Author: Sureita Hockley

We reached out to leading experts in SRI to find out their responses, and this is what we found…

QUESTIONWhy does the term ESG create a problem for so many?

ANSWERMichael Poisson, Managing Director – Ideal Ratings

ANSWERFear. When it comes to the term ESG, people may fear it for a variety of reasons that are often rooted in their own beliefs, values, or concerns. For some it’s simply their uncertainty or lack of familiarity of just what ESG is, for others, there is a perception of overreach or intrusion into their personal values or freedoms,  while some are skeptical of the impact or effectiveness of addressing ESG issues for others it is simply a threat to their political or ideological differences.

ANSWERIt’s important to acknowledge that fear or skepticism surrounding ESG is not uniform, and individuals’ concerns can vary widely. Engaging in open dialogue, providing accurate information, and addressing these concerns can help foster a better understanding of ESG and its potential benefits.

QUESTIONWhy does the term ESG create a problem for so many?

ANSWERCharles Hamowy, CPA/PFS, CFP®, Editor In Chief – The Socially Inspired Investor

ANSWEROne of the main criticisms of ESG investing is that it is too focused on social and environmental issues and not enough on financial performance. Some investors argue that companies that prioritize ESG factors may be sacrificing financial returns in order to meet social and environmental goals. This can be particularly problematic for investors who are primarily focused on maximizing their returns and may not be as concerned with social or environmental issues.

ANSWERAnother reason why some people are mad at ESG is that they believe it is too subjective. ESG ratings are often based on a variety of factors, including a company’s environmental impact, labor practices, and corporate governance. However, different ESG rating agencies may use different criteria to evaluate companies, which can lead to inconsistencies in ratings. This can make it difficult for investors to compare companies and make informed investment decisions.

ANSWERFinally, some people are mad at ESG because they believe it is too politically motivated. ESG investing often involves taking a stance on social and environmental issues, which can be controversial. For example, some investors may choose to divest from companies that are involved in the fossil fuel industry or that have poor labor practices. However, this can be seen as a political statement rather than a financial decision, which can be off-putting to some investors.

We reached out to leading experts in SRI to find out their responses, and this is what we found…

QUESTIONWhat are cities doing to become more energy efficient and sustainable? And how are they paying for it?

ANSWERDaria Bogatyreva, Head of Canadian Sustainability and Outreach, Pappus 101

ANSWERHere is my vision of what cities are doing to become more energy efficient and sustainable and how they are paying for it. I observe that cities are generating opportunities to make a quantum leap in energy-efficient infrastructure. To accrue energy efficiency, Urban planners assess wards rather than distinct buildings according to a consistent strengthening of guidelines for the placement of green facilities and DE&I traction planning. There are several ways that cities are paying for strengthening infrastructure performance, including PPPs (in transportation and water & sanitation services provision), subsidies, revenue from utilities, and the funds circulating from offsetting payments.

QUESTIONWhat are cities doing to become more energy efficient and sustainable? And how are they paying for it?

ANSWERSarah Welton, Expert in Social & Environmental Sustainability, NYC

ANSWERAcross the United States, cities and localities are taking a variety of approaches toward combating climate change, especially when it comes to one of the primary culprits of carbon emissions: buildings. This bespoke approach can be a headache for national, or even regional, real estate owners, but it also allows some cities, like NYC to stand out as sustainability leaders. Most notably, New York recently passed Local Law 97, which penalizes large emitters, including the LEED Platinum BofA Tower, which is estimated to pay nearly $2.5 million dollars per year for its carbon emissions. In an effort to reduce carbon in the atmosphere, the city is offering programmatic and financial support for property-level assessments, retrofits and efficiency improvements like green roofs and solar panels. Though NYC is criticized for working too slowly on cleaning up the grid or installing EV charging stations, New Yorkers are responsible for fewer carbon emissions than most Americans, even after death.

QUESTIONWhat are cities doing to become more energy efficient and sustainable? And how are they paying for it?

ANSWEREugenio Liu, ESG Strategy and Development & Sustainability Consultant

ANSWERCities need a catalyst to get things rolling, and often times it is the government that needs to take on that role. In the case of Santiago (Chile) where I hail from, our cities are tackling decarbonization from three very specific areas: Clean Transportation, through sustainable mobility and public EVs; Energy Efficiency, from subsidies to vulnerable sectors; and Green buildings. These projects which have added up to approx. $8.5 Billion are being financed through green bonds and sustainability bonds successfully placed and oversubscribed in international markets. In fact, Chile was the first country in the American continent to issue a green bond.

