third-party verification eventually being required for Scope 1 and 2 emissions. The agency is currently reviewing public comments and preparing a final version of the rule.

The recent survey data echo the results of a December poll commissioned by Just Capital, Ceres, Public Citizen and SSRS. That report found that 87% of 1,100 Americans surveyed said they think the government should require large companies to disclose their climate risks, with 97% of Democrats and 74% of Republicans agreeing.

KraneShares adds carbon-offset ETF

The product is the first to include the top carbon-offset futures markets into one fund, the firm says

KraneShares launched its latest ETF Thursday, a product that provides coverage of the voluntary carbon market.

The KraneShares Global Carbon Offset Strategy ETF tracks carbon-offset futures contracts, including nature-based global emission offsets and global emission offsets, which trade through the Chicago Mercantile Exchange, according to the firm. The ETF will add more offset markets “as they reach scale,” KraneShares said in the announcement.

The ETF is the first in the US “to combine the leading carbon offset futures markets into a single investable fund,” KraneShares CEO Jonathan Krane said in the announcement.

The ETF, which trades under the ticker KSET and charges total fees of 79 basis points, can also invest in carbon credits issued under cap-and-trade regimes, as well as instruments including options, swaps and other ETFs, according to the prospectus.

Climate Finance Partner, or CLIFI, is the ETF’s nondiscretionary subadvisor.

“Voluntary carbon markets are a vital tool in the fight against climate change and are increasingly viewed as a cornerstone in global efforts to achieve mid-century net-zero targets,” CLIFI cofounder Eron Bloomgarden said in the announcement. “Investors can feel confident that the offset credits behind KSET are generated from emission reduction activities that have been third-party verified by leading carbon offset registries.”

Schwab lets DIY clients see MSCI ESG stock ratings

The move follows the recent launch of thematic stock lists

Charles Schwab is helping DIY investors build their own socially responsible portfolios, on Wednesday announcing that it is giving clients access to MSCI’s ESG ratings for individual securities.

That includes ratings for 14,000 issuers, representing about 8,500 different companies, which are available through Schwab’s research tool or its Equity Ratings Reports for specific securities.

The move follows Schwab’s launch in March of thematic stock lists, which are designed to guide people who want to invest according to their values or interests, according to the company. And earlier in April Schwab announced that it was adding a direct indexing service to help clients further personalize their portfolios.

About a quarter of Schwab’s retail clients who were surveyed earlier this year said that their values or personal interests factor into their investment decisions, and an additional 20% said they would like to begin investing accordingly, the company stated.

“A growing number of people want to align their investments with their beliefs and values,” Malik Sievers, head of ESG strategy at Schwab Asset Management, said in the announcement. “Having an easy way to review a company’s ESG rating during the research process is something today’s investors find useful as they seek to integrate ESG in their portfolios and evaluate a company’s resilience to ESG risks.”

US ahead of UK in company net-zero goals

Sylvera survey finds 78% of US companies have strategies in place

Despite the US being years behind much of Europe on ESG investing, American companies are significantly more likely than those in the UK to have made net-zero goals.

That is according to a report published Wednesday by carbon ratings provider Sylvera, which commissioned a survey in March and April of 250 companies each in the US and UK that employ at least 10,000 people.

More than half – 55% – of UK firms said they have net-zero transition strategies in place, while 78% of US companies reported the same, according to Sylvera’s report.

“The general perception is that European markets are further ahead, however, the survey data indicates that US counterparts are more advanced in building their strategies than UK corporations,” Sylvera COO Sam Gill said in an announcement of the findings.

“Regardless of where these companies are located, the next 12 months will be pivotal in hitting climate targets, putting words into action and ensuring that net-zero transition plans are not just created but also implemented.”

Decision-makers at US firms were also more likely to profess having “expert knowledge” about the voluntary carbon markets, at 50%, compared with 26% of their corollaries at UK businesses.

For companies that utilize those markets, 96% in both countries said they purchase carbon credits, the survey found. More than a third of companies said that pressure from shareholders was what led them to purchase carbon credits.