THE ROAD BACK TO PARIS AND BEYOND
The U.S. is now officially back in the Paris Agreement. Messages coming from the government on climate change are strongly worded, but it’s still early days in terms of tangible actions. As The New York Times noted, “There are two immediate signals to watch for. First, how ambitious will the Biden administration be in its emissions reductions targets?” and, “…how much money will the United States provide to help poor countries adapt to the calamities of global warming and shift their economies away from fossil fuels?”1
On April 22nd, Earth Day, President Biden will hold a “Climate Summit,” which should give some insights into these questions. In the meantime, domestic climate adviser, Gina McCarthy “has pledged “the most aggressive” carbon cut the U.S. can make.”2
The White House is also working to determine the “social cost of carbon,” or SCC, which “would be considered in every rule, regulation and policy enacted as part of President Joe Biden’s “whole-of-government” approach to tackling climate change.”3 Carbon costs in other countries are running between $20-$100 per ton. Following the same method as the Obama administration could result in a cost of $125 per ton, the same value New York State recently announced as its carbon value.
REFINITIV: TOP ESG TRENDS FOR 2021
We are featured in Refinitiv’s latest publication of ESG trends. In it, Jeff reiterates his view that we are facing a significant repricing driven by climate change that will impact multiple asset classes. As always, we encourage advisors and investors to assess their portfolios for climate impact.
Featured insights and takeaways from other contributors include:
- Circular economy practices are expected to gain more traction in 2021, which “represents a systemic shift in our current conceptualization of wealth generation and well-being.”
- Corporate incentives will increasingly be linked to ESG metrics, or at least shareholder resolutions will increasingly make that ask.
- Addressing racial inequality requires multiple solutions e.g., removing lending biases, improving board diversity, investing in managers of color, and venture capital funding.
- Social indicators, in general, will gain more focus as “the pandemic continues to reveal the weak points of our societies.”
Finally, as Jeff states in the piece, “[we] have a tough road ahead, but we believe there are amazing feats along the way. Human potential is always in abundance.”
IN CASE YOU MISSED IT
Jeff recently interviewed Will Relle, Responsible Investment Consultant at Mercer, to discuss Mercer’s experience with institutional asset owners (e.g. endowments, foundations, and pension plans) in sustainable investing. Will notes how shifts in the U.S. regulatory landscape, given the CTFC’s 2020 report on Managing Risk in the U.S. Financial System and Chairman Powell’s November remarks, are catalyzing institutional asset owners into integrating climate risk. Asset owners are adopting climate KPIs in their investment objectives and disclosing climate information according to TCFD guidelines.
ESG PRACTICE PLAYBOOK: REGISTER NOW!
Starting on March 3rd, we are cohosting the “ESG Practice Playbook” series, in partnership with RIA Channel. This four-week event is aimed at advisors who want to know how to integrate ESG into their practices. Join us for weekly 90-minute online sessions, each carrying CFP / IWI / CFA CE credits.
As always, please reach out if we can be helpful as you establish and grow your sustainable investing practice.