In Brief

Princeton axes oil companies from endowment

The school will sever ties with the 'most-polluting segments' of the industry

Princeton University is dumping the fossil fuel holdings in its $38bn endowment, the school’s board of trustees announced Thursday.

The school listed 90 oil and gas companies from which it will dissociate, meaning that it will divest from the companies and also avoid any business relationships with them. The dissociation is “focused on the most-polluting segments of the industry”, including companies with significant business in thermal coal and tar sands, according to the announcement.

Princeton made the decision last year to move away from fossil fuel holdings in its endowment but just recently had its board of trustees vote on the list of companies to exclude. The most prominent name on the list is ExxonMobil, but it also includes energy producers such as Xcel Energy and Alliant Energy.

The measure is part of the board’s goal to eventually have a net-zero endowment portfolio. Princeton used data to compile the list of companies based on recommendations from a faculty panel, according to the announcement.

Along with the dissociation, the university is planning to start a fund that will be used to support energy research. That will be necessary in order to make up for a drop in research funding that will result from cutting ties with the energy companies on its list, the school stated.

Yale partners with Arvella Investments for ESG data

Helping people integrate ESG into their portfolios

Yale University has launched a partnership with Paris-based boutique firm Arvella Investments to provide ESG research, the groups have announced.

The Yale Initiative on Sustainable Finance will be the research partner for the firm’s ESG for Investors sustainable investment service. That service is designed to help people integrate ESG into their portfolios, with input from fellow investors and academics, according to Arvella.

“After a dramatic growth in ESG-labeled assets, ESG investing faces an unprecedented backlash,” the company stated in the announcement. “Two factors drive this backlash. First, investors have challenged weak analytical foundations of ESG investing, anticipating that it is likely to deliver subpar long-term investment returns. Second, the lack of meaningful real-world impact has fed greenwashing claims.”

The research is aimed to provide information to asset managers and their clients that could improve returns and have environmental and social impact.

“Greenwashing is a rational, if unambitious reaction to ESG activists’ absurd asks,” said Arvella CIO Benoit Mercereau, in the announcement. “ESG activists exhort investors to do things that make little investment sense. Unsurprisingly, most investors won’t. ESG proponents should acknowledge investors’ reality and make the business case for ESG improvements instead. If a company’s positive ESG impact will increase its profits, investors will stop at almost nothing to maximize that impact.”

The arrangement between the Yale Initiative on Sustainable Finance and the asset manager is not the first of its kind. Other firms have recently partnered with universities to provide ESG research, including MIT’s relationship with Wellington Management and Columbia University’s partnership with AB.

‘Expert’ investors value ESG more than novices

A Schroders survey found people seek sustainable investments for multiple reasons

Seasoned investors are more likely than novices to attribute performance benefits to ESG factors – but they also value sustainable investing most for environmental and social benefits.

That is according to a report published Tuesday by Schroders, which earlier this year surveyed more than 23,000 people globally.

Just over two thirds of respondents who identified as expert of advanced investors said they agreed with the statement that “Sustainable investing is the only way to ensure profitability in the long term,” compared with 52% of intermediate-level investors and 43% of beginners. Further, experienced investors were also much more likely (69%) than others to agree that “investment can drive progress in sustainability challenges such as climate change.” Fifty-seven percent of intermediate investors and 49% of beginners said they agreed with that statement, according to Schroders.

Over the past several years, people have become more likely to say they choose sustainable investments because of environmental and social factors, rather than potential for higher returns, the company found. Fifty-two percent of people drawn to such funds cited environmental impact as their leading concern, up from 47% who said so in 2020. Meanwhile, 43% pointed to “societal principles,” compared with 32% two years ago. Those saying higher returns were their primary reason declined from 42% to 36%.

When it came to factors that would lead people to invest more in sustainable funds, the top reason (57%) was being able to pick funds that go along with their personal preferences on ESG issues, according to Schroders. Behind that were “more education about sustainable investment in general” (48%) and data showing higher returns associated with those funds (44%).

“The interaction between sustainability and returns has seen some polarizing results this year,” the firm’s head of sustainability strategy, Hannah Simon, said in an announcement. “While self-professed beginner investors appear more skeptical, the majority of people believe sustainability is crucial to delivering long-term returns.”

