Investors may be better placed to understand the financial implications of managing “E” in ESG when financed carbon emissions are measured and tracked.
For voluntary carbon credits to be effective vehicles for funneling private investments into high quality, effective and impactful projects, the credits must have integrity and investors must have assurance that are achieving their goals.
Collectively the DOL’s and SEC’s proposed proxy voting rules create an opportunity for plan fiduciaries to exercise greater influence over corporate governance issues, including ESG matters. With these proposals ERISA fiduciaries may come under greater scrutiny for how they develop, monitor and implement corporate governance and proxy voting. Once there is greater transparency around how fiduciaries are exercising their governance responsibilities, participants may want greater say on what is in their best interests.
Advisor / investors can create custom values-based metrics on which to build a portfolio or fund-level profile against which they can judge whether an investment is more or less aligned with their objectives – financial and non-financial
Regardless of legislative points of view, standard disclosures across sustainability and ESG topics, regardless of materiality in a specific company’s instance, is necessary to provide a foundation for evaluation across firms and time. Allowing companies to provide contextual guidance about how such disclosures fit into risk management activities or long-term strategy also provides useful information upon which investors and other market participants can base decisions.
ESG ratings are attracting increasing scrutiny. Not every investor has the same views about the underlying issues nor do they place the same weight on them. Fractional trading now allows investments aligned with an investor’s values.