By Ross Kerber, Isla Binnie and Simon Jessop
BOSTON (Reuters) – A movement by financial firms and activists to challenge companies over their efforts on climate change and social inequality faced organised and growing push-back in 2022, led by Republican U.S. politicians.
Focusing on environmental, social or governance-related issues, ESG in industry parlance, could hit returns to investors, critics said.
A rise in oil prices this year bolstered their case by hurting the performance of many ESG funds that had moved away from energy stocks, responsible for producing a large share of climate-damaging carbon emissions.
Despite that, the list of financial firms signing up to industry coalitions aiming to help companies make the shift to a low-carbon economy lengthened as scientists warned time was running out to limit global warming.
Activist shareholders also won significant victories at corporate annual meetings this year such as a call for a human rights report at gun maker Sturm Ruger & Co.
In the eye of the storm for much of the year was BlackRock, the world's biggest money manager, whose chief executive kicked off the year with a defence of ESG investing in a letter to peers.
BlackRock, along with JPMorgan, Goldman Sachs, Morgan Stanley and Wells Fargo & Co, was later barred from winning state business from West Virginia because of its stance on climate change.
Other states followed, with Texas accusing BlackRock and banks including Bank of America of 'boycotting' fossil fuel companies in the transition to a greener economy. Florida said it would pull $2 billion in investments from BlackRock.
Elsewhere, Missouri launched an investigation into ratings company Morningstar over whether its ESG scores violated state consumer-protection laws; while Texas and others launched a similar investigation into S&P Global.
The pressure was not all one way, though, with left-leaning groups such as the Sierra Club and Democratic state officials, which collectively have more money to invest, calling for BlackRock and others to stand firm or be even more ambitious in its climate efforts.
The criticism comes at a critical time for global climate efforts. A landmark U.N. report earlier this year said time was running out to cap global warming at 1.5 degrees Celsius by 2050.
The pressure from the Republican politicians has already had a chilling effect, with the world's biggest mutual fund manager Vanguard recently pulling out of the Net Zero Asset Managers (NZAM) initiative, a group of investors pushing for net-zero emissions, citing a need to demonstrate its independence.
In the world of regulation, meanwhile, the Securities and Exchange Commission (SEC) has faced pressure to scale back planned rules on climate-related financial disclosures.
Given the United States is the biggest economy in the world with many large multi-national companies, any fracturing of the regulatory response from the world's leading markets could dull their collective impact.
WHAT DOES IT MEAN FOR 2023?
With a number of investigations into finance-linked ESG activities still in train across various states, the prospect of a let-up in pressure in 2023 is slim.
Market watchers will be looking to see how leading investors exercise their voting power in the season for annual shareholder meetings, although BlackRock has already said it does not expect much change from last year.
The outcome of the SEC's climate disclosure rules, as well as its efforts to rein in 'greenwashing', where firms issue misleading statements around their environmental efforts, will all help shape the future for ESG in the country.
For some, the ESG question is even more existential: has it become so politicised that firms decide not to use it in marketing and corporate communications, maybe opting for other, less loaded words?
Explore the Reuters' round-up of news stories that dominated the year, and the outlook for 2023
(Reporting by Simon Jessop; Editing by Anna Driver)
Investors looking for sky-high income should consider dividend stock MPLX, which delivers a jaw-dropping 9.47% yield.
BOIL and KOLD may be for those investors who don’t get cold feet.
Fund managers’ embrace of less-liquid assets could boomerang on them if market turbulence continues.
While many airlines were looking to have cleared the worst of it, Southwest Air had some real issues. Of the four major airline stocks, Southwest Airlines is the only one struggling on the day. Delta and American Airlines are about flat while United Airlines is up 1%.
TJX Companies has been up this year amid the stock market carnage and its business prospects should improve in the event of a recession.
Bitcoin (BTC) is trading flat below $17,000, after falling roughly 64% this year. Prosper Trading Academy's Cryptocurrency Educator Howard Greenberg discusses the reasons behind the token's recent stagnant price and his crypto markets outlook for 2023.
BETH PINSKER If you’re getting crushed by inflation and you have any money sitting in your 401(k), you may be wondering how you can get at it. In that kind of situation, something called a “hardship withdrawal” sounds like it would fit the bill.
The Philippines is grappling with food insecurity amid natural disasters and global price rises.
Cboe Global Markets Inc. said there would be no pit trading of Cboe Volatility Index options Tuesday due to water damage caused by a burst pipe above its Chicago trading floor. As a result of the temporary pit closure, Cboe Volatility Index options (VIX and VIXW) will be available for trading electronic-only, with no open outcry trading, for at least Tuesday, CBOE said, in a news release. Cboe said it intends to implement contingency plans to relocate the VIX trading pit to an alternate space on
For those willing to hear a different — anti-group think — view, Kass has plenty of bets for what could happen over the next 12 months, including Elon Musk saving Twitter at the expense of Tesla , a shock Apple merger, a major plummet in Bitcoin's value and those predicted jumps in gold and oil. Of course, Kass had some predictions, especially political ones, that didn't pan out.
Dozens of changes are coming to America's retirement landscape.
EV developer NIO has cut its delivery guidance figures as it expects COVID disruptions in China to impact manufacturing goals.
The worst may be over for the stock market for this cycle, but many economists see more pain ahead for 2023, including a possible recession that will create poor financial-performance comparisons for companies and send stock prices even lower. Greg Adams, director of quantitative and risk management at fund manager Alger, recommends that investors focus on companies with solid balance sheets and strong cash flow to endure tough times. Alger is based in New York and has $26 billion in assets under management.
Tesla investors already lost more than $700 billion on the stock this year. How much more can this S&P 500 stock drop?
Once a symbol of extravagant wealth, $1 million is now the retirement-savings goal for millions of Americans. For retirees able to accumulate $1 million in savings, the funds translate into inflation-adjusted income of $40,000 in the first year of a three-decade retirement using the 4% spending rule. With the addition of the average annual Social Security payment for retirees of about $20,000, a $1 million nest egg can replace about 85% of a $70,000 median household income.
The average brokerage recommendation (ABR) for Medical Properties (MPW) is equivalent to a Buy. The overly optimistic recommendations of Wall Street analysts make the effectiveness of this highly sought-after metric questionable. So, is it worth buying the stock?
What to watch in markets on Wednesday, December 28, 2022.
(Bloomberg) — FTX founder Sam Bankman-Fried said he and former executive Gary Wang borrowed more than $546 million from Alameda Research to buy a nearly 8% stake in Robinhood Markets Inc, according to court papers. Most Read from BloombergSouthwest Air Memos Showed Growing Alarm on Eve of Epic Winter StormSouth Korea Sends Drones to Kim Jong Un’s Airspace in Unprecedented MoveRussia Says Ukraine Must Surrender Even as Putin’s Army RetreatsAlameda Lent Sam Bankman-Fried $546 Million for Robinhoo
“I think you occasionally get a turning of the investment and economic age, and we're at one of those now after over a decade of near-zero interest rates,” said George Ball, chairman of Sanders Morris Harris.
The bottom in Tesla's stock is still being searched for.
U.S. finance faces ESG backlash, with more to come in 2023 – Yahoo Finance
By Ross Kerber, Isla Binnie and Simon Jessop