QUESTIONWhat are cities doing to become more energy efficient and sustainable? And how are they paying for it?

ANSWERMaria Stoica, Environmental & Sustainability Advisor, Financial Conduct Authority (FCA)

ANSWERThe cities accelerate the revision and allocation of development permits that include energy efficiency requirements among other environmental and social aspects. So, businesses are delivering energy efficiency but cities are facilitating that opportunity.

ANSWERNonetheless, cities assess the energy efficiency of the local built environment and send grant schemes information to property owners and tenants in mapped low energy efficiency buildings.

QUESTIONWhat are cities doing to become more energy efficient and sustainable? And how are they paying for it?

ANSWEREve Zoma, ESG/Climate Analyst, APICIL Asset Management

ANSWERThe carbon footprint of cities and urban areas accounts for nearly 70% of global carbon emissions. From this observation, the N°11 of the Sustainable Development Goals calls on cities to trigger the necessary transformations to become more energy efficient and sustainable. To meet this goal, cities are increasingly turning to cleaner energy sources such as solar power. They are redefining themselves by becoming smart cities and creating green spaces to reduce pollution. Furthermore, more and more eco-districts and coworking spaces are being created in cities, facilitating telecommuting and relieving congestion in certain areas. These actions, allowing cities to meet the dual climate objective of reducing greenhouse gas emissions and adapting to climate change, require massive investments. For this purpose, cities usually use credits or loans (green bonds, bonds, bank credits, or others). In addition to the substantial investments to be made, some cities have to face technical difficulties.

We reached out to leading experts in SRI and ESG to find out their responses, and this is what we found…

QUESTIONHow do Socially Inspired investment themes differ and why is that important?

ANSWERTonderai Leonel Njowera, Civil Engineer, Sustainable Finance, Strategy and Risk Analyst

ANSWERSocial investment themes differ in materiality, asset classes such as education, health, agriculture, water supply and sanitation, either of both climate change adaptation or mitigation, to name a few. This can be either in terms of investment technology or even investment in a particular social asset class or even non-investment. For example, there will be investment in social housing in some geographies, and non in other, or the level of healthtech/edutech will be lower in one region than the other.

ANSWERThese variations are key because they allow contextual investment, which allow real social challenges to be addressed through relevant asset solutions, putting investment resources of time, money and human capital, to efficient and effective use.

QUESTIONHow do Socially Inspired investment themes differ and why is that important?

ANSWERLiana Le, Energy Transition Analyst and Niklas Huppmann, Business Strategy at Kayrros

ANSWERESG or socially inspired investments not only allow finance socio-ecological progress but also create long-term interest and contingency to ultimately move key issues at the core of political and economic considerations. As different issues become more apparent through events and disasters, having separate themes allow for a more effective allocation of funding to drive change in an organized way. The process begins with policy and trickles down to the cause itself. For example, with the pressure of climate change rising and the influx of sustainable investments following — whether through government organizations or third parties backed by large firms, new policies are made throughout the value chain. This top-down approach makes it so that money is not the only incentive — and stakeholders not only can take a hedging position in the short term but trust it will make an actual impact in the long run. 

QUESTIONHow do Socially Inspired investment themes differ and why is that important

ANSWERPersia Navidi, Partner, Hicksons Lawyers

ANSWERSocially inspired investment themes are becoming more and more prevalent and differ from other themes in that they focus on and consider the core of all businesses – their people. Why are they important? They are, arguably, the way of the future. Companies who fail to address issues such as diversity and inclusion, social justice and the “people” element of business may risk falling behind because investors, insurers, consumers, employees, clients and the wider community seek more transparency and evidence of socially inspired action and investment. While it may be difficult to define, assess and measure the “S” in ESG, we are increasingly seeing company directors and their insurers recognise the significance of socially inspired investments, leading to proactive steps being taken to measure and invest in this space.

We reached out to leading experts in SRI and ESG to find out their responses, and this is what we found…

QUESTIONRenewable energy is getting cheaper every day – What is the potential impact for consumers and investors?

ANSWERNimet Vural, Sustainability, Accountability and Corporate Finance

ANSWERThe domination of Fossil fuels around the World is changing dramatically, instead, Renewable Energies are getting more acceptable. In most places around the World, Renewables are cheaper than Fossil Fuels.

ANSWERWhy can this be? Why do we see that Renewable Energy Costs are declining so fast? There are multiple reasons for it.