Earlier this year, Schroders issued separate survey data from retirement-plan investors, finding that 74% said they would increase contribution levels to their accounts if sustainable funds were available.

Muni bond ESG intel service launches

Data around climate risk and potential default can help investors amid a rise in natural disasters

Data provider UrbanFootprint and insurance company Assured Guaranty are preparing an ESG information service catered to the muni bond market, the companies recently announced.

Municipal Bond Insights is designed to help investors evaluate climate risk and other factors amid a rise in extreme weather events that cost the US an estimated $145bn in damages across 20 natural disasters in 2021, the firms stated. Such events can lead to higher rates of defaults.

“As climate change continues to accelerate the severity and regularity of extreme weather events, public finance institutions are seeking solutions to include climate and community resilience metrics in risk assessment for their portfolios,” UrbanFootprint CEO Joe DiStefano said in the announcement.

Assured Garanty has been using UrbanFootprint’s methodology for more than a year to analyze climate risks in its portfolio of insured bonds, the company said.

JP Morgan adds double materiality ESG data service

The firm developed the new capability with data company Datamaran

JP Morgan has launched an investment research platform offering an ESG integration process based on financial and impact materiality, also known as double materiality.

The company has developed the ESG Discovery platform with ESG data vendor Datamaran and with input from JP Morgan’s equity research team.

Proprietary materiality assessment models have been constructed by the group based on data from corporate disclosures, mandatory regulations, voluntary policy initiatives and online media.

These sources provide signals on sentiment and anticipate which emerging topics are positioned to have an impact on financial markets.

According to Datamaran, the platform offers timely, high-quality information on material ESG risks and opportunities at both a company and sector level on an ongoing basis.

Functionality is split in to four main areas:

  • Company profiles show materiality scores of 35 ESG themes for a specific company and as well as views on how the company manages most material themes.
  • Thematic screening screens companies based on their management of a specific ESG theme across sectors.
  • Sector analysis displays materiality of 35 ESG themes for a specific sector.
  • Cross-sector analysis allows the investor to compare the materiality of 35 ESG themes across sectors.

Available to JP Morgan clients, ESG Discovery is intended to look beyond ratings to underlying drivers and make the asset manager’s work in this area searchable in one place through time.

Sophie Warrick, head of EMEA equity research and co-head of global ESG research at JP Morgan, said: “ESG Discovery will provide JP Morgan’s sector analysts with the unique ability to assess ESG issues according to a clients’ own ESG priorities, providing in-depth, fundamental and forward-looking opinions on ESG performance, which are increasingly important to our clients.”

She noted the use of a double materiality approach better serves clients’ needs by “addressing a broad range of ESG investment strategies, from ESG integration to impact investing.”

Datamaran’s CEO Marjella Lecourt-Alma also commented on the need for this dual perspective: “Looking at material risks from both a financial and wider sustainability perspective is becoming standard practice for investors and companies, and they both need a credible, robust and tech-enabled process to achieve that.”

This story first appeared on ESG Clarity Intelligence.

Putnam hires ESG leader from BofA

Jackie VanderBrug will help expand the company's sustainability efforts

Putnam Investments has hired a sustainable investment leader from Bank of America and Merrill Lynch for a new high-level role at the firm.

Jackie VanderBrug has been appointed Putnam’s head of sustainability strategy, reporting to CEO Robert Reynolds, the company announced today. Most recently, VanderBrug was head of sustainable and impact investment strategy in the chief investment office at Merrill and Bank of America Private Bank, a position she has held since 2018.

VanderBrug is on the company’s operating committee and “will lead a host of key ESG-focused business functions, such as stewardship, engagement and partnerships, and ESG strategy and integration,” Putnam stated. She will work alongside the company’s other sustainability-focused leaders: Katherine Collins, head of sustainable investing; and Catherine Saunders, head of corporate sustainability.

VanderBrug “will play an integral role in further expanding our firm’s focus in the critical realm of sustainability,” Reynolds added in the announcement. “At a time when ESG-related questions are rising in complexity and intensity, we are focused on further strengthening our investment-centric approach to these issues.”

Like other fund providers, Putnam has been expanding the ESG-themed products in its lineup.

This year, the firm has prepped or launched several ESG ETFs, and next year it plans to repackage its existing RetirementReady target-date series as the Putnam Sustainable Retirement Funds.