We gather developments and commentary in and around the ESG investment space.

This news service regularly draws together developments in the environmental, social and governance-driven investment space. Shifting to a low-carbon economy is not going to be easy and cheap - the pandemic-induced economic mayhem may delay, or possibly derail, some of the hoped-for changes. The impact on different people from COVID-19 certainly puts stress on the “S” and “G” elements. Aviation engine workers at Rolls Royce and JC Penney have lost their jobs, to give two examples; financial advisors and technology developers are rushed off their feet with work. Millions are unemployed and worry if they can get their jobs back. And governments give daily examples of why accountability and honesty matter (often because of serious failings in those respects). 

Here are comments and developments from across the wealth management industry. 

Deutsche Bank 
The German bank this week said that it has published quantifiable targets for expanding its sustainable business activities covering the ESG space. By the end of 2025, it will increase its volume of ESG financing plus its portfolio of sustainable investments under management to over €200 billion ($219.2 billion).

The minimum volume of €200 billion ($219 billion) within six years includes loans granted by 2025 and bonds placed by Deutsche Bank during this period. It also includes sustainable assets managed by the Private Bank as of the end of 2025

Deutsche Bank said it will be guided by the EU Taxonomy – the European Union’s ESG standard. In areas where the EU has yet to develop its own standards, Deutsche Bank will rely on its own ideas.

So far in 2020, the country has advised clients on 22 transactions, placing ESG bonds with an underwriting volume of nearly €3.5 billion. These included green bonds, social bonds, sustainable bonds and bonds linked to sustainability criteria.

IQ-EQ
ESG investing resembles a “snowball effect”, according to Hugh Stacey, executive director, Investor Solutions, IQ-EQ. 

“What we have found is that a lot of fund managers are starting to look at ESG reporting because other forms of deal flow have dried up,” Stacey said. (In other words, managers have more time on their hands to look at the ESG aspects of a portfolio or potential investment.)

“Advisors GPs and LPs are looking at their respective portfolios and wargaming where they might be hit…and how they might be impacted. They [are] seeing what they can improve.”

“A lot of banks will have platforms for listed equities,” he said, noting that IQ-EQ has broken new ground with its Cosmos platform, an online portfolio monitoring technology which, on behalf of their clients, IQ-EQ Investor Solutions collects, collates and gathers the underlying data that goes into the platform and ultimately provides real-time investment intelligence on the GP’s portfolio companies. 

The COVID-19 pandemic has put more of a focus on the “S” in ESG, such as how lockdowns and other suppression methods affect staff, HR policy, and specific groups in society (people who cannot work remotely and have lost their jobs vs those in certain professions who can work from home). As for the “G”, the role of shareholders and owners (buybacks being halted, changing AGM arrangements, etc) has come into more prominence.