Blog @SRI30

A collection of thought leadership pieces from our sponsors.

ESG Risks Affecting Municipal Credit Quality

There are several evolving environment, social, and governance (ESG) credit risks that we believe have the ability to materially impact an obligor’s credit profile, including: climate change, the rise of renewable energy, population loss, public pensions and retiree health benefits, and acrimonious budget negotiations and impasses. While ESG investing pertains specifically to a subset of factors that represent both risks and opportunities in a credit profile, this blog post focuses on ESG risks as they pertain to municipal bond investments. An article by Gurtin Municipal Bond Management. 
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Small Cap ESG Value as an Alternative to Private Equity Impact Investing

Private equity investing is often described as a superior alternative to public equity investing with studies citing private equity’s historical outperformance vis-a-vis the S&P 500 Index. However, these studies frequently do not adjust for issues such as 1) appropriate benchmark selection, 2) current market valuations, 3) illiquidity, and 4) high fees. Additionally, when studies have examined the performance of impact investing private equity, historic returns have actually underperformed S&P 500 index. For these reasons, we believe that a small cap1 public equity strategy with value and ESG integration may be a viable alternative to private equity investing particularly when it comes to the area of private equity impact investing.
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Digging Deeper into Municipal Credit for Impact and Total Return

  In searching various dictionaries for the most frequently observed terms used to define “meaningful” one would readily find these terms: Important, Purposeful, Useful, Significant We think many would agree that these words accurately describe the main characteristics socially responsible investors care about in building an investment portfolio. It would not be at all surprising to see “Impactful” also used to define something that is meaningful.
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Linking Investor Engagement with Financial Value

Shareholder proposals give investors of all sizes a direct line into boardrooms and executive suites. As sustainable investors, we file them when we see opportunities for companies in our portfolios to improve in ways that might make them even better investments. Over the years we’ve witnessed many companies make value-enhancing changes to their business as a result of our engagements and those of other investors. But recently some industry groups have urged the Securities and Exchange Commission to consider measures that would make the shareholder proposal process less available to investors. Julie Gorte explains why that would be detrimental.
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Tackling good and bad practices relating to the stewardship of long-term endowments

As an increasing number of charities seek to invest more responsibly and address environmental, social and governance (ESG) issues within their endowment portfolios, it seems right to ask if they are getting what they want from the asset management industry. What are the good and bad practices when it comes to the ‘stewardship’ of client assets? How can a charity identify ‘greenwashing’ (a term coined by environmentalist Jay Westerveld in 1986 to describe misleading corporate environmental claims)? Asset managers have to step up their reporting of ESG issues, particularly around climate change, and clients need to hold their asset managers firmly to account.
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