🌎 The ESG investing boom

Monday, September 13, 2021 by Snacks
_Up close and personal with ESGs [David Trood/ DigitalVision via GettyImages]_

Up close and personal with ESGs [David Trood/ DigitalVision via GettyImages]

Last Week’s Market Moves
Dow Jones
34,608 (-2.15%)
S&P 500
4,459 (-1.69%)
15,115 (-1.61%)
$45,213 (-10.01%)

Hey Snackers,

First, there was the pandemic TP shortage. Then: baking yeast, tie dye, and dumbbells. Now, we've got a highly concerning Rolex shortage (#relatable).

Stocks fell sharply for the week, as investors worried about slowing economic growth and rising Delta cases.


1. The ESG boom: “ethical investing” has taken off – but what does it actually mean?

ABC, easy as… ESG? Socially responsible investing, aka ESG (or environmental, social and governance) investing, has boomed recently. ESG criteria — like a company’s enviro-impact, board diversity, and/or exec compensation — is used by some firms and investors to evaluate companies for funds or personal portfolios. S&P Global, Bloomberg, and Moody’s are a few of the companies that rate and measure ESG performance.

Spell it out… Like with most stock purchases on public markets, people aren’t directly funding ESG-conscious companies when they buy their stock. But investors gain voting rights that could help companies make better decisions. Increasingly, people are using their values and ethics to guide investment choices — especially Millennials.

  • 10X: Investors contributed $51B to sustainable funds in 2020, compared to less than $5B five years ago.
  • 90% of Millennial investors say they believe in sustainable investing, according to a 2019 report.
  • $285B: How much ESG funds grew last year — nearly double their 2019 value.

Lean in to green… This month, the SEC said it may require companies to report climate-risk info along with their annual earnings. Think: emissions metrics and progress toward climate goals. In recent years, companies have been doubling down on ESG initiatives — especially environmental ones. Big Tech companies are the largest allocations for most ESG funds. Amazon pledged to become carbon neutral by 2040, Microsoft committed to become carbon-negative by 2030, and Google bought enough wind and solar energy in 2019 to power 500M European homes.


The next step in ESG is validation… Many aspects of ESG investing still aren't well-defined. Dozens of sources share company ESG scores, but many use different criteria that can be tough for companies to measure. It can also be hard to measure ESG investing’s impact: One study found that increasing ESG investment didn't lead companies to reduce pollution, or improve workplace safety or board diversity. The next step is having clearer, standardized criteria to assess ESG investments — and keep companies accountable.

Zoom Out

2. Stories we're watching...

Shots in the hot seat... Last week, President Biden ordered companies with 100+ employees to require employee vaccinations or weekly testing. Amazon praised the move, while Nike and Target questioned America’s ability to meet the requirement. Some smaller employers and Republican politicians criticized the mandate as costly overreach. Meanwhile, others like United Airlines and Tyson have already passed vax mandates. We’ll see how companies approach implementation.

Prime cap and gown... Amazon offered to pay full college tuition at select schools for 750K+ employees, in a push to attract workers in a tight labor market. The US has a record 10.9M job openings, but 8.4M Americans are still unemployed. Walmart and Target began offering college tuition perks earlier this summer, Uber and Lyft debuted huge bonuses to attract drivers, Chipotle and McDonald’s raised wages, and some big banks even offered employees free Pelotons. TBD if the perks will work.


3. Coming up this week...

The core of the Apple… Tomorrow, Apple is expected to drop the iPhone 13 and other new tech goodies at its big launch event. iPhone sales consistently make up over half of the Fruit's total, but they fell in 2019 and 2020. This year, iPhone sales soared as the new 5G-enabled iPhone 12 fueled a sweet upgrade cycle — but they’ve slowed quarter to quarter. We’ll see if the iPhone 13 has the specs to rev up demand.

Here comes the sun… energy. Solar energy powers 3% of the US electric grid, but Biden wants it to power nearly half by 2050 — which would require solar infrastructure to double each of the next four years, and again by 2030. It’s potentially brilliant news for solar battery makers like Tesla and Panasonic, and solar panel producers like First Solar and JinkoSolar, the world’s largest panel-maker. JinkoSolar’s earnings this Wednesday could shed light on momentum in the solar biz.


4. Last week's highlights...

  • Shade: Another day, another Zucking. Facebook partnered with Ray-Ban to launch “Stories,” smart glasses that shoot videos, play music, and aren’t FB-branded.
  • B-Day: El Salvador became the first country to adopt Bitcoin as a national currency. It's the first big coin experiment, and the stakes are high.
  • Blood: The trial of Elizabeth Holmes, disgraced founder of blood-testing startup Theranos, kicked off last week— “fake it till you make it” culture is also getting heat.

What else we’re Snackin’

  • Do: Post-summer rut? Three ways to get your mojo back when you've lost motivation.
  • See: Fall in love with PSL season with this leaf-tracking foliage map.
  • Earn: Only six companies have broken into the elite "Trillion-Dollar Club."
  • Visualize: Psychologists say this simple exercise can help you retire earlier.

This Week

  • Monday: Earnings expected from Oracle
  • Tuesday: August consumer price index. Apple's big launch event. Earnings expected from Core & Main and FuelCell Energy
  • Wednesday: Earnings expected from JinkoSolar
  • Thursday: Jobless claims
  • Friday: Earnings expected from Manchester United

Authors of this Snacks own shares of: Apple, Google, Tesla, Walmart, Uber, Amazon, and Microsoft

ID: 1833701

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