This is some serious inside baseball. But it IS October:
If your basic theory of ESG investing is “we will avoid bad-ESG stocks in order to drive up the cost of capital of bad-ESG things,” it seems to be working:
Years of awful returns and pressure from clients to exit from the oil-and-gas business have left fewer and smaller firms able to take advantage of rising prices and help boost production. The unwillingness of some banks to make energy loans has compounded the challenges to boosting energy supplies.
Those left are moving to increase production, but they are relatively small players who won’t be able to make a significant impact on output. Investors are steering capital away from fossil fuels and toward companies that rank high in environmental, social and governance, or ESG, measures.
“Oil-and-gas has seen the worst returns of any sector over the past five years; the returns are volatile and investors feel ESG pressures,” says Wil VanLoh, who runs Quantum Energy Partners, which manages $18 billion, making it one of the few remaining big energy private-equity funds. “There’s been a huge retreat in available capital.”
That’s from Matt Levine’s Bloomberg daily newsletter, talking game about the game. But the idea that ESG investing is maturing, as he says, is an interesting one. If companies and the courts are no longer going to just line up on the side of fiduciary responsibilities as a way to protect shareholders – and hence, the companies that may continue to pollute and spew for profit – that’s at least a change.
Image: Abraham Lincoln: Baseball Theme Currier & Ives Cartoon, 1860.
We’re mostly still just trying to do that, as if there’s a first, as if THAT’s the opportunity:
Sustainable investing is one of the hottest trends on Wall Street. Trillions of dollars are rushing in as consulting firms and private foundations spread the gospel. But no one is entirely sure what ESG is beyond the literal (environmental, social and governance) or exactly how to define it. Metrics are self-reported and often hard to measure, tracking everything from carbon emissions to boardroom diversity. Greenwashing is a perennial concern.
Profits, however, are very much measurable. Bloomberg’s fourth annual ranking found that the biggest ESG funds are beating the market. If you do happen to have $1 million to spare and a soft spot for the future of planet Earth, here are some investment ideas for you. How does the intersection of AI, blockchain and climate sound?
We also reported this week on emerging technology such as carbon capture, and less environmentally damaging rocket launches. While not as sexy as spaceships, dirt is also important to the future health of the planet. Global agriculture has come to rely on annual crops and heavy fertilizer use, which inhibit soil’s ability to sequester carbon.
So we’ll call it ESG or whatever, and we do. Predictions about how this will affect THAT, about where to place your future-of-energy bets is till going to lead to many near-term flareups and dead-ends. Reckoning with the ultimate dead-end may not be appealing, prospectus-wise, but acknowledging that we’re doing it anyway, that doing it the old way got us right to here, is the thing we will always still need to do until we do it.
Waiting. Adaptability Funds are going to scare the investor class for about one-half of a news cycle.
When the banality of economics becomes seductive. Via Matt Yglesias, Economix offers this chart undermining the truly pathetic neologism of a “mancession.” Please.
We could use crises to take a second look at issues in society – budget crises ostensibly allow us to prioritize our concerns, even if cowardly politicians address them with ridiculous across-the-board-cuts. Steep drops in employment bring up gender equity issues in the workforce in a way which, combined with other forces, should reflect not just changing demographics but shifts in national economy itself – toward education and healthcare, for example, and away from certain types of heavy manufacturing. Which itself reflects the tack away from industrial-based activity and toward a service economy. We will still have to make things and build stuff, and women may be increasingly designing the buildings, negotiating the contracts and cutting the ribbons. But this is less ‘XX takin’ XY’s jobs’ than ‘the nature of our jobs is changing.’