How the SEC's new climate fund rules will change greenwashing game
Welcome to Callaway Climate Insights. We will be back in action in California as of Tuesday, May 31. Have a great long weekend.
To read all our insights, news and in-depth interviews, please subscribe and support our great climate finance journalism. Callaway Climate Insights publishes Tuesdays and Thursdays for everybody.
LONDON (Callaway Climate Insights) — The Securities and Exchange Commission may be the only part of President Joe Biden’s government getting tougher on climate change. Fresh from fining BNY Mellon for misleading claims on its environmental, social and governance (ESG) funds earlier this week, the regulator published a list of new restrictions set to bite down hard on so-called greenwashing claims in the $350 billion U.S. sustainable fund market.
Among them, making funds disclose the emissions of the assets they hold, very much like investors are looking at banks to do. And requiring funds marketing ESG funds to hold up to 80% of their assets in securities that meet that criteria, which they also must disclose. And finally, to disclose how they vote on climate shareholder resolutions against specific fund holdings.
Coming only a few months after the SEC and Chairman Gary Gensler dropped proposed rules on companies about disclosure, the second shoe coming down on fund companies tied to misleading marketing is a strong signal the regulator is serious about cleaning up the messy, confusing world of ESG investing.
Republican objections that the SEC shouldn’t be telling investors what to invest in appear to have been brushed aside, a rarity in Washington these days with any climate strategies coming out of the administration.
It will take some time to clean up five years’ worth of Wild West marketing of ESG funds by Wall Street, and it will only work with hard, painful penalties setting examples — much more than the $1.5 million fine levied at BNY Mellon. But amid all the recent talk about the failure and ineffectiveness of ESG, it’s good to see someone targeting a comprehensive reset.
More insights below . . . .
Don’t forget to contact me directly if you have suggestions or ideas at firstname.lastname@example.org.
BlackRock’s belated epiphany
. . . . BlackRock raised more than a few eyebrows last week when it said that for the near future it would vote against some climate-friendly shareholder resolutions, writes Mark Hulbert. The world’s largest asset manager, whose CEO Larry Fink has held the torch for environmental, social and governance investing the past two years, suddenly seems to be bending in a year marked by war, energy shortages and rising interest rates. Is it possible ESG investing is only favorable when the markets are going up? More likely, Hulbert says, the fund manager realized that in matters of global markets, social investing can sometimes be trumped by fiduciary duty. . . .
EU notebook: Austria’s first green bond issued to strong demand despite shaky markets
. . . . Austria issued its first green bond this past week, raising €4 billion ($4.26 billion) to fund sustainable projects, and joined the Netherlands, Germany and Britain in the sustainable income market, writes Alisha Houlihan from Dublin. The lead manager said the issue had more than €25 billion in investor demand, underscoring continued interest in green bonds despite the downturn in global markets this year. Greece intends to launch its first green bond later this year, which will be a milestone given Greece’s recent history in debt markets. Meanwhile, the EU agreed on gas storage requirements for member countries to avoid price shock this coming winter. . . .
Thursday’s subscriber insights: Playing the hot heat-pump companies
. . . . It turns out elephants are litter louts. Dumbo and his pals raid village dumps in India (and other places), eat everything — including plastics — and then poop plastic bags and other similar stuff in the forest. Can’t help the pachyderms, either. Check it out. . . .
. . . . Want to make out like a bandit during the renewables transition? You might want to get hot about heat pumps, the devices that warm you in winter and cool you in summer. And the U.S. government wants to help with tax credits and by encouraging domestic production. Here are some of the publicly traded companies set to score on heat pump products. Read more here. . . .
. . . . What a difference a year makes. In the last annual general meeting (AGM) season, fossil fuel companies were bowing before activist investors. Now, flush with cash due to rising oil and gas prices, they are not so keen — and their investors are very happy to see the big profits. Read more here. . . .
. . . . Hotels and other travel destinations have woken up to the fact that they need to cater to EV drivers and are installing chargers. Other travel entities, such as Expedia, are getting in on the action by noting where charging is available on its website. Read more here. . . .
Editor’s picks: Energy upgrades can lower bills, and emissions
Energy-efficiency upgrades help lower costs and emissions
Although energy efficiency improvements can lower utility bills, the upfront costs of upgrading are beyond many Americans’ budgets. Paula Glover, president of the nonprofit Alliance to Save Energy, tells Yale Climate Connections, “These investments – particularly if you want to have big impacts, so we’re talking about heating and cooling and maybe even water heating and that sort of thing, or switching out a refrigerator — can be expensive and not every household has the funds to make that kind of investment.” Hope comes in the form of the federal bipartisan infrastructure law that passed last year, which includes $3.5 billion for the Department of Energy’s weatherization assistance program. YCC notes the program funds energy efficiency upgrades for low-income households. Glover says these types of government programs can help reduce energy costs for low-income people who often need the savings most.
Battery swapping can change urban transportation
Horace Luke, founder and CEO of Gogoro (GGR), sees the electrification of two-wheeled vehicles as a major opportunity for the transportation sector. In a special episode of Renewable Energy Smartpod on SmartBrief, Luke explains the basics of battery swapping and outlines how Gogoro’s charging station network is changing urban transportation. Gogoro is based in Taiwan, and focuses on electric scooters, related hardware and battery swapping technology. SmartBrief notes that Gogoro, which recently debuted on Nasdaq and which had early support from Al Gore, Temasek and Engine No. 1, offers a range of sustainable uses for batteries, ranging from stoplights and parking meters to in-home use. Listen to the complete podcast.
Latest findings: New research, studies and projects
Is social media making the climate crisis worse? Probably.
This conceptual paper introduces the notion of algorithmically embodied emissions to highlight how everyday choices facilitated by commercial algorithmic information systems such as commercial search engines, social media and recommender systems contribute to the climate crisis and other forms of environmental destruction. According to the authors of Algorithmically Embodied Emissions: The Environmental Harm of Everyday Life Information in Digital Culture, the proposed concept is developed by integrating terminology from the fields of information studies, critical algorithm studies and environmental impact assessment, and by examining a strategic selection of examples. The authors show that semantic interpretation of queries, as well as the information architecture, involve normative dimensions with implications for the climate crisis and other forms of environmental destruction. Authors: Jutta Haider, Swedish School of Library and Information Science, University of Borås; Malte Rödl, Swedish University of Agricultural Sciences Department of Urban and Rural Development; Sofie Joosse, Swedish University of Agricultural Sciences Department of Urban and Rural Development.
More of the latest research:
Words to live by . . . .
“My message to you is simple: Don’t work for climate wreckers. Use your talents to drive us towards a renewable future.” — António Guterres, Secretary-General of the UN, speaking to graduates of at Seton Hall University this week.