ANSWERFirstly, the cost of Fossil Fuel and Nuclear Power depends on the fact that the prices of Fuel mostly burn and the Power Plants’ operational costs. On the other hand, the Renewable Energy System is completely different compared to Fossil Fuels. Their operational costs are not only low but at the same time, they don’t pay anything for fuel.

ANSWERWhat is more, the role of the Portfolio Standards requires Electric Utilities and other retail Electric providers to supply a specified minimum percentage of Customer demand with eligible sources of Renewable Electricity. Several studies show that Renewable Portfolio Standards (RPS) help the stringency, and demand elasticity influences only the magnitude of the price effect. 

QUESTIONRenewable energy is getting cheaper every day – What is the potential impact for consumers and investors?

ANSWERJack Casady, Director of Marketing at YourStake

ANSWERWe’ve seen many investors want to align their portfolios with renewable energy and renewable technologies to help create meaningful impact on the planet. With the high cost reduction in these renewable energy technologies, not only do they often make better investments, but many companies are shifting their energy suppliers to these renewable sources and lowering their carbon emissions all with lower costs.

QUESTIONRenewable energy is getting cheaper every day – What is the potential impact for consumers and investors?

ANSWERCarly Turner, MSc Candidate Sustainable Resources: Economics, Policy & Transitions at University College London

ANSWERRenewable energy is getting cheaper which indicates the viability of decoupling economic growth and environmental degradation in the form of increasing carbon emissions. In my opinion, leaning into natural assets such as wind and solar energy is a far more viable strategy to meet decarbonization targets than far-off technologies such as Carbon Capture and Storage (CCS). The decreasing costs of these technologies are indicative of system change which is a product of shifting consumer demand, policy reform, and new business models, all of which may be interpreted as a signal that economies are modernizing. There is a tremendous opportunity for investors to further this change by investing in renewables and continuing to scale operations to bring down costs so that consumers have access to clean, reliable, and affordable energy and therefore, consider renewable energy a norm rather than an alternative.

QUESTIONRenewable energy is getting cheaper every day – What is the potential impact for consumers and investors?

ANSWERRachel “Indy” Svetanoff, Impactvest Podcast Host

ANSWERElectricity is the bedrock for modern society, and renewable energy is a sign of society advancing forward with its collective consciousness. Not only does it help restore the natural world, but renewable energy is also an opportunity to shine a light on those left in the dark, namely the underserved and marginalized communities. With costs lowering, there is a historic opportunity to reduce multidimensional poverty in a way that uplifts the quality of life for all of us.  

QUESTIONRenewable energy is getting cheaper every day – What is the potential impact for consumers and investors?

ANSWERShawn Cain, Finance Student at Suffolk University “23

ANSWERRenewable energy groundwork has been happening for decades but now we’re seeing more and more adoption and investing across the board. New financial tools like green insurance and green bonds are helping get impactful projects started. Since every industry is pricing in climate change and taking steps to reverse it, the renewable energy industry is coalescing faster than ever.

QUESTIONRenewable energy is getting cheaper every day – What is the potential impact for consumers and investors?

ANSWERChristianne Carin, Managing Director, CEO, Stellars LLC, | ESG Impact-Investment Management | Serial Entrepreneur & Inventor

ANSWERFocused impact-investments in innovative on-site and off-grid renewable power generation solutions for communities, agriculture and onshore manufacturing is significantly cheaper than using fossil fuels to produce electricity while also reducing omissions. Proof: According to the EIA’s chart U.S. electricity flow, 2021, fossil fuel operators consumed more energy to generate electricity than the energy provided by their fossil fuel inputs due to their high conversion losses. This loss was supplemented by renewable energy and nuclear electric power, which also provided all the energy required for the generation of electricity for end users.

QUESTIONRenewable energy is getting cheaper every day – What is the potential impact for consumers and investors?

ANSWERFranz Hochstrasser, CEO and Co-Founder, Raise Green

ANSWERWith dirty fossil fuel prices spiking at the pump and in power plants, and solar and wind surpassing gas as the cheapest form of energy in most places across the world, it has never been a better time to make your money do good by investing in the clean energy future. For those who are overwhelmed by the climate crisis and tired of being told to recycle and petition their way out of it, Raise Green is the community finance platform that enables every American to join the ranks of the heroic entrepreneurs and innovators powering the transition from dirty to clean energy.

