In Brief

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.

Millennials push growth in impact investing

Advisers can play a big part in whether clients use impact investments, survey finds

Interest in impact investing is on the rise with millennials driving the trend, a recent survey from Fidelity Charitable has indicated.

Just over 60% of millennial investors said they currently have such investments, with roughly as many saying impact investing has more potential to make long-term change that traditional philanthropy, the non-profit found. Furthermore, two-thirds of millennials said impact investing is simply a smart way to invest, according to the report, which is based on a survey in July and August 2021 of more than 1,200 people in the US with at least $25,000 invested outside of an employer-sponsored retirement plan.

Those figures compare with one third of investors overall who participate in impact investing, Fidelity Charitable found. But as younger investors grow their wealth, that is likely to change, according to the non-profit.

“We find investors are increasingly interested in aligning their investments with their broader values and desire for social change,” Scott Nance, vice president of impact investing at Fidelity Charitable said. “And the trend toward values-based investing will only grow as millennials come to control a larger share of wealth.”

Financial advisers play a big role in determining whether clients use impact investments, according to the report. Among people who don’t use impact investments, 39% said they had little knowledge of the strategies, which usually involve mutual funds or securities that in addition to returns provide capital to “to address key challenges in sectors like sustainable agriculture, microfinance and access to basic services like housing and health care.”

Meanwhile, 31% of those who don’t use impact investments said they would consider them with help from their advisers. Of those who have impact investment in their portfolios, 42% said they learned about them from an adviser, while 30% said their knowledge of impact investing came from materials provided by investment firms, the survey found.

Deloitte to expand sustainability, climate services as regulations mount

Consulting firm aims to help businesses transform their sustainability

Amid an evolving ESG regulatory landscape in the US and Europe, Deloitte is injecting $1bn into its global sustainability and climate practice, the firm announced Wednesday.

Through that investment, the company is “assembling one of the largest global networks of sustainability experience,” with funding going toward “client-related services, data-driven research, and assets and capabilities,” it said in the announcement.

The consulting giant aims to help clients improve the sustainability of their businesses and aid in disclosure and regulatory requirements. Part of that includes the launch of the Deloitte Center for Sustainable Progress, which will collaborate with academics, business groups, and policy and governmental organizations, Deloitte said. That network “will focus on holistic, results-oriented thought leadership, data driven analysis, and accountability reporting to guide organizations through their sustainability journeys.”

In the US, public companies are facing increasing pressure from shareholders to measure, report and find ways to rein in greenhouse gas emissions. Shareholders have also been lobbying much more for other environmental and human rights causes.

That trend is accompanied by a rule proposed by the Securities and Exchange Commission that would require many public companies to measure and report their climate risks, including comprehensive Scope 3 emissions, which cover carbon in a business’s value chains. Along with that, the proposed rule would require verification for Scope 1 and 2 emissions data by independent third parties.

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