ESG

Markets around the world finished last week on yet another strong note with the USA’s S&P 500 up 1.7% on Friday and Australia’s ASX 200 remaining weaker but improving 0.5%.

Shareholder activist groups are diverting company management’s time and energy towards narrow environmental and social causes. We explore why active ownership and purposeful engagement can achieve a better outcome for all stakeholders.

I recently tried an experiment. I changed several light bulbs, and since one required a little rewiring, I sent my wife (also known as the majority shareholder) a bill for $110.50 (plus GST). In return, she sent me a bill of $457.98 for her preparation in late December of a sumptuous meal, plus her work managing all social connections associated with the holidays. 

I recently returned from a research trip to China and was struck by how seriously environmental issues are now being taken by government and town planners. As China continues to develop, environmental issues are increasingly front and centre in what is described in the country as a “war” against pollution.

For fixed-income investors, understanding environmental, social and governance (ESG) factors – as they are financially material to performance – has proven to be critical in assessing an issuer’s fundamental quality.

Last week’s wellbeing budget in New Zealand was based on the Livings Standards Framework (LSF), a set of wellbeing measures that include cultural identity, environment, income and consumption, and social connections. But these provide no overall index of the nation’s performance.