We reached out to leading experts in the ESG investing industry to find out their responses, and this is what we found…

QUESTIONIt seems more expansive company reporting on sustainability factors creates a better business model – WHY?

ANSWERMarci Bair, CFP, Bair Financial Planning

ANSWERThe more ESG data a company has the better it can analyze that data and information that is pertinent to the success of their company. ESG data is critical for a company to know its sustainability score for the long-term health of their company. Shareholders are educating themselves on companies ESG scores and supporting those companies that are creating a better business model that supports diversity, equity and inclusion. Employees are also becoming more decerning on whether the company they work for shares their values and those companies with higher ESG scores will attract employees focused on the future and shared success of the company.

QUESTIONIt seems more expansive company reporting on sustainability factors creates a better business model – WHY?

ANSWERRebecca Self, Director of Sustainable Finance at South Pole

ANSWERComprehensive reporting on sustainability factors provides important insight on the drivers of value creation and destruction in an organization. This supports long-term strategic decision making, looking beyond simply the financial results alone. Creating a better long-term business model requires a good understanding of a company’s customers, employees and other key stakeholders. This type of sustainability information, as well as environmental metrics, give a rounded view of business impact and the future drivers of financial results.

QUESTIONIt seems more expansive company reporting on sustainability factors creates a better business model – WHY?

ANSWEREvan Zall, President, Longview Strategies

When you want to build a better engine, you poke at the gears, you examine how the pieces fit together, and you also step back to look at the machine in broader context. How can it safely perform at peak performance – for the operators, the mechanics, and everyone else involved? Same thing for expansive reporting on sustainability factors. The process that companies follow to develop accurate and authentic sustainability reporting uncovers operational risks, areas of strength, and pathways to improvement that were previously left unexplored. The resulting communications can drive greater trust in the brand, increase customer loyalty, enhance employee recruiting and retention, and boost shareholder confidence.

QUESTIONIt seems more expansive company reporting on sustainability factors creates a better business model – WHY?

ANSWERRabo Garba, Senior Business Development Manager – Silicon Ranch Corporation

I think the key to successful sustainability reporting is to focus on the most impactful areas within a company’s control without losing sight of overall improvement. When leaders can take an honest look at the entire organization’s role in society and where they want to go, sustainability can then be aligned and integrated throughout the organization. I believe this kind of focus leads to better execution.

QUESTIONIt seems more expansive company reporting on sustainability factors creates a better business model – WHY?

ANSWERVishal Thiruvedula, Head of Product at RS Metrics

ANSWERExpansive company reporting based on a standardized framework reduces the disclosure gap and the risk of misleading investors by providing precise information needed for investment decisions. Advances in geospatial technology such as satellites and sensors are giving companies additional tools to address the environmental disclosure gaps.

QUESTIONIt seems more expansive company reporting on sustainability factors creates a better business model – WHY?

ANSWERTea Ivanovic, Co-founder and Chief Operating Officer at Immigrant Food

Impact investors are no longer a niche in the financial industry, and companies are catching on to that new reality. Doing “good” doesn’t have to come at the expense of companies’ bottom line and businesses have a much larger responsibility than maximizing returns to shareholders: we are entering an era where stakeholders are the community at large, not merely investors.

QUESTIONIt seems more expansive company reporting on sustainability factors creates a better business model – WHY?

ANSWERAbass Bila, Doctorate Candidate, FMVA, CSMA, Asset Management

ANSWERCompanies’ sustainability factors disclosure exercise scarcely responds to the general call for more transparency in their reporting. Yet Transparency towards sustainability reporting represents a fundamental part of the sustainability process, which can ultimately enable innovation. Hence, expansive company reporting on key factors can help them bridge sustainability and profitability for better value propositions along with disruptive and long-term business models.

QUESTIONIt seems more expansive company reporting on sustainability factors creates a better business model – WHY?

ANSWERPablo David Necoechea Porras, Ph.D., ESG and Sustainability Senior Manager, Investor Relations, Televisa

ANSWERCompanies are increasingly reporting sustainability factors because environmental, social and governance (ESG) management is linked to greater value creation. A strong, consistent but ambitious ESG proposal can help companies access new market niches and expand in existing markets. In addition, ESG management can also significantly reduce companies’ operating costs through the efficient use of resources or the introduction of circular economy strategies in their value chain. Finally, a strong ESG management can help companies recruit, select and retain labor talent and enhance employer branding; which increases company productivity by promoting a sense of purpose and an organizational culture based on organizational development.