Resource Center

Our Stewardship Team shares insights from a recent company engagement trip. Learn about the ESG-related progress being made by companies in Turkey and Saudi Arabia.

While perhaps not a widely considered link between the defense industry and climate change, several Eurosatory conference sessions addressed how climate change can intensify security risks and threats.

The negative physical impacts of climate change are being felt by communities and corporations globally and are likely to get worse in the coming years. The knock-on costs of more frequent “once-in-a-century” climate events on economies are likely to rise. To prepare for this looming threat, investors must forecast the asset-level effects of climate change on companies in a granular and sophisticated way. Here are six things portfolio managers should know to manage and mitigate the physical risks of climate change to their portfolios and meet growing list of climate-focused reporting requirements.

Socially conscious ESG investors are interested in how to implement international business and human rights norms in their portfolios and understand the potential impacts of applying additional screening criteria within their strategy.

Maritime shipping is the most common mode of transport for global trade, with around 80-90% of the volume of international trade in goods carried by sea. Complex supply chain challenges around the world made 2021 an exceptionally challenging year for retailers, exacerbating global inflation. Still, it was also very profitable for ocean carriers and containership owners.

Transport electrification is at the forefront of the international climate transition agenda. Because of this, global demand for cobalt is projected to grow fourfold by 2030, which raises the question, are mineral supply chains robust enough to fuel a sustainable EV revolution?

The ethical implications of lethal autonomous weapons systems (LAWS), often referred to by their dramatic moniker ‘killer robots’, have long been a topic of interest. Until recently, debates about LAWS were relegated as hypothetical, with the technology assumed to be under development and out of reach. Such assumptions may be due for reevaluation, and while a firm conclusion is yet to be drawn, it is worthwhile presenting them to the ESG investment community.

The Russia-Ukraine conflict has put more pressure on a sector that was already constrained by the disrupted supply chains, brought about by pandemic-induced congestions and shortages. Additionally, the surge in fuel price is already affecting customers, although it may accelerate the adoption of electric vehicles (EVs) as a side effect. However, the scarcity of minerals, which are necessary for semiconductor manufacturing, may further exacerbate the chip shortage that has afflicted the automotive industry since 2020.

The Russia-Ukraine conflict and the subsequent sanctions on Russian entities have led to material and wide-ranging impacts on diversified sectors and international firms. However, company disclosures and other sources suggest that the conflict’s primary impact on the global insurance industry is limited for two main reasons

The aviation industry is feeling the impact of rising fuel costs as an immediate repercussion of the conflict in Ukraine. In particular, the airline sector is still facing significant challenges in mounting a steady recovery from the COVID-19 crisis. On the other hand, the defense industry may be presented with opportunities in light of increased government spending in the aftermath of the invasion.

Investor interest in the banking sector remains high as the impact of Russian sanctions unfolds. Based on Morningstar Sustainalytics’ research, total unmanaged risk has increased for both Russian and international banks with exposure to Russian clients. To what extent have sanctions affected banks’ total unmanaged risk?

The invasion of Ukraine highlights the fragility of the global food system. The destruction caused by the war and subsequent trade restrictions on Russia, endangers a significant percentage of the global food supply coming from two of world’s leading agricultural commodity exporters, consequently prompting food prices to surpass the 30-year high.

As the unprecedented situation in Ukraine continues to unfold, Russia’s energy industry has remained remarkably untouched by the waves of sanctions currently being deployed against the country, despite being arguably its most important sector. While the European Union and its allies have been cautious to avoid disrupting energy flows (unlike how sanctions are currently disrupting the flow of capital), international oil companies are responding to the crisis in their own capacity.

Living Income is a crucial consideration among leading companies across some sectors and their supplier companies throughout the agricultural and food supply chain. Companies that manage ESG risk in their supply chains, making targeted investments to improve their resilience, are better positioned to build investor confidence.

Over the past decade, the world has made progress in reducing the gender gap in education, health, economic resources and political participation. Some countries, however, are still lagging—including Japan.

For observers of the EU’s Sustainable Finance Strategy, 2022 kicked off with a crack and a bang as the European Commission went ahead with plans to include natural gas and nuclear-related activities as potentially sustainable under their ‘Green Taxonomy’. However, in midst of this furor, seemingly less attention has been paid to other components of the regulation that have quietly taken effect from the 1st of January 2022, presenting their own set of challenges.

As growing pressure to cut GHG emissions is causing Western oil majors to sell their high-carbon assets, it is expected that National Oil Companies (NOCs) will pick up some of the production. For investors holding an interest in or considering investing in NOCs or sovereign debt, it is worth assessing how fossil fuel production shifts will impact their portfolio’s alignment with climate ambitions and ESG values.

Utilities have found themselves in the literal and metaphorical eye of the storm over the last year as hurricanes, floods and wildfires of increasing frequency and strength have wreaked damage on their assets. In late August, Storm Ida made landfall in Louisiana, USA and devastated the power grid lines. Entergy, the utility operating in Louisiana, supplying most of New Orleans, restored 90% of the supply only by mid-September, with 87,000 customers still without power.

Pipelines play a critical role in the U.S energy infrastructure transporting natural gas, crude oil, natural gas liquids, petroleum, and petrochemical products. While these pipelines play a vital role in supporting the U.S economy, investors are increasingly scrutinizing pipeline operators' long-term economic profitability and sustainability practices. A closer look into the status of pipelines reveals a particular issue that investors need to consider.

On issues from voting rights to climate change, the relationship between investors, companies, and governments has never been more dynamic. This has spurred a lively discussion about the impact and appropriate role of these actors in addressing systemic environmental and social issues. An increasingly cited view is that commitments made by businesses and investors are often superficial, and at best, can provide only incremental progress towards addressing the problems we face. Some go further to suggest that sustainable investing has done more harm than good, with the notion that these efforts have provided a false sense of progress and have delayed meaningful government action. This is a worthwhile debate, but my experience over the last eight years in the sustainable investing space has given me a very different perspective.