In the Industry: Q4 2020 Impact Digest

While activists and advocates have long called for greater transparency and action on issues ranging from racial justice to climate change, the confluence of recent events, including the ongoing pandemic, racial justice protests and a dramatic shift in the political and regulatory environment, could mark a time of progress not just in philosophy but in real action. 

Increased transparency and accountability related to diversity and climate risk has been a priority for impact investors for some time. Moves like the recent BlackRock commitments to increase its support for climate action and diverse corporate leadership show that asset managers and corporations alike are becoming more aware that investors expect not only words but also meaningful action and accountability.

In the News

BLOOMBERG 

The World’s Courtrooms Could Unleash the Next Wave of Green Investing 

Lawsuits brought by investors and stakeholders worldwide seek to hold fund managers and corporations to account for failure to sufficiently assess and disclose the financial risk associated with climate change. More than 700 suits of this type have been filed over the past five years. 

MORNINGSTAR 

Biden Administration Will Improve Regulatory Climate for Sustainable Investing 

Sustainable and ESG focused investing’s popularity in the past several years was at odds with regulatory action during the Trump administration, but the expectation is that under President Biden and a 3-2 Democratic majority on the U.S. Securities and Exchange Commission will lead to a walk–back of the recent Department of Labor rule limiting the use of ESG considerations by retirement plans and a push for greater corporate transparency of climate-related financial risks. 

Bloomberg

Fidelity, UBS Join Investors Making $9 Trillion Net-Zero Pledge 

A group of 30 asset managers, along with pension funds and insurance clients, are working towards carbon neutral portfolios by 2050. The members of this Net Zero Asset Managers initiative have committed to align their engagement and their votes for corporate boards with this carbon neutral goal and creating new products to support investment in climate solutions. The question remains how quickly these commitments can be translated into meaningful progress. 

BLOOMBERG 

Time’s Up on Corporate America’s 2020 Climate Goals. Here’s the Results 

In 2015, a group of corporate leaders committed to a series of goals directed at fighting climate change by 2020. As time runs out, it’s good news and bad news. The good news is that most of the 138 pledges have been met or appeared to be on track in the fourth quarter. The bad news is it was at least in some part because the goals were relatively modest. 

WALL STREET JOURNAL

Biggest U.S. Banks Embrace ‘Rooney Rule’ Policies in Diversity Hiring Push 

JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and U.S. Bancorp will ensure they have policies in place to guarantee that diverse candidates are being interviewed for upper level positions. The banks have also committed to making their policies public. While the policies will vary, they primarily require interviewing at least one woman and one person of color for each senior or upper management position. While all of the banks in question said that they currently have some of these guidelines in place, the increased transparency make it easier for them to be held accountable for their commitments. 

NEW YORK TIMES 

BlackRock Chief Pushes a Big New Climate Goal for the Corporate World 

In his annual letter, CEO Laurence D. Fink called for companies “to disclose a plan for how their business model will be compatible with a net-zero economy” by 2050. Fink also announced that BlackRock will use what it called a “heightened-scrutiny model” to analyze climate change-related risk in their actively managed funds, including flagging some high-risk holdings the firm could exit. BlackRock has been the focus of criticism for heavily favoring management positions over shareholders on issues like climate change, which they positioned as “giving companies the benefit of the doubt” prior to the sea change over the past year. 

Research & Reports

MAJORITY ACTION 

Equity in the Boardroom: How Asset Manager Voting Shaped Corporate Action on Racial Justice in 2020 

Despite public statements supporting racial justice, the proxy voting behavior of some prominent asset managers has consistently supported the status quo against calls for greater racial equity and accountability, according to this joint report from Majority Action and Service Employees International Union. In 2020, BlackRock and Vanguard consistently voted against shareholder calls for action on issues of racial justice both inside and outside of corporations. In contrast, Legal & General, Amundi and PIMCO voted to support nearly all racial justice related resolutions. 

US SIF 

Report on U.S. Sustainable and Impact Investing Trends 

One out of every three dollars in professionally managed U.S. assets employed ESG strategies at the start of 2020. $17.1 trillion in U.S. based assets employed ESG strategies, out of a total $51.4 trillion in professionally managed assets. Climate change ranked as the top ESG criteria for money managers while avoiding conflict risk in countries like Sudan and Iran was the primary concern for institutional investors.  

Disclosures

All content presented on the Wetherby Asset Management (“Wetherby”) website is for informational purposes only and is from sources believed to be reliable. No warranty is either expressed or implied by its presentation.

This content is not, and should not be, considered a recommendation, offer, nor solicitation of an offer by Wetherby or its affiliates to buy, sell or hold any security or other financial product; nor is it an endorsement or affirmation of any specific investment strategy. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Information contained in third-party articles was prepared by independent outside parties, and the accuracy of any such information may have changed since the article was published. Unless otherwise specified, opinions expressed reflect those of the author and not of Wetherby. Wetherby does not guarantee the accuracy or completeness of information in these articles and assumes no liability for damages resulting from or arising out of the use of such information. Should any specific funds or securities be mentioned in a third-party article, it may not be reflective of any funds or securities recommended by Wetherby, nor should it be considered an investment recommendation or investment advice. These investment strategies may or may not be appropriate to incorporate in our client portfolios. Wetherby’s analysis is subject to change as information develops regarding specific investment goals, profiles and/or the economic markets. Individual investments typically constitute a minority allocation within a client’s fully diversified portfolio managed by Wetherby.

Wetherby manages portfolios according to each client’s specific investment needs in accordance with a signed investment agreement. Therefore, each client’s portfolio has a unique set of circumstances and, consequently, investment results. Wetherby’s outlook may change if the client provides new information or if there are material changes in the market or investment recommendations. While Wetherby intends to add value to our clients in non-investment related areas of tax and financial planning, we do not hold ourselves out to be practicing income tax professionals or estate planning attorneys. You should consult your tax advisor and/or estate planning attorney for any legal or accounting needs.

To the extent that our website contains information about specific companies, securities and/or investment strategies – including whether they are profitable or not – it is provided only as a means of illustrating a potential investment thesis. It is not intended as a reflection of any securities or funds held by clients nor the experience of any client; the holdings and performance of which may be materially different from any investments discussed. It should not be assumed that any information contained serves as a substitute for, personalized investment advice from Wetherby or an investment agreement.

If a reader has questions regarding the applicability of this information to her/his situation, she/he is encouraged to consult with the professional advisor of her/his choosing. A copy of Wetherby’s current ADV Part 2 & 3 discussing our advisory services, fees and other relevant information is available upon request.

Certifications

Wetherby’s status as both a Certified B Corporation^® and a Certified San Francisco Green Business is indicative of our commitment to enhanced social, environmental and governance standards. It is not intended to represent Wetherby’s investment capabilities or performance. For additional details regarding Certified B Corporations^® please visit www.bcorporation.net; for San Francisco Green Business please visit www.sfenvironment.org/green-businesses.

Social Media

Social media content involving Wetherby and our affiliated people is intended solely for informational purposes. It should not be considered as a recommendation, investment advice, nor an offer or solicitation of services. Links to third-party content are provided for convenience only; Wetherby cannot assure the accuracy or completeness of the information and no warranty is either expressed or implied by its presentation. Neither Wetherby nor our affiliated people are responsible for any third-party content, services, products or information. Please note that as a registered investment advisory firm with the U.S. Securities and Exchange Commission, Wetherby and our affiliated people are restricted from using any form of testimonial relating to our investment advisory services. We appreciate your acknowledgments; however, our policy requires that we hide any recommendations or endorsements.