Environmental, social and governance (ESG) investment has been around since the early 2000s, but it has only exploded in the past two years.
ESG investments are now estimated at $ 35.3 trillion, or around a third of assets under management worldwide.
The explosion happened just at the start of the pandemic (Q1 of 2020), with Europe currently being the epicenter of ESG action.
There is so much going on in the ESG space on a global scale at any given time. Before you start, here’s a good guide to what ESG investing really is.
In July, 457 funds with more than $ 41 trillion in assets wrote a coordinated message to G7 leaders, urging them to step up their climate ambition and implement strong policies.
The coordinated letter sets out five actions that governments must urgently take or be avoided by investors.
The message, in part read: “Strengthen Nationally Determined Contributions for 2030 in accordance with the global warming limitation to 1.5 ° C”. It was the strongest call to date from ESG fund managers to tackle climate change.
And the World Gold Council has just released a document detailing its contribution to the UN’s Sustainable Development Goals (SDGs).
The report says gold miners contribute to global health, as gold metals are used as components in diagnostic devices for COVID-19 and other diseases such as malaria.
Meanwhile, the world’s first and only vegan ETF, the NYSE Arca Vegan ETF for the climate (symbol: VEGN) has outperformed the S&P 500 Index since its inception two years ago.
Since September 2019, VEGN has achieved a return of 67.91% compared to 57.07% for the S&P 500 index.
What’s going on in Australia
Back home, things are getting serious as well, as business regulator ASIC has announced it is examining the threat of “greenwashing”.
Greenwashing refers to the potential of funds to over-represent the extent to which their practices are environmentally friendly, sustainable or ethical. ASIC says it wants to make sure its investment strategy is as ESG-focused as it claims to be.
Investments on the ESG theme have indeed been very profitable for Australian investors.
Over the past five years, the shares of the Australian ESG Fund Ethical investment (ASX: AEF) have gained 1.100%, or 12 times.
The prices of renewable energy stocks like lithium mining and batteries also skyrocketed during this period.
Lithium battery producer Novonix (ASX: NVX) for example, increased by 1000% in five years and 200% in the past year alone. As a result, the company was recently included in the ASX 300 index.
Notable ESG-related ASX announcements during the week
Apiam Animal Health (ASX: AHX)
Australia’s largest regional veterinary network, Apiam Animal Health, says it is determined to do its part to end the mental health and suicide crisis plaguing the industry.
Studies show that veterinarians are four times more likely to kill themselves than the general population, and twice as likely as any other health care profession.
“We have tried to make access to counseling as convenient as possible, not only through the traditional face-to-face sessions, but also over the phone or online,” says Renee Waters, CEO of Apiam.
Apiam is also offering an additional reward day for paid time off to support mental wellness and has partnered with Smiling Mind, a non-profit web and app program developed by psychologists and educators to help promote mindfulness.
RareX Limited (ASX: REE)
The rare earth explorer said this week it has established an ESG framework it has adopted based on guidelines from the World Economic Forum (WEF).
REE says this new framework will help ensure it can develop its flagship Cummins Range project in Washington state in a responsible and balanced manner – while respecting safety, corporate governance and the environment.
It will also ensure that indigenous relations, community and stakeholder engagement and other essential elements of the ESG matrix are maintained.
Mineral raw materials (ASX: MRC)
The company has signed a memorandum of understanding with the Arctic University of Norway to form a collaboration regarding the fields of mineral geology, which includes training and indigenous studies of the Sami culture.
The Sami are indigenous peoples who traditionally occupied the Sapmi region, in the northernmost regions of Scandinavia and Russia.
Synertec Corp (ASX: SOP)
The diversified tech design firm announced a major new contract during the week, after being selected as the designer of choice for the $ 11 billion subway tunnel (MTP) project.
The MTP adds to Synertec’s diverse range of ESG-focused technologies and leading engineering and consulting projects, including a memorandum of understanding with oil and gas major Santos to build a renewable energy system for its coal-gas development of Myalla mine in Roma, Queensland.
Overall, Synertec’s work pipeline places it at the forefront of the ESG transition, where its intellectual property and internal knowledge base give it a competitive edge in the market.
ReNu Energy (ASX: RNE)
The renewable energy company signed an agreement with Enosi, an Australian company that developed Powertrace – a 24/7 renewable energy trading and tracing software solution.
Carbon-free energy tracing is quickly becoming the next global benchmark for sustainability to achieve the ambitions of 100% renewable energy around the clock.
ReNu Energy CEO Greg Watson said: “The proposed investment in Enosi is part of the promotion of the company’s renewable and clean energy accelerator and incubator strategy.
Woolworths (ASX: WOW)
The company will issue its first sustainability bonds of € 550 million (approximately AU $ 880 million).
The ratings are directly linked to the group’s sustainable development goals aimed at achieving the 63% emission target from 2015 levels by 2030.
The Notes have been valued at a 0.60% margin over the Euro base rate and have been rated as “stable outlook” by Moody’s (Baa2) and S&P (BBB).
BHP (ASX: BHP)
After divesting its fossil fuel business to focus on green metals, the mining giant is expected to release its annual report on the economic contribution next week.
Stock prices today:
At Stockhead, we say it as it is. Although Apiam Animal Health and Synertec are advertisers of Stockhead, they did not sponsor